IRDM - To The Skies: 3 Space Stocks That Are Better Buys Than SpaceX
2024-05-20 08:00:00 ET
InvestorPlace - Stock Market News, Stock Advice & Trading Tips
SpaceX may be grabbing the headlines with its groundbreaking launches and ambitious plans for Mars colonization, but savvy investors know that there are other space stocks to buy that offer significant returns. While Elon Musk’s venture has captured the public’s imagination, it’s not the only player in the rapidly expanding space industry.
The global space economy is projected to exceed $1 trillion by 2040, according to Morgan Stanley. This growth is driven by a surge in satellite launches, space tourism and advancements in space technology. Satellite broadband internet access is expected to constitute up to 70% of the projected space economy expansion by 2040.
As we look towards the future, several companies stand out as undervalued gems with the potential to outperform SpaceX. Here are three space stocks to buy that deserve a spot on any investor’s radar. These stocks offer promising growth and innovation in an industry that’s literally reaching for the stars.
Rocket Lab (RKLB)
Rocket Lab (NASDAQ: RKLB ) is a leading aerospace manufacturer and small satellite launch service provider. The company has vastly underperformed and is currently trading close to its all-time lows. However, the company has the potential to grow significantly from current levels.
Rocket Lab’s future growth heavily relies on its Neutron launch rocket. The medium-capacity Neutron is designed for a maximum payload capacity of approximately 13,000 kg and is tailored for commercial and U.S. government constellation launches, with the potential for human spaceflight. The company is targeting its first launch by 2025, despite some skepticism about meeting this deadline.
In Rocket Lab’s Q1 2024 earnings call, the company reported mixed results, reflecting significant progress and some challenges. Rocket Lab generated $92.8 million in revenue, a 69% increase year-over-year (YOY). The company reported a GAAP EPS of -$0.06, beating market expectations by $0.02. The company’s non-GAAP gross margin for the quarter stood at 31.7%. This exceeded the market forecast, indicating improved operational efficiencies.
Intuitive Machines (LUNR)
Intuitive Machines (NASDAQ: LUNR ) is currently riding significant momentum within the space exploration sector. In 2023, Intuitive Machines successfully completed its first lunar mission, establishing its capability and setting the stage for more missions planned for 2024 and 2025.
Following the success of its first lunar mission, the company plans to establish a regular lunar mission schedule. Utilizing SpaceX’s Falcon 9 rockets, Intuitive Machines aims to offer payload space for both Earth and lunar deliveries.
Intuitive Machines has faced financial challenges, including negative equity, since its launch in 2020. However, recent improvements in the balance sheet, including a significant cash infusion from warrant exercises and strategic investments, have bolstered the company’s financial position. The company expects revenues to reach between $200 million and $240 million in 2024, up from $80 million in 2023, driven by increased mission frequency and enhanced operational efficiency.
The company’s stock has outperformed the market significantly in 2024 and is up 131%. However, analysts are still bullish and have an average price target of $11.5 on the stock. This presents a potential 111% upside in the near-term.
Iridium Communications (IRDM)
Iridium Communications (NASDAQ: IRDM ) has recently emerged as a compelling opportunity within the satellite communication sector, thanks to its strong earnings performance and strategic growth initiatives. The company’s latest quarterly earnings showcased robust revenue growth and an increase in subscribers, reinforcing its position as a leader in satellite-based communication services.
Iridium reported earnings per share of $0.16 for the quarter, aligning with analysts’ expectations. However, the revenues of $203.85 million surpassed the forecast of $193.75 million. The higher-than-expected growth was driven by a significant uptick in service revenue and an expanding subscriber base.
Iridium recently completed its first-ever acquisition on April 2. The acquisition of Satelles, now renamed Satellite Time and Location (STL), positions Iridium as a market leader in secure satellite-based time and location services. STL’s applications are crucial for GPS and GNSS systems, and its integration into Iridium’s portfolio, already supported by 500 global partners, expands the company’s reach into 5G base stations and data centers.
On the date of publication, Mohammed Saqib 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 .
Mohammed Saqib is a research analyst with experience in equity research and financial modeling. He has extensively covered stocks listed in the tech sector using fundamental analysis as the cornerstone of his approach. Currently pursuing a master’s degree in finance, Saqib is dedicated to obtaining the CFA charter to augment his expertise in the field further.
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