On Wall Street, many space exploration stocks have transcended the boundaries of science fiction, becoming part of a potentially lucrative investment area. In recent years, a new breed of companies has been emerging, dedicated to pushing the final frontier. These space stocks are not only capturing the imagination of innovators but also attracting the attention of savvy investors.
Research suggests that the value of the space industry in 2022 was around $450 billion. In addition, it is likely to achieve a compound annual growth rate (CAGR) of between 6% to 10% until 2030. Thus, the space industry is growing, thanks to advancements in technology, increased private sector involvement and ambitious governmental initiatives. From launching satellites that enhance global communication to developing spacecraft capable of interplanetary travel, the potential applications of space technology are vast. With that information, here are three space exploration stocks to buy.
Northrop Grumman (NOC)
We start our discussion of space exploration stocks with the global aerospace and defense (A&D) giant Northrop Grumman (NYSE:NOC). With a rich history of innovation and a robust portfolio of cutting-edge technologies, Northrop Grumman plays a pivotal role in national security, civil government and commercial markets. It manufactures satellites, provides space technology and services and has contributed to multiple space missions, including NASA’s Artemis program.
According to metrics released in late April, Northrop Grumman had a strong first quarter in 2024, showcasing impressive growth across its various sectors. Sales increased by 9% year-over-year (YoY), reaching $10.1 billion. Operating income grew 13%, while diluted EPS grew 15% to $6.32. In addition, management reaffirmed its 2024 company-level guidance.
Over the past several months, Northrop Grumman has been actively securing new deals and partnerships, further strengthening its market position. For instance, Poland signed a letter of acceptance with the U.S. government for the implementation of Northrop’s Integrated Battle Command System (IBCS) product line, also known as Narav. In addition, the first of four Triton aircraft will likely be delivered to Australia in the second half of 2024. Meanwhile, NATO is looking to expand its maritime surveillance capabilities, with the possibility of up to five Triton aircraft.
Despite these positive developments, year-to-date (YTD), NOC stock has declined close to 8%. Northrop shares are currently changing hands at 17.6 times forward earnings and 1.6 times sales. Wall Street maintains a favorable outlook on NOC stock with a 12-month median price that suggests a potential 14% advance. As governments worldwide continue to prioritize defense spending, the aerospace industry is poised for further growth, and Northrop Grumman stands at the forefront of this sector.
Spire Global (SIPR)
Our next space exploration stock is Spire Global (NYSE:SPIR), which is widely watched in the satellite data industry. The company is leveraging its network of nanosatellites to provide valuable insights and analytics.
In its most recent earnings call, Spire Global reported a revenue of $25.7 million, which fell short of expectations due to several factors. The company faced reduced data production from its Lemur satellite constellation, attributed to increased solar cycle activity. Additionally, delays in orders from U.S. government agencies, caused by the underperformance of a third-party propulsion unit, led to delays in revenue generation.
Despite the revenue shortfall, Spire has maintained tight cost controls and thus met its guidance for non-GAAP operating loss and adjusted EBITDA in the first quarter. The company expects a strong rebound in the second-quarter revenue, projecting it to be between $29 million and $33 million. Spire remains focused on achieving profitability, with plans to generate positive free cash flow by the summer of 2024.
Spire Global has been proactive in securing deals to bolster its growth. It has recently announced a multimillion-dollar deal with a financial firm for its high-resolution weather forecast and to develop an artificial intelligence (AI)-powered model for long-range forecasting.
Additionally, Spire has a partnership with Nvidia (NASDAQ:NVDA), through which it provides data to Nvidia for training its models. In return, Spire gains access to Nvidia’s GPU infrastructure to train its own models, allowing the company to build higher cost-efficiency models that can then be sold to customers.
So far in 2024, SPIR stock has advanced close to 30%. Despite the recent short-term challenges, we remain optimistic about Spire Global’s long-term growth prospects. Therefore, potential long-term investors can consider buying the dips in SPIR stock.
Virgin Galactic (SPCE)
We conclude our article on space exploration stocks with Virgin Galactic (NYSE:SPCE), a leader in commercial space tourism. Founded by Sir Richard Branson, the company aims to make space travel accessible to private individuals.
The commercial spaceflight industry is characterized by high barriers to entry, significant capital requirements and advanced technological developments. Key players in the industry include the privately held SpaceX and Blue Origin as well as Boeing (NYSE:BA), each with its unique approach to space travel. According to industry analysts, the global space tourism market is projected to exceed $3.7 billion by 2032, with a compound annual growth rate (CAGR) of 19% from 2023 to 2032.
For the first quarter of 2024, Virgin Galactic reported revenues of $2 million, primarily driven by commercial spaceflight and future astronaut membership fees. A year ago, revenues stood at $0.4 million. This growth marks a significant milestone as the company transitions from development to revenue-generating operations. Looking ahead, Virgin Galactic expects revenue of approximately $3.5 million in the second quarter.
Recently, Virgin Galactic has entered into several Space Act agreements with NASA. These agreements aim to advance HiMock Technologies and facilitate private orbital human spaceflight. Management is also focusing on developing future business opportunities, including point-to-point hypersonic travel and orbital space travel.
Since January, SPCE stock has lost over 80% of its value. This volatility and decline underscore the challenges and uncertainties associated with pioneering companies in a new industry-like space. Nonetheless, analysts have a favorable view of Virgin Galactic stock, giving it a 280% appreciation potential.
On the date of publication, Tezcan Gecgil 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.