SPECIAL REPORT The Top 7 Stocks for 2024

3 Space Stocks That Should Be on Every Investor’s Radar This Fall

Advertisement

  • Things are looking up for these three space stocks.
  • Planet Labs (PL): The company’s strong balance sheet gives it a leading position in Earth’s observability field.
  • Terran Orbital (LLAP): The satellite maker just raised funds and can proceed in developing its manufacturing capabilities.
  • Lockheed Martin (LMT): The space and defense is a giant on its recent stock price dip.
space stocks - 3 Space Stocks That Should Be on Every Investor’s Radar This Fall

Source: muratart / Shutterstock.com

Billionaires such as Elon Musk and Jeff Bezos are plowing billions of dollars into the space industry. After years in the doldrums, it seems like space stocks are set to take to the stars.

It can be a challenge to assemble the right space stocks portfolio. After all, it is a young industry with many firms still in the early stages of executing their business plans. We don’t know exactly how the commercial markets for things like space tourism or space-based communications will ultimately play out. However, these three space stocks give investors a good entry point into the industry.

Planet Labs (PL)

A vector image of two satellites orbiting above Earth
Source: Illus_man / Shutterstock

Planet Labs (NYSE:PL) is a leader in Earth observability. This is a field where companies take detailed satellite imagery of the planet and sell the information to customers.

There is a wide range of potential client industries including transportation, agriculture & forestry, mining and governmental organizations. The war in Ukraine, in particular, highlighted the need for defense departments to have the most powerful imagery possible to track and plan tactical operations.

Planet Labs stock has gotten hammered as a former SPAC that hasn’t ramped up operations as quickly as bulls would have hoped.

However, the important thing is that Planet had more than $350 million in cash and short-term investments on hand as of July 31, 2023. That gives the company a tremendous runway to scale its operations without worrying about raising money. Analysts see revenues jumping more than 15% to $221 million this year, making the current sub $800 million market capitalization on Planet rather interesting.

Terran Orbital (LLAP)

A photo of a satellite over earth.
Source: AlexLMX / Shutterstock

Terran Orbital (NYSE:LLAP) is a small satellite producer. Make no mistake, Terran is a more speculative pick as the company’s $1.15 stock price would indicate. The firm’s balance sheet is not nearly as strong as Planet’s, which is why the market has been less forgiving of Terran’s operating losses.

However, there’s tremendous upside potential here. That’s because Terran has a huge backer and a massive order. Its key backer is defense giant Lockheed Martin (NYSE:LMT), which pumped $100 million into the company in 2022. Terran and Lockheed Martin also have a strategic partnership which should lead to more recurring revenues going forward.

Terran also has a big contract win in the shape of a $2.4 billion order from Rivada Space Networks for 300 spacecraft. Rivada will pay Terran $180 million in 2023 as an initial upfront commitment toward a longer-term contract.

LLAP stock sank this week following a share offering. While dilution is never great news, this gave Terran money to ramp up its production capacity while waiting for the Rivada deal to start paying off. For long-term investors, the recent dip could mark a great entry point.

Lockheed Martin (LMT)

A Lockheed Martin (LMT) Space Systems sign in Sunnyvale, California.
Source: Ken Wolter / Shutterstock.com

Lockheed Martin is a global aerospace and defense giant. Known for its fighter jets, Lockheed delivers a vast array of products primarily for the defense sector.

However, Lockheed has an increasingly interesting business in the space and satellite arena. In fact, Lockheed’s space division brought in $11.5 billion in revenues in 2022, and there’s potential for significant growth as the industry’s prospects improve.

It’s not just Lockheed’s own operations, either. Lockheed Martin has a venture capital-like approach to the industry. It invests in or acquires a variety of smaller firms, such as Terran, to make sure it has a piece of all the latest technologies taking flight in the space industry.

LMT stock dipped recently around fears of a potential government shutdown in Washington, D.C. That could pressure revenues for a quarter or two. But in the bigger picture, demand for both space and satellite services won’t be going anywhere, making LMT stock a solid buy here at less than 16 times forward earnings.

On the date of publication, Ian Bezek held a long position in LMT stock. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.


Article printed from InvestorPlace Media, https://investorplace.com/2023/09/3-space-stocks-that-should-be-on-every-investors-radar-this-fall/.

©2024 InvestorPlace Media, LLC