The final frontier. Few things hold more promise than outer space. Successful colonization of the moon, Mars or other celestial bodies would completely change the course of human history. And there are plenty of other promising categories as well, such as space research, mining, tourism and manufacturing among other possibilities.
Space stocks are a new and relatively unproven category of investment. After all, we used to rely primarily on governmental organizations to power our space programs forward. But now billionaires like Elon Musk and Jeff Bezos are throwing countless sums of money into the category.
That makes it a promising time for the space industry. Not all space stocks will fare well; this is a new field with much left to prove. However, these are worth a spot on your watchlist today.
Planet Labs (PL)
Planet Labs (NYSE:PL) is a leader in Earth observability. That is a field where companies take detailed satellite imagery of the planet and sell the information to customers.
There is a wide range of potential client industries, including transportation, agriculture & forestry, mining and governmental organizations. In addition, there is a major defense component as well. The war in Ukraine highlighted the value of Planet’s real-world imagery, and the recent unrest in the Middle East could further that trend.
Planet Labs stock came about from a former SPAC. And as traders have shunned SPACs, PL stock has slumped.
However, the important thing is that Planet had more than $350 million in cash and short-term investments on hand as of July 31, 2023. In an industry where many firms are running on fumes, Planet Labs has the balance sheet to play the long game and steadily grow its business over time.
Terran Orbital (LLAP)
Terran Orbital (NYSE:LLAP) is a small satellite producer. Like Planet, Terran is a former SPAC that most investors have given up on. With the share price at less than 80 cents, this is a highly speculative space stock, and success is far from assured.
However, there’s tremendous upside potential here if things go right. That’s because Terran has a huge backer and a massive order. Its key backer is defense giant Lockheed Martin (NYSE:LMT), which pumped $100 million into the company in 2022. Terran and Lockheed Martin also have a strategic partnership, which should lead to more recurring revenues going forward, such as a $7.7 million contract modification announced last month.
Terran also has a big contract win in the shape of a $2.4 billion order from Rivada Space Networks for 300 spacecraft. The company needs more cash to fund its satellite program, and the threat of dilution is an overhang on the share price. But at a mere $150 million market cap here, the reward will be tremendous if Terran can successfully build out its operations.
Lockheed Martin (LMT)
Lockheed Martin is a leading defense and aviation firm. Most well-known for fighter jets, Lockheed sells a broad range of products to governments and the aerospace industry.
Under the radar, Lockheed has built an impressive space business as well. That comes primarily in the form of satellites. We may see exponential growth in satellite demand in the coming years as companies put ever more satellites up there for communications, industrial and defense purposes.
In addition to its own satellite efforts, Lockheed invests broadly across a range of start-ups in the industry. That has given it equity in and partnership with firms like Terran Orbital that could define the next generation of satellite technology.
Unlike most space stocks, Lockheed Martin is highly profitable and pays a large dividend today. That makes it a blue chip stock that can give investors a safe way to shoot for the stars.
On the date of publication, Ian Bezek held a long position in LMT stock. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
