Investors are often told to follow the money. Right now, you may think that means artificial intelligence stocks, and you wouldn’t be wrong. Many of those stocks carry Buy or Strong Buy ratings. But if you’re a growth-oriented investor with a slightly longer time horizon, it could be time to consider some strong buy space stocks.
Space is big business for many reasons. A new race to the moon has developed between the United States and China. And this time, the moon is just a pitstop on the way to Mars.
But for investors, the space sector is about more than launching rockets and satellites. There’s an entire space services industry that will represent much of the growth in this sector.
The takeaway is that there is a lot of growth coming in this sector, but you can’t just throw a dart and hope for the best. The rapid growth in this industry is coming with consolidation and some business failures.
That’s where analysts can come in. Because of their close ties to the industry, their ratings can be useful in pointing you to the stocks that will likely boost your portfolio. With that in mind, here are three strong buy space stocks with strong analyst support.
Northrop Grumman (NOC)
Northrop Grumman (NYSE:NOC) isn’t a pure play space stock but is a large-cap stock that can exposure you to this emerging sector. The company generated 35% of its total revenue ($13.9 billion) from the space sector. The company also points to a backlog of over $40 billion in its Space Systems business.
Part of that backlog includes the company’s selection by the U.S. Defense Advanced Research Projects Agency (DARPA) to develop a “lunar railroad” concept. This is one part of DARPA’s moonshot (pun intended) of developing a thriving commercial economy on the moon within 10 years.
NOC stock is up 76% in the last five years, and when you factor in the company’s dividend, which yields 1.57%, investors have received a solid total return on their investment. That dividend has also been growing for 20 years at a sustainable rate in the high single digits and has a 55% payout ratio.
Redwire (RDW)
If small-cap penny stocks are more your style, Redwire (NYSE:RDW) is an intriguing choice in the space sector. What stands out in the company’s investor presentation is that its critical infrastructure and space solutions touch virtually every part of the sector, including the parts of the market that will be the biggest growth drivers in 2024 and beyond.
The micro-cap company is not yet profitable. However, it took a significant step closer to that landmark in 2023. Redwire delivered record revenue of $243.8 million, which was 51% higher year-over-year. The company also has a $4.8 billion backlog. That’s one reason it’s forecasting a 23% growth to $300 million in revenue in 2024. Additionally, cash from operations and free cash flow are now positive.
Many penny stocks are only covered by 1 or 2 analysts, particularly when they’re not yet profitable. That’s another thing that makes Redwire stand out. RDW is covered by five analysts and received a Strong Buy rating from four of them. It also has a consensus price target of $6, 36% higher than its price on March 27.
Intuitive Machines (LUNR)
Intuitive Machines (NASDAQ:LUNR) is another small-cap company that makes this list of strong buy space stocks. The company is best known for the role it plays in the development of lunar landing vehicles.
That being said, LUNR stock had a major sell-the-news moment after its Odysseus moon lander touched down on the moon in February. After surging to nearly $11 a share, the stock plunged over 50%. However, it has since made back almost all those gains. This is probably a good time to mention that LUNR stock carries 21% short interest. That’s something for investors to consider before getting involved.
Despite the possibilities that exist for future growth, LUNR stock is only covered by four analysts. Nevertheless, it gets a Strong Buy rating and has a price target of $11.5, indicating a 67% upside.
On the date of publication, Chris Markoch 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.
