In the last few years, the commercialization of space has reached new highs with governments investing heavily in commercial space assets. Exploring all that space has to offer is becoming more common than ever before. And it has some envisioning the possibility of life on Mars!
Given the increased interest in space travel, companies leading the charge are experiencing explosive growth. This has served as a boon for investors looking to capitalize on returns beyond earth’s orbit.
The potential of the space industry is undeniable. According to McKinsey and Company, the space economy will be worth a whopping $1.8 trillion by 2035. That number is up significantly from $630 billion in 2023. This growth will be driven by demand for positioning and navigation services, satellite connectivity and insights powered by AI.
As one of the most promising sectors in 2024, space stocks are an attractive investment option for those seeking out of this world returns.
Virgin Galactic Holdings (SPCE)
Once a fever dream, commercial space travel is now a reality, thanks to companies like Virgin Galactic Holdings (NYSE:SPCE). It stands in contrast to traditional space travel which typically involves launching satellites and drones into space. Yet, SPCE is operating fully manned passenger flights beyond the earth’s orbit. Virgin Galactic Holdings successfully launched its seventh crewed suborbital spaceflight on June 8th. It sent a crew of six on the VSS Unity Space flight.
And if fully operational space travel isn’t reason enough to invest in SPCE, the financials are not too shabby either. In its previous quarter, operating expenses came in lower at $164 million compared to $113 million in 2023. This is an impressive feat, given that space travel is a pricey endeavor.
A second metric worth looking at is the backlog. Virgin Galactic Holdings’ space flights currently have a 800 person waitlist. Four passengers a flight at $600,000 a ticket translates into a lot of revenue in the pipeline.
Now the company did lose money this year. But the losses were lower year-over-year (YOY). Moreover, given that space travel is a growing business with massive potential, Virgin Galactic Holdings remains one of the best space stocks to buy.
Lockheed Martin (LMT)
The rise in defense spending amidst geopolitical tensions has been a huge tailwind for Lockheed Martin (NYSE:LMT). It’s a leader in the defense sector with several highly-advanced jets, aircraft and weapon systems to its name. LMT stock gives plenty of reasons for investors to get behind its name. However, given that this is a story about space stocks, it’s worth exploring the company’s developments beyond earth’s orbit.
Recently, the Lockheed Martin Space business has seen plenty of action. Last week the Pentagon announced that Lockheed was awarded a $997.5 million contract extension for the continued development and testing of missile warning satellites. This brings the total value of the project to $8.2 billion. In other news, NASA selected Lockheed Martin to build a next-gen spacecraft for the National Oceanic and Atmospheric Administration (NOAA). The total value of the contract is approximately $2.27 billion.
And, while the future prospects of its space business remain optimistically bright, performance in the previous quarter was just as impressive. Revenue in the Lockheed Space sector came in at $3.3 billion, up from the same period last year. Additionally, operating profits were up by 16% with a $33 billion backlog.
With a steady stream of contract wins and strong financial performance, LMT is undoubtedly one of the top space stocks to buy right now.
Rocket Lab USA (RKLB)
SpaceX may dominate the rocket industry but Rocket Lab USA (NASDAQ:RKLB) isn’t too far behind. In its first quarter, the company successfully launched four rockets into space and saw its revenue rise by 69% YOY.
And after inking two new deals, RKLB is giving investors more reasons to celebrate this stock. Earlier this month, the company signed its largest deal with the Japanese earth observation company, Synspective. It is scheduled to launch 10 Electron rockets as part of the contract.
This news comes right after Rocket Lab USA’s deal with the French-based company Kineis to set up IoT satellites across the globe. The contract will include 25 satellites that will be launched over eight months through 2025. Needless to say, Rocket Lab USA is at the top of its game.
When considering smaller companies as potential investment opportunities, the pipeline strength is perhaps the best indicator of long-term growth. Rocket Lab USA’s high-value contracts suggest plenty of upside in the long-haul.
Share prices have wavered on profitability concerns in recent months. But as the company delivers on its contracts, this remains one of the best space stocks to buy this year.
On the date of publication, Divya Premkumar 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.
Divya has a background in finance and accounting and has worked in FP&A roles at Fortune 500 companies. She is an avid reader and enjoys writing on a variety of topics including stocks, crypto, blockchain and global policy.