Space stocks are primed to deliver substantial gains for investors. These companies are rarely in the spotlight, while the rest of the market focuses on more trendy developments such as artificial intelligence (AI) and electric vehicles (EVs).
The benefit of buying into these space stocks early is that their trajectories are more speculative and thus could have more upside that’s not already priced into their valuations. Although the risk is higher, investors are compensated through higher potential returns.
So, as the broader indices like the S&P 500 continue to move higher, explore these three space stocks that investors are taking advantage of now.
Space Stocks: Spire Global (SPIR)
Spire Global (NYSE:SPIR) operates as a leading global provider of space-based data, analytics, and space services.
Investors have good reason to feel bullish about SPIR stock. For the full year of 2023, the company forecasts revenue between $105 million to $109 million. This represents a year-over-year (YOY) growth of 31% to 36%. The anticipated annual recurring revenue (ARR) is in the range of $125 million to $135 million, reflecting a growth of 26% to 36% YOY.
Also, SPIR is unveiling new products that could progress into FY2024, such as its space-driven high-resolution weather forecast for utilities and commodity traders. Wall Street rates SPIR as a buy, with an upside of 16.18% from its current stock price.
Rocket Lab USA (RKLB)
Rocket Lab USA (NASDAQ:RKLB) is one of those space stocks that I’m the most bullish on for 2024. The company provides a suite of services from spacecraft design to on-orbit operations. And it’s a key contractor for both the U.S. Space Force and NASA.
True, RKLB has struggled amid recent satellite launch failures and struggling margins. But, the worst may be over for the company, and it may be turning a corner. Its stock price has fallen 50.20% over the past five years.
The company’s guidance for Q4 indicates expected revenue between $59M to $61M, although this falls short of the $66M consensus. An adjusted EBITDA loss of $28M to $30M is anticipated.
Further, analysts hold a positive outlook on Rocket Lab USA, with an average stock price target of $7.88, indicating a potential increase of 61.15% from its current price. This consensus comes from 8 analysts and aligns with a strong buy rating.
Space Stocks: Howmet Aerospace (HWM)
Howmet Aerospace (NYSE:HWM) specializes in producing components for aerospace and defense applications, such as jet engines, fastening systems, and gas turbines.
Also, HWM reported some healthy metrics for the previous quarter. For instance, the Engine Products segment saw a 17% YOY revenue increase. This is mainly attributed to growth in commercial aerospace, defense aerospace, oil and gas, and industrial gas turbine markets. Also, the Fastening Systems and Engineered Structures segments reported significant YOY revenue growth.
Additionally, HWM is poised attractively for the future, with an earnings per share (EPS) guidance ranging from $2.10 to $2.20. This forecast aligns closely with the consensus EPS estimate of $2.17 by analysts. The company anticipates revenue to be between $7.0 billion and $7.2 billion for the year.
Morgan Stanley has recognized Howmet Aerospace’s potential, selecting it as the top aerospace stock pick for 2024. In 2023, it managed to reduce its gross debt by approximately $376 million.
Finally, Wall Street rates HWM as a strong buy, a well-deserved rating for the company.
On the date of publication, Matthew Farley did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
