Even as many space stocks fell back to Earth this year, there are multiple opportunities for investors bullish on the sector. Although the industry’s 2023 performance lags major market benchmarks, its future remains bright. Projections for space stocks’ future operational potential range between $1 trillion and $10 trillion. Pinning a hard number of the market’s future value is difficult. But, one thing remains clear, space stocks represent an investment in the future.
At the same time, tightened economic conditions and industry-wide struggles mean only a few space stocks will emerge as winners when the dust settles. These three space stocks represent an ideal slice of the broad industry, with proven operational viability and, in most cases, sufficient financial standing to beat short-term turbulence.
Rocket Lab (RKLB)
Rocket Lab (NASDAQ:RKLB) hit a major milestone, successfully reusing an engine from a previous flight on its August 23rd rocket launch. The milestone brings Rocket Lab a step closer to its goal of complete booster reuse over the span of multiple launches. The goal, when complete, will speed up Rocket Labs’ launch pace and save substantial money in manufacturing costs.
At the same time, the company is closer than ever to hitting its post-launch barge landing goal, another time and cost-saving measure that will increase its operational efficiency. The company’s recent acquisition of Virgin Orbit’s defunct facility brings the company another step closer to fully operationalizing these dreams and, ultimately, further entrenching Rocket Lab as a must-buy space stock.
Rocket Lab’s financial position is also strong, which is rare for smaller space stocks. Recent earnings hit 12% year-over-year revenue expansion, and customers added a $40 million contract backlog to the company’s queue.
Intuitive Machines (LUNR)
Intuitive Machines (NASDAQ:LUNR) has been on a roller coaster ride recently, with the space stock surging more than 200% after its February public listing before falling back to Earth. Still, at a price that’s a fraction of its post-SPAC merger high, Intuitive Machines is a risky, but viable, space stock play.
The company’s current position seems clear, even if its financials aren’t yet stable. LUNR ended last quarter with a $137 million contract backlog, ensuring it has a healthy operational cash flow moving forward.
Critically, though, the company’s lunar lander finished all structural tests, load demonstrations, and mission sequence testing. These milestones mean the lander is ready to go into operation. And, as of August, the company plans to send the lander into space by November. The unit will go into space on the back of a SpaceX Falcon 9 rocket, facilitated by NASA, and represents a huge win for the company as global interest in moon missions grows.
L3Harris Technologies Inc (LHX)
L3Harris Technologies Inc (NYSE:LHX) isn’t necessarily up-and-coming on its own. Still, the defensive sector mainstay’s recent Aerojet Rocketdyne acquisition is a significant win for its growing space-based operational sector. L3 Harris has big plans for the space company, as it “represents an entry into [the] missiles and munitions market, an area that L3Harris didn’t have a footprint.”
Management projects full integration by mid-2024, but, in the meantime, investors can take advantage of L3 Harris’ existing stability to shield their space stock portfolio allocations. Recent earnings hit a 13% year-over-year revenue jump despite a stale economy. At the same time, though, L3 Harris seems fairly oversold and represents a viable value play for investors capturing a slice of the space industry. The company’s stock is down almost 14% since January. L3 Harris’ dominant defense position and burgeoning space sector make it one of the most exciting opportunities available to investors who prefer stability in their long-term portfolio.
On the date of publication, Jeremy Flint held no positions in the securities mentioned. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
