AMZN - 3 Space Stocks to Buy While You Wait for a Starlink IPO
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Space stocks are heating up because space appears to be the final frontier for today’s billionaires.
Celebrity businessman ranging from Amazon (NASDAQ:AMZN) founder Jeff Bezos to Tesla (NASDAQ:TSLA) Chief Executive Officer Elon Musk and Virgin Group founder Sir Richard Branson each seem to have their sights set on the commercialization of space
The projects range from resupplying the International Space Station, to carrying tourists into Earth’s outer atmosphere, to using satellites to improve broadband internet and a host of other goals.
Elon Musk generated excitement recently when he stated his intentions to spin-off and take public Starlink, the satellite internet constellation being constructed by Musk’s company SpaceX.
Starlink will provide powerful satellite Internet access to us earthlings. However, investors should temper their excitement as the Starlink initial public offering (IPO) is still likely years away.
Musk said he won’t move to take Starlink public until its cash flow is more predictable, which is a way off yet. In the meantime, here are three space stocks that people can buy now while we wait for the eventual Starlink IPO.
- Virgin Galactic (NYSE:SPCE)
- Maxar Technologies (NYSE:MAXR)
- Loral Space and Communications (NASDAQ:LORL)
Space Stocks to Buy: Virgin Galactic (SPCE)
You can’t discuss space stocks without mentioning space tourism company Virgin Galactic.
Shares of the company have been on fire ever since the June 25 announcement that the Federal Aviation Administration (FAA) has granted it the license it needs to fly passengers on commercial spaceflights.
Virgin Galactic has essentially been given the green light to begin its business of carrying tourists into Earth’s outer atmosphere, which it plans to begin doing next year (2022).
SPCE stock jumped nearly 40% immediately following news of the FAA license. Virgin Galactic’s stock is now up 108% year-to-date at $48.20 a share.
In addition to giving tourists a few minutes of weightlessness, Virgin Galactic is also diversifying its operations. The company has secured a partnership with NASA to develop aircraft that can travel at supersonic speeds.
It also has contracts in place to deliver NASA astronauts and supplies to the International Space Station.
Looking into the future, Virgin Galactic continues to develop its “Unity” spaceship and plans to eventually fly deeper into outer space.
Maxar Technologies (MAXR)
Another pure space stock is Maxar Technologies.
The company’s 4,500 employees manufacture the satellites and related technology used to enhance communication on Earth and observe the wider universe. Maxar also builds advanced radar technologies used to track objects floating in our planet’s orbit.
Maxar Technologies has several contracts with NASA, including a major one to provide power and propulsion for the Lunar Gateway.
Lunar Gateway is a small space station that is being developed to orbit the moon and serve as a solar-powered communication hub, science laboratory and storage area for rovers and robots.
Founded in 1969, Maxar Technologies is today a leading U.S. space company. Maxar and its executives are not the household names Messrs. Bezos, Branson and Musk are, and that lack of recognition may partly contribute to MAXR stock’s tepid gains.
Year-to-date the stock is up a modest 6% at $38.40 a share. The stock peaked at $58.75 in January of this year and has come down 35% since then. The company’s earnings have been anemic during the Covid-19 pandemic.
Investors should see the depressed share price as a buying opportunity and trust that MAXR stock will recover. The median price target on the stock is $48.25 a share, suggesting 26% upside from current levels.
Space Stocks to Buy:Loral Space and Communications (LORL)
Loral Space and Communications rounds out this list of space stocks.
The company is in the process of merging with Telesat, Canada’s main satellite communication company that is based in the capital city of Ottawa.
The combined company will be a Canadian publicly traded company called “New Telesat.”
Shares of New Telesat will initially trade on the NASDAQ Global Select Market, and may also eventually be listed on the Toronto Stock Exchange. The deal is expected to close later this year.
In the meantime, LORL stock has had an incredible run this year leading up to it morphing into New Telesat.
So far in 2021, Loral Space and Communications stock has gained 90% and now trades at $38.95 a share. The stock is now up 105% over the past 12 months, and further gains are likely ahead of the Telesat deal’s conclusion.
Loral Space and Communications, through Telesat, is also looking to compete against Starlink in the burgeoning satellite internet provider category.
Telesat, which is majority-owned by Loral Space, announced in February of this year that it had hired French satellite builder Thales Alenia Space to develop a $5 billion constellation comprising 298 next-generation broadband internet satellites.
The project, named “Lightspeed” will spend $3 billion to build the actual satellites and another $2 billion to launching them and construct a ground base to manage them.
Telesat plans to begin launching Lightspeed satellites in 2023 and has partnered with Bezos’ Blue Origin to rocket them into orbit. The Lightspeed project has also served as a catalyst for LORL stock this year.
Disclosure: On the date of publication, Joel Baglole 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.
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