SA Asks: What are the best space stocks right now?

What are the best space stocks for investors right now?

We asked Seeking Alpha analysts Hunting Alpha, Dr. Christopher Davis of Quad 7 and Oakoff Investments for their picks.

Hunting Alpha: My top space stock pick is Leonardo S.P.A (OTCPK:FINMF) (OTCPK:FINMY), an Italian aerospace and defense technology company. Leonardo is creating a dedicated New Space Division under which it will provide end-to-end services such as design, build, launch and operation of satellites to support military and government needs. It is also implementing digitalization and efficiency programs that can grow profits and cash flows in the mid-teens CAGR over the next five years.

Leonardo (OTCPK:FINMF) (OTCPK:FINMY) is also set to reap the benefits of Italy boosting defense spending from 1.5% to up to 3.5% of GDP. This kind of catalyst for aerospace and defense stocks is very powerful as it can lead to multi-year bull runs as in the case of Bae Systems (OTCPK:BAESF) (OTCPK:BAESY).

I also see great potential in Rocket Lab (NASDAQ:RKLB) as it provides a cost-competitive alternative to SpaceX’s (SPACE) Falcon 9. But I would want to buy at cheaper valuations.

Dr. Christopher Davis of Quad 7: We like the upside in Intuitive Machines (NASDAQ:LUNR) but think Rocket Lab (NASDAQ:RKLB) and AST Spacemobile (AST) are winners. You could also consider scooping a blended space/satellite stock ETF, and we like the ticker for the Procure Space ETF (NASDAQ:UFO).

Oakoff Investments: I’d buy SpaceX (SPACE) if it were publicly traded (sophisticated investors can buy some of its shares OTC by purchasing employees’ options, though).

When it comes to investing in publicly traded space stocks, I like what I see in Rocket Lab’s (NASDAQ:RKLB) recent developments. I had a neutral article on the stock before, which I should have upgraded after its Q1 earnings (released in May), but I haven’t done so, unfortunately. The stock trades at sky-high EV/Sales multiples, and the management projected just ~$135M in sales for Q2, willing to finally launch Neutron this year.

If they do launch successfully, the path to higher volumes (launches) will be clearer, and the overall TAM should expand massively. With the U.S. government’s support, which seems to be forthcoming, Rocket Lab (RKLB) should succeed. However, it’s a very long-term investment, and I would not speculate with it.

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