Investing gurus constantly trumpet the maxim, “follow the money.” While artificial intelligence (AI) stocks undoubtedly capture the limelight with their Buy or Strong Buy recommendations, keen-eyed investors with a penchant for growth and a slightly extended investment time horizon may find the allure of space stocks hard to resist.
The Vast Frontier of the Space Sector
The space industry, once a distant, unattainable frontier, has now metamorphosed into a major economic powerhouse. A modern-day moon race is in full swing between the United States and China, with Mars as the ultimate destination.
However, beneath the romanticized facade of launching rockets and satellites lies a burgeoning space services sector. This burgeoning industry is set to be the catalyst driving substantial growth in the realm of space exploration.
The burgeoning potential in this sector is undeniable, but blind luck is no winning strategy. The rapid expansion and evolution in the space industry bring both consolidation and, regrettably, some business casualties.
Navigating the Space Market with Analyst Insight
Enter analysts, the unsung heroes of the stock market. Given their intimate knowledge of the industry, analyst endorsements can be invaluable in steering your portfolio towards stocks poised for growth. With that in mind, let’s shine a light on three space stocks that enjoy robust analyst support.
Northrop Grumman (NOC)
Northrop Grumman (NYSE:NOC) may not be a pure-play space stock, but it offers exposure to this burgeoning sector. The company boasts a substantial 35% share of its total revenue, a healthy $13.9 billion, from the space market. Notably, Northrop Grumman holds a hefty backlog exceeding $40 billion in its Space Systems arm.
During its impressive five-year run, NOC stock has soared by 76%. Adding icing to the cake is the company’s dividend yield of 1.57%, making it a delectable choice for investors seeking solid returns. With a 20-year track record of consistent dividend growth at a sustainable pace in the high single digits and a modest 55% payout ratio, Northrop Grumman stands tall in the space sector.
Redwire (RDW)
If you lean towards small-cap penny stocks, consider the captivating allure of Redwire (NYSE:RDW). This micro-cap gem shines with its critical infrastructure and space solutions, touching every nook and cranny of the space market set to fuel significant growth in 2024 and beyond.
Despite its lack of profitability, Redwire took a substantial leap towards this milestone in 2023, achieving record revenue of $243.8 million, marking a 51% surge year-over-year. Boasting a robust $4.8 billion backlog, Redwire is poised for a projected 23% revenue growth to hit $300 million in 2024, with positive cash flows paving the way for a lucrative future.
Intuitive Machines (LUNR)
Intuitive Machines (NASDAQ:LUNR) is a hidden gem in the small-cap domain that shines brightly among the strong buy space stocks. Widely recognized for its contributions to lunar landing vehicle development, Intuitive Machines carved a niche for itself in this dynamic market.
Although LUNR stock weathered a major sell-off following the moon landing of its Odysseus lander in February, it has staged a remarkable recovery, nearly recouping all previous losses. Notably, LUNR stock bears a substantial 21% short interest, a factor that beckons caution to prospective investors.
In the realm of analyst coverage, LUNR stock stands out with a Strong Buy rating from four out of the five analysts covering it. With a consensus price target of $11.5, indicating a promising 67% upside potential, Intuitive Machines beckons daring investors to explore its promising trajectory.
On the date of publication, Chris Markoch 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.
