The space sector remains speculative but remains a remarkably fascinating investment avenue. Moreover, with a greater appetite for risky investments, betting on space race stocks might be wise before they take off. The tremendous long-term potential in the space economy will continue to captivate investors, which bodes well for investors in space race stocks.
The space industry is not what it used to be, though. The space economy has evolved over the past few years, with several new revenue streams opening. Some of these include the creation of reusable rockets, space tourism, and satellite networks. Consequently, the total addressable market for space stocks has grown immensely. GlobalData forecasts the sector to grow by an annual CAGR of 6% to 10% from 2022 to 2030 to a whopping $1 trillion. That said, here are three of the needle-movers in the space race, offering robust upside potential ahead.
Planet Labs (PL)
Planet Labs (NYSE:PL) is one of the top space stocks. It delivers satellite imagery through 200 compact satellites covering virtually every terrestrial area. It then sells those images through subscriptions and related tools to its diverse clientele spanning different sectors.
Perhaps the most attractive point about the business is its recurring revenues. As of its most recent quarter, the recurring annual contract value (ACV) percentage stood at an impressive 94%. ACV refers to a portion of company sales that is predictable and expected to continue well into the future, including subscriptions and service agreements. Therefore, the majority of Planet Lab’s sales are stable, making it one of the more low-risk players in its niche.
Furthermore, in its third quarter (Q3), the non-GAAP EPS of a negative five cents beat expectations by three cents. Additionally, sales of $55.4 million beat analyst forecasts by $70,000, while its customer count rose 13% year-over-year (YOY) to 976 customers. Also, it wrapped up Q3 with a sizeable $315 million in cash and short-term investments, a significant improvement from its $22.4 million balance in 2020.
Rocket Lab USA (RKLB)
Rocket Lab (NASDAQ:RKLB) is another popular space company that made the rounds last year with a record number of launches. Moreover, it stands apart from its competition with a launch and contract backlog valued at $1 billion. Though its fourth-quarter sales were only a fraction of its backlog at $60 million, its massive backlog hints at robust future growth.
RKLB’s financials are in excellent shape, with solid top-line growth over the past several quarters. In each of the four quarters last year, the company witnessed double-digit sales growth on a YOY basis. Moreover, as we advance, analysts are upbeat about the company’s top-and-bottom-line earnings this year and beyond. EPS estimates for the fiscal year 2024 are at negative 30 cents, but they are expected to improve substantially to negative seven cents next year. Additionally, revenues are expected to rise 49% to $641.43 million by 2025.
Northrop Grumman (NOC)
Northrop Grumman (NYSE:NOC) is a highly diversified defense and aerospace technology firm with a powerful presence in the space sector. It has a rich legacy in space exploration and remains at the forefront of commercial space ventures. Moreover, its space segment delivered another solid year of growth in 2023, delivering an impressive 14% jump in sales year over year. Space systems are the company’s fastest-growing segment, generating a whopping $13.9 billion in revenues last year.
The most attractive aspect of the business is the diversification of its revenue sources. It has interests in various segments, culminating in a record backlog exceeding the $84 billion mark. On top of that, it returned a sizeable $2.6 billion to its shareholders through dividends and share buybacks. Additionally, it plans to raise its share repurchases to roughly $2 billion in 2024. It currently yields an attractive 1.60%, with 20 consecutive years of payout growth.
On the date of publication, Muslim Farooque 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.
