It’s been quite the year for space stocks and billionaire Richard Branson. For one, the business magnate’s space tourism company, Virgin Galactic (NYSE:SPCE), recently launched Branson as part of its “first fully crewed spaceflight.” Moreover, Virgin Orbit — a satellite-launching spinoff of Virgin Galactic — has also had a breakthrough year with its first successful commercial launch. It also plans to go public via a special purpose acquisition company (SPAC) in a merger valued at $3.2 billion.
Both Virgin Galactic and Virgin Orbit have made significant strides this year. Yet, although they are some of the more talked about companies in this evolving sector, they’re not the only ones in the game. The space economy is growing at an incredible pace. Experts suggest that it could become a $1.4 trillion market by 2030.
When it comes down to it, this is one of the most lucrative investment areas for the future. So, let’s look at some of the most promising space stocks in the sector today.
- Lockheed Martin (NYSE:LMT)
- Iridium Communications (NASDAQ:IRDM)
- AST Spacemobile (NASDAQ:ASTS)
- Maxar Technologies (NYSE:MAXR)
- ARK Space Exploration & Innovation ETF (BATS:ARKX)
- Boeing (NYSE:BA)
- Loral Space & Communications (NASDAQ:LORL)
Space Stocks to Buy: Lockheed Martin (LMT)
First up on this list of space stocks, defense contracting giant Lockheed Martin is not exactly a pure play in the space industry. However, its space segment accounted for a healthy 18% of the $65 billion in revenues the company generated in 2020. This year’s second quarter, its space segment generated over $3 billion in revenues, growing 10.4% year-over-year (YOY). Moreover, with forward growth estimates of over 6%, LMT stock trades at just 1.42 times forward sales.
Currently, Lockheed plans to acquire rocket and missile propulsion manufacturer Aerojet Rocketdyne (NYSE:AJRD). However, with antitrust concerns, the deal might not go through. If it does, though, Lockheed would meaningfully increase its footprint in space and missile production.
Apart from its space segment, this company is a top investment in the aerospace and defense sectors at large. Lockheed Martin has an incredible growth runway ahead and is considerably undervalued based on its long-term outlook.
Iridium Communications (IRDM)
Iridium Communications is a global satellite communications operator and the next entry on this list of space stocks. The company runs and operates a network of some 66 satellites that it calls the Iridium satellite constellation. These satellites facilitate communication from satellite phones and other transceiver units. Through this network, the company has established itself as a stable business catering to both government and commercial end-users.
True, Iridium is not a fast-growing business, but it is a cash cow. Looking at its financial performance, the company has clearly had a healthy track record of generating free cash flows. Last year, IRDM generated service revenues of $463.1 million. From those revenues, it generated $249.8 million in operating cash flows. Free cash flows were around $211 million.
With its satellites already in space, capital expenditures are also low for Iridium. Therefore, as it boasts such strong cash-flow generating ability, you can expect this company to commence paying dividends and boost IRDM stock in the process.
Space Stocks to Buy: AST Spacemobile (ASTS)
Founded in 2017, AST Spacemobile is a Texas-based company which aims to bring satellite internet to all handheld devices without any modifications. Basically, the goal is to provide robust broadband solutions which automatically link with existing carriers’ services. The company hopes to achieve this through its network of 168 satellites, which will allow customers to maintain their WiFi connections at all times.
This company expects to achieve global coverage with just 110 of its 168 satellites (Page 179). It plans to have these satellites in orbit by the conclusion of 2023. By the end of 2024, AST also plans to complete all of its 168 launches.
One of the biggest selling points for ASTS stock and the underlying business is its massive addressable market. Right now, this company believes to be looking at a $1 trillion wireless services market. With potential like that, this one clearly lands itself among the top space stocks to consider.
Maxar Technologies (MAXR)
Based in Colorado, Maxar Technologies is a satellite communication and radar specialist. It operates under two key segments — Space Infrastructure and Earth Intelligence — both of which have performed incredibly well of late. Maxar’s clients include top government agencies as well as commercial customers in several markets. With a healthy outlook ahead, MAXR stock’s consensus price target of around $41.88 predicts upside of over 30%, according to Tipranks.
Back in late June, Maxar announced the delivery of 3D data products to the Australian Department of Defense under a multi-million dollar contract. Further, revenues are expected to accelerate in a big way once the company’s planned “WorldView Legion satellite constellation” begins to come online. It even recently secured a $35 million contract involving this constellation. The contract will enable Maxar’s customer to download 30 cm-class satellite imagery directly.
With all of this lucrative deal-making in mind, MAXR stock remains one of the top space stocks to watch right now.
Space Stocks to Buy: ARK Space Exploration & Innovation ETF (ARKX)
The next entry on this list is actually and exchange-traded fund (ETF). The ARK Space Exploration and Innovation ETF aims to gain exposure to orbital and sub-orbital aerospace companies. The fund is led by maverick investor and ARK Invest CEO Cathie Wood.
ARKX has investments in some of the top space stocks in the market, including Lockheed Martin, Iridium Communications and Kratos Defense & Security Solutions (NASDAQ:KTOS). In fact, each of those names appear in the fund’s top 10 holdings, which weigh in at around 58% altogether.
So far, ARKX stock hasn’t returned much to its shareholders. The fund hasn’t entirely lived up to its billing as a space-oriented ETF either; it has holdings in various companies, but the majority are not pure plays in the sector. However, this name does have investments in some of the most promising enterprises in aerospace, defense and other ancillary industries.
Boeing is a leader in the aviation and aerospace industry, supporting airline and government clients in over 150 countries. Its products include satellites, communication systems, military aircraft and more. Sure, it is a secondary play in the space industry — but it could have a pivotal role as the sector moves forward.
Boeing is a key player in developing the International Space Station (ISS), which aims to expand the future space economy. Specifically, it is developing Starliner spacecraft “in collaboration with NASA’s Commercial Crew Program.” The Starliner will ensure successful delivery to Earth’s orbit. Moreover, Boeing’s tracking and relay satellites will provide advanced communications between the spacecraft and facilities on the ground.
This in mind, space could be a major growth area for the company — and could propel BA stock to new heights. Definitely consider this name as one of the top space stocks to buy right now.
Space Stocks to Buy: Loral Space & Communications (LORL)
Last up on this list of space stocks, Loral Space & Communications provides satellite-based communications services to private and public sector customers around the world. Specifically, the company provides its satellite services through “a fleet of 15 in-orbit geostationary satellites.”
LORL stock has gained an incredible 80% or so in the past 12 months. This is due to the hype surrounding its merger with Telesat Canada. Loral already owns over 60% economic interest in Telesat.
The hullabaloo surrounding this deal relates to Telesat’s push to develop “Lightspeed,” the company’s LEO constellation of 298 satellites. These smaller yet robust satellites offer greater affordability, higher throughput and more flexibility. If Telesat can effectively develop this constellation, it could drive a lot of value for Loral long-term.
But that’s not all. Apart from Telesat, Loral also has a 56% stake in Xtar, a telecom-services provider for governments.
On the date of publication, Muslim Farooque did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Muslim Farooque is a keen investor and an optimist at heart. A life-long gamer and tech enthusiast, he has a particular affinity for analyzing technology stocks. Muslim holds a bachelor’s of science degree in applied accounting from Oxford Brookes University.