The space sector is heating up and experiencing exponential growth. The commercial space industry was worth $32.7 billion in 2021 and is currently forecasted to grow at a compound annual growth rate (CAGR) of 6% in the coming years.
Unsurprisingly, a growing number of private sector companies are entering the space sector to provide in-demand services and capitalize on the opportunity. As governments and industry increasingly rely on the private sector to help with everything from carrying people and supplies to the international space station to managing satellites and expanding the human footprint further into outer space, the commercial sector is flourishing. While many space companies remain in start-up mode and are not yet profitable, the future looks bright. Here are the three best space stocks to buy in July.
Virgin Galactic (SPCE)
Virgin Galactic (NYSE:SPCE) just carried its first tourists into space, hitting a key milestone for the company. But the successful event came years later than originally planned and took a heavy toll on both the company and its stock. Sir Richard Branson, who founded Virgin Galactic, initially wanted to begin commercial flights into space back in 2010. The company’s maiden spaceflight didn’t actually take place until 2018, with the first few tourists hitching a ride on one of the company’s VSS Unity spaceships this June.
Repeated setbacks and delays have strained Virgin Galactic’s finances and hurt its share price. SPCE stock is down 42% in the last 12 months and trading in penny stock territory. Since going public via a special purpose acquisition company (SPAC) in 2020, the share price is down 63%. However, there is hope now that the company’s commercial spaceflights have begun. Virgin Galactic currently has a backlog of about 800 passengers who paid between $200,000 and $450,000 for a trip into space. The company now plans to start one spaceflight per week.
Planet Labs (PL)
Planet Labs (NYSE:PL) is another space stock that went public via a SPAC and has been down on its luck ever since. And like Virgin Galactic and many other space stocks, Planet Labs has huge potential. The company makes satellites used to image the Earth each day to identify changes and trends. This technology is used for a range of tasks including predicting weather patterns to tracking the movement of Russia’s military within Ukraine.
Despite its cutting edge technology and wide spread applications, PL stock is down 67% since going public in November 2021. The shares currently trade in penny stock range. A lack of profits account for the poor stock performance. However, things are looking up with Planet Labs most recently announced earnings beating Wall Street expectations. The company reported that its sales rose 31% year-over-year, and its gross profit margins expanded to 53%, an improvement of 12-percentage points. In time, PL stock could soar.
Lockheed Martin (LMT)
Lockheed Martin (NYSE:LMT) is best known as a leading defense contractor. The company is not a pure play space venture like Virgin Galactic or Planet Labs. However, Lockheed Martin retains a strong foothold within the global space industry through its contract with NASA to build as many as 12 Orion spacecraft that are going to be used to ferry humans farther into space than we’ve ever gone before. Lockheed also has a satellite business that is among the most advanced in the world.
Space is a growing part of Lockheed Martin’s business and an increasing focus of the company. Space also contributes significantly to the company’s bottom line. As far as its stock is concerned, LMT continues to perform strongly, having gained 11% in the last year. Through five years, the shares have increased 55%. Lockheed Martin is also a mature and stable company with predictable earnings, a stock that trades at a modest 21 times earnings, and offers a quarterly divided payment of $3, which equates to a yield of 2.58%.
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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