ASTS - The 3 Best Space Stocks to Buy in July 2024
2024-07-12 14:40:00 ET
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Morgan Stanley predicts that the value of the space sector will reach $1 trillion annually by 2040, up from about $330 billion today, and certain space stocks could benefit greatly from that. Goldman Sachs has a similar outlook. Of course, satellites, satellite launchers, and defense systems are three of the most lucrative parts of the space economy. And the number of “objects” launched by America is rising meaningfully every year and jumped from 362 in 2019 to 2,166 in 2023.
Meanwhile, NASA is quite active these days, providing space firms with another important source of revenue. For example, two of the agency’s astronauts are currently aboard its International Space Station. After landing a vessel without any humans on the moon in February, NASA intends to land two astronauts on the moon in 2026. Moreover, U.S. space companies could benefit from the ongoing space programs of America’s allies, such as India. Here are the three best space stocks to buy to benefit from these trends.
Intuitive Machines (LUNR)
Intuitive Machines (NASDAQ: LUNR ) provided the vessel used in NASA’s uncrewed moon landing in February. The spacecraft was able to carry “…five NASA payloads and commercial cargo,” including instruments that carried out “scientific research” and tested “technologies,” NASA reported.
In April, the space agency chose Intuitive Machines, along with two other firms, to create buggies that will transport its astronauts to the moon’s surface. Given the company’s past success with winning contracts from NASA, I believe it will obtain many more deals from the agency going forward. Intuitive Machines could also receive meaningful revenue from a number of America’s allies in the future.
On June 28, investment bank B. Riley started covering LUNR stock with a “Buy” rating. The bank indicated that the company’s “…superior capabilities and trade secrets” would give it an edge over other firms seeking deals from NASA. B. Riley placed an $8 price target on the shares.
Given Intuitive Machines’ close connections to NASA, I view it as one of the best space stocks to buy.
AST SpaceMobile (AST)
AST SpaceMobile (NASDAQ: ASTS ) is developing “…the first and only space-based cellular broadband network accessible directly by standard mobile phones.” The company added that the “…network is being designed to provide connectivity at 4G/5G speeds everywhere on the planet – on land, at sea and in flight.” If that description is accurate, the network could cover the entire planet completely. In other words, the network would not have any “dead zones” whatsoever. Of course, such a network would be vastly superior to today’s cellular networks, which have many dead zones.
In May, AST announced it had made a deal with AT&T (NYSE: T ) “…to provide a space-based broadband network direct to everyday cell phones.” Also noteworthy is that AT&T’s head of network will join AST’s board, underscoring how seriously AT&T is taking the partnership. The companies have been partnering under a Memorandum of Understanding since 2018. Similarly, AST unveiled a partnership with Verizon (NYSE: VZ ) in May. Under the agreement, Verizon provided AST with up to $100 million of funds.
Given AST’s tremendous potential and its partnerships with America’s two largest cellular phone networks, I think its relatively low market capitalization of $3.14 billion (as of writing) makes it one of the best space stocks to buy.
Rocket Lab (RKLB)
Rocket Lab (NASDA: RKLB ) provides rockets, platforms, and launch vehicles for its customers to launch and maintain satellites and spacecraft.
Last month, the firm announced that it had made a deal to provide its Electron rockets, which are used to launch satellites, to Japan-based Synspective . Rocket described Synspective as a “Japanese Earth observation company.”
Under the agreement, Synspective will use the Electron rockets to power ten of its future launches. Rocket reported that the deal represents its largest-ever purchase of Electron rockets.
In the wake of the announcement, investment bank Roth MKM wrote that the agreement makes Rocket’s outlook more certain. The bank added that it was “encouraged” by Synspective, which previously utilized Electrons, agreeing to sign a ten-launch contract. The bank reiterated a “Buy” rating on RKLB stock.
Analysts, on average, expect the company’s top line to jump to $427.4 million this year from $244.6 million in 2023.
On the date of publication, Larry Ramer did not hold (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
On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.
Larry Ramer has conducted research and written articles on U.S. stocks for 15 years. He has been employed by The Fly and Israel’s largest business newspaper, Globes. Larry began writing columns for InvestorPlace in 2015. Among his highly successful, contrarian picks have been SMCI, INTC, and MGM. You can reach him on Stocktwits at @larryramer.
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