·5 min read
Recent data suggests a positive shift in the future of the U.S. economy, with Americans expressing increased confidence in economic conditions. Expectations include a descent in inflation and anticipated moderation in interest rates. The recovering consumer sentiment could benefit President Biden’s chances for re-election, offering optimism amid a strong job market, moderate gas prices and a record-breaking stock market. While economic risks remain, the improving sentiment may play a crucial role in shaping voter perceptions as the country continues in the presidential election year. Because of this economic positivity, you need to invest in innovation, these three space stocks are the best place to start. It does not look like this industry will stop any time soon!
Virgin Galactic (SPCE)
Virgin Galactic (NYSE:SPCE) is an aerospace company; manufacturing advanced vehicles and also providing human spaceflight for private individuals. It is one of the few companies working towards space tourism.
Virgin Galactic has beat earnings estimates for two consecutive quarters, and nine analysts are predicting an upside potential of 30.14%. It is important to note; however, that Virgin has a high burn rate, totaling hundreds of millions each quarter, hindering it from becoming profitable. That is due to the capital-intensive sub-sector it is in. However, the company seems to have recognized this and is taking steps to change its business model — a positive change in light of its dismal financials.
It is expected to launch a commercial flight by the end of the month, which will serve to increase brand awareness and reach. Additionally, the company is diverting resources towards its Delta aircraft, which will launch in 2026. It will be cost-cutting to meet this goal, a positive sign to investors. Additionally, the company expects to attain free cash flow-breakeven in 2026. Along with this, the space tourism sector should reach $17.742 billion by 2032, with a CAGR of 36.6%.
Immense sector growth over the next few years, and a promising future, poise this space stock for growth and make it a company you should invest in.
Lockheed Martin (LMT)
Source: Ken Wolter / Shutterstock.com
Lockheed Martin (NYSE:LMT) is a leader in DevSecOps-driven software engineering, serving the aerospace and defense sectors. Its name is well known in the fields of tactical aircraft, airlift sustainment and aeronautical research and development. LMT’s current stock of $439.67 grew 54% in the past five years.
The Global Space Technology Market Size accounted for $419.9 billion in 2022 and could achieve a market size of $843.2 billion by 2032, growing at a CAGR of 7.4% from 2023 to 2032.
Lockheed Martin beat the analyst’s expectations in Q3 2023. Revenue of $16.88 billion grew 1.78% YoY, beating expectations by 5.16%, and EPS of $6.73 grew 0.3% YoY, beating expectations by 8.92%.
The company has been forming many contracts with different companies. For example, Lockheed possesses a dominant position in the global military aircraft space with its F-35 fleet. It recently secured a modification contract involving this F-35 fighter aircraft and is expected to significantly bolster its revenues in the upcoming quarters. It also introduced its experimental X-59 plane with NASA a week ago.
Rocket Lab USA (RKLB)
Source: T. Schneider / Shutterstock.com
Rocket Lab USA (NASDAQ:RKLB) is an end-to-end space company providing launch services and space systems solutions to the space industry. The stock currently sits at $5.08, up 5.61% YoY. Ten analysts are bullish on the stock, offering a 12-month median price target of $8.00.
In 2023, the space economy market was valued at $518.48 billion and could reach $1.11 trillion by 2030, exhibiting a CAGR of 8.9%. That high growth is largely due to investments in space research and exploration from both the public and private sectors.
In Q3 2023, Rocket Lab reported revenue of $67.66 million, up 9% QoQ. It also reached $582 million in contract backlog, an increase of 9% QoQ. Management expects continued growth in the future as evidenced by its Q4 2023 revenue expectation of $65 million to $69 million. Furthermore, with Rocket Lab’s Electron rocket launches expected to resume shortly, management forecasts revenue to reach upwards of $95 million to $105 million in Q1 2024. The company’s extraordinary contract backlog combined with these metrics showcase Rocket Lab’s financial strength and growth potential.
Additionally, in late December 2023, Rocket Lab secured a $515 million U.S. government contract to design, build, deliver, and operate 18 of SDA’s Transport Layer Tranche 2 Beta satellites to launch by mid-2027, with an extension option to operate the satellites through 2033. Not only did this huge deal nearly double the company’s contract backlog, but it also signifies confidence in Rocket Lab’s operational abilities, validating the company’s technology and providing revenue predictability for the next few years.
On the date of publication, Michael Que 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.
The researchers contributing to this article did not hold (either directly or indirectly) any positions in the securities mentioned in this article.
Michael Que is a financial writer with extensive experience in the technology industry, with his work featured on Seeking Alpha, Benzinga and MSN Money. He is the owner of Que Capital, a research firm that combines fundamental analysis with ESG factors to pick the best sustainable long-term investments.
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Positive Shift in the U.S. Economy
Recent data suggests a positive shift in the future of the U.S. economy, with Americans expressing increased confidence in economic conditions. This includes a descent in inflation and anticipated moderation in interest rates. The recovering consumer sentiment could benefit President Biden's chances for re-election, offering optimism amid a strong job market, moderate gas prices, and a record-breaking stock market.
Investing in Innovation and Space Stocks
The article suggests that due to the positive economic outlook, investing in innovation, particularly in the space industry, could be a good opportunity. It highlights three space stocks as potential investment options:
Virgin Galactic (SPCE): Virgin Galactic is an aerospace company that manufactures advanced vehicles and provides human spaceflight for private individuals. The company has beat earnings estimates for two consecutive quarters and is expected to launch a commercial flight by the end of the month, which will increase brand awareness and reach. Additionally, the company is diverting resources towards its Delta aircraft, which will launch in 2026. The space tourism sector is projected to reach $17.742 billion by 2032, with a compound annual growth rate (CAGR) of 36.6%.
Lockheed Martin (LMT): Lockheed Martin is a leader in DevSecOps-driven software engineering, serving the aerospace and defense sectors. The company has been forming contracts with different companies and possesses a dominant position in the global military aircraft space with its F-35 fleet. It recently secured a modification contract involving the F-35 fighter aircraft, which is expected to significantly bolster its revenues. The Global Space Technology Market Size is projected to reach $843.2 billion by 2032, growing at a CAGR of 7.4% from 2023 to 2032.
Rocket Lab USA (RKLB): Rocket Lab USA is an end-to-end space company that provides launch services and space systems solutions. The company reported revenue growth in Q3 2023 and has a strong contract backlog. In late December 2023, Rocket Lab secured a $515 million U.S. government contract to design, build, deliver, and operate 18 of SDA's Transport Layer Tranche 2 Beta satellites. This deal nearly doubled the company's contract backlog and signifies confidence in Rocket Lab's operational abilities.
Please note that investing in stocks involves risks, and it's important to conduct thorough research and consider your own financial situation and risk tolerance before making any investment decisions.
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