Space stocks represent underappreciated investments due to the market’s current obsession with AI and electric vehicles (EVs). With these strong buy space stocks out of the limelight, it’s likely their upsides haven’t yet been fully priced into their valuations.
So, let’s explore three best space stocks that investors should put on their watch lists this month.
Spire Global (SPIR)
Spire Global (NYSE:SPIR) is a provider of space-based data, analytics, and space services. A simple way to think about SPIR’s business model is that it helps scientists and engineers with unique datasets about Earth.
SPIR’s financial performance for the first three quarters of 2023 impresses. In the most recent quarter, the company saw its revenue and Annual Recurring Revenue (ARR) grow significantly. In fact, revenue projections fall between $104 million to $109 million and ARR is expected to be in the range of $125 million to $135 million.
Furthermore, the company is forecasting strong growth for its customer base for additional ARR, anticipated to be between 800 and 830 by year’s end. The company said this should translate to a revenue growth of 30% to 36% for the full year of 2023.
Naturally, Wall Street appreciates these kinds of projections. So, it has issued SPIR stock with a collective strong buy rating. Also, the Street is forecasting that its stock price will increase 84.32% within the next twelve months.
Rocket Lab USA (RKLB)
Rocket Lab USA (NASDAQ:RKLB) specializes in satellite parts and space launch systems.
RKLB is somewhat of a contrarian play for many interested in the space sector. The company’s stock price has fallen 10.86% in the past year and 56.52% over the past five years. The brand has suffered from persistently negative operating margins and low gross margins. Additionally, sensationalized rocket failures have placed a damper on the company’s potential.
But, the company appears to be turning a corner. The brand has had an increase in its gross margins over the trailing twelve months, with space systems gross margins growing beyond 30% and launch margins inching closer to 50%.
By FY2026, Wall Street believes it could reach breakeven profitability, with a projected increase of 71.81% for its revenues next year.
Howmet Aerospace (HWM)
Howmet Aerospace (NYSE:HWM) is known for its aerospace and defense components. Although it’s a lesser-known space stocks, it may have the highest potential to surge upwards.
Certainly, some strong momentum factors are at play for HWM. For the most recent quarter, the company’s sales increased to $1.658 billion. This marks a 16% year over year (YOY) growth, and EBITDA climbed to $382 million for an 18% increase. This expansion is supported by improvements in margin rates across all segments.
Additionally, for the next quarter, HWM expects revenue of nearly $1.635 billion, EBITDA of $375 million, and EPS of $0.45. This guidance was revised upwards recently, which strongly deserves investors’ attention.
As a bonus, a dividend hike was also awarded. This may be a small step in bringing its dividend yield closer to that of its peers in the defense sector, which is well-known for paying high dividends. A 25% increase to its dividend was declared in September, bringing its quarterly dividend to $0.05 and its forward yield to 0.4%.
Hence, Howmet Aerospace is one of those strong buy space stocks to watch.
On the date of publication, Matthew Farley did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Matthew started writing coverage of the financial markets during the crypto boom of 2017 and was also a team member of several fintech startups. He then started writing about Australian and U.S. equities for various publications. His work has appeared in MarketBeat, FXStreet, Cryptoslate, Seeking Alpha, and the New Scientist magazine, among others.