Three Space-Related Shares to Invest in During November
Three Space-Related Shares to Invest in During November
Over the past three years, numerous space-related start-ups went public by merging with special purpose acquisition companies (SPACs). Some of these stocks initially skyrocketed, but most ultimately deflated as rising interest rates exposed their substantial losses and burst their inflated valuations.
Many of these SPAC-funded space companies set overly ambitious growth objectives, fell substantially short, and faced substantial delays and executive issues. Nevertheless, a select few companies managed to endure this widespread market downturn.
Let's investigate why three of these enduring companies -- Rocket Lab USA (RKLB 3.12%), Intuitive Machines (LUNR 11.64%), and AST SpaceMobile (ASTS -1.40%) -- remain valuable purchase options today.
1. Rocket Lab USA
Rocket Lab manufactures partially reusable rockets for the National Aeronautics and Space Administration (NASA), the U.S. Space Force, the Swedish National Space Agency, Capella Space, and other prominent clients. Its flagship product, the Electron orbital rocket, can transport payloads of about 300 kilograms (roughly 660 pounds).
The Electron has successfully launched 53 times over the past seven years. Its imminent rocket, the Neutron, is slated for launch next year with an optimum capacity of 15 metric tons.
Rocket Lab competes against SpaceX and other start-ups in the burgeoning market for reusable rockets, but there might be enough room for all of these companies to thrive in this nascent industry without treading on each other. In 2021, it launched six Electron rockets; in 2022, it launched nine; and in 2023, it launched 10. It launched another five rockets in the first half of 2024 and signed 17 new launch contracts.
Over the past year, the company secured new launch contracts from NASA, the Internet of Things (IoT) connectivity provider Kinéis, and other space-focused customers. As it expands, analysts predict its revenue to grow at a compound annual growth rate (CAGR) of 54%, from $245 million in 2023 to $887 million in 2026.
They also expect its adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) to turn positive by the final year. Although Rocket Lab's stock isn't a bargain at 10 times next year's sales, it has the potential to rocket up significantly over the next few years if it successfully scales up its operations.
2. Intuitive Machines
Intuitive Machines develops lunar landing and exploration vehicles for NASA. Its original plan was to launch its Nova-C lander in 2021, but that was repeatedly postponed. It also dissatisfied its investors by failing to secure new standalone NASA contracts in 2022 and 2023.
However, last February, NASA finally placed Intuitive Machines' first Nova-C lander on the moon, the first successful U.S. moon landing since 1972. This encouraged NASA to award the company with two new contracts: a lunar terrain vehicle contract in April and an exclusive near-space network contract worth up to $4.8 billion in September. Intuitive also offered more "ride-sharing" services to deliver other payloads to the moon.
From 2023 to 2026, analysts expect its revenue to grow at a CAGR of 82%, from $80 million to $480 million. They also expect its adjusted EBITDA to turn positive in 2025 and dive more than ninefold to $42 million in 2026.
Given these optimistic expectations, the stock appears inexpensive at slightly above next year's sales. Intuitive Machines' long-term growth may be affected by delays and competition from other start-ups and aerospace firms, but it has the potential for significant upward momentum as NASA increases its lunar exploration missions.
3. AST SpaceMobile
AST SpaceMobile's low Earth orbit (LEO) satellites provide 2G, 4G, and 5G connectivity in areas not covered by terrestrial tower networks. It signed space-based 5G contracts with AT&T and Verizon earlier this year, while its competitor Starlink offers similar LEO services to T-Mobile.
The company launched its prototype BlueWalker 3 satellite in 2022, and five BlueBird Block 1 commercial satellites in September. In early 2025, it plans to launch its first four Block 2 satellites, which have approximately 10 times the data processing capacity of its Block 1 satellites.
It aims to eventually launch 17 Block 2 satellites as part of its long-term goal to build a substantial constellation of 243 LEO satellites. However, this ambitious plan has only been partially endorsed by the U.S. Federal Communications Commission.
As AST scales up its operations, analysts expect revenue to grow from $6 million in 2024 to $393 million in 2026 as it reduces its net losses. Although the stock isn't inexpensive at 12 times its projected sales for 2026, it has the potential to go much further as AT&T, Verizon, and other telecom companies expand their LEO broadband networks to reach more customers.
In the context of investing, Rocket Lab USA's potential growth is highlighted with analysts predicting its revenue to grow at a compound annual growth rate (CAGR) of 54%, making its stock a potential candidate for significant price increases.
Intuitive Machines' stock may also show significant upward momentum following its successful lunar landing and securing new contracts from NASA, as NASA increases its lunar exploration missions.