2 Space Stocks That Are Quietly Becoming Some of the Market's Best Opportunities
Key Points
The space economy could reach $1.8 trillion by 2035, according to estimates by McKinsey.
Rocket Lab has a growing launch business along with its expanding space systems segment.
Planet Labs captures satellite imagery daily and is a prime contractor with the U.S. government.
- 10 stocks we like better than Rocket Lab ›
The countdown has begun for SpaceX's initial public offering (IPO), which is on track to be the largest IPO ever. The SpaceX IPO thrusts the budding space economy into the limelight, an economy that McKinsey projects could be worth $1.8 trillion by 2035.
As launches become cheaper and more satellite constellations are deployed, two stocks that have been crushing it are Rocket Lab (NASDAQ: RKLB) and Planet Labs (NYSE: PL), whose stocks are up 372% and 1,017% in the last year alone. Here's why these two space stocks are quietly becoming some of the market's best opportunities for investors.
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Rocket Lab has scored major deals with the U.S. government
Rocket Lab is one of the top launch services companies in the United States today, second only to SpaceX in terms of total launches. The company has a strong presence in the small launch services market with its Electron rocket and has its sights on bigger things with its medium-lift Neutron rocket, which management expects will take flight later this year. By expanding into rockets capable of carrying larger payloads, Rocket Lab positions itself to compete for high-margin contracts.
In addition to launch services, Rocket Lab has a bustling space systems business that is experiencing strong growth. Here, the company provides components for solar arrays, communications, spacecraft, and sensors. In the first quarter, the company delivered record revenue of $200 million and a backlog of $2.2 billion, with 58% of it in space components and the remainder in launch services.
Looking toward the future, Rocket Lab is excellently positioned to capitalize on the rapidly growing space economy and increased government investments in it. One noteworthy agreement is a $816 million prime contract with the U.S. Space Development Agency, which involves the design and manufacture of 18 advanced missile-defense satellites. It also has a $190 million contract for 20 hypersonic test flights using its HASTE rocket, a suborbital version of its Electron rocket.
Rocket Lab is an emerging star in the space industry, and the stock has surged over the past year. Investors buying today are investing in a company that is building a formidable space systems business and will eventually expand its launch services with its Neutron rocket. As companies and countries continue to pour money into the space economy, Rocket Lab is a top space to own over the long term.
Planet Labs leverages AI to provide insights from space in minutes
Planet Labs is another emerging space business that operates a massive constellation of satellites that take images of the planet's surface multiple times a day. Its satellites help a variety of customers, from government agencies that use its daily tracking and high-resolution imagery for national security to farmers who use it to optimize crop yields and track plant health.
Planet Labs distinguishes itself by capturing satellite imagery daily, or in some cases hourly, providing customers with vital information in real time. The company leverages its extensive satellite fleet and partners with Nvidia to deploy its AI chips on its Pelican-4 satellite, enabling it to process and analyze data on board and deliver actionable insights in minutes, not hours.
Its technology helped Planet Labs secure a prime contractor role on the SHIELD (Scalable Homeland Innovative Enterprise Layered Defense) contract from the Missile Defense Agency, where it will use AI-based detection to provide warning systems for the government. It has also signed deals with Sweden, Japan, and Germany, worth over $500 million, cementing its status as a key partner for NATO and allied nations seeking.
Beyond this, Planet Labs has partnered with Alphabet to develop prototype solar-powered satellites for orbital data centers, potentially leading to major future cloud infrastructure contracts in space. For investors looking to ride the wave of the growing space economy, Planet Labs is another excellent space stock to scoop up today.
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Courtney Carlsen has positions in Alphabet, Nvidia, and Rocket Lab. The Motley Fool has positions in and recommends Alphabet, Nvidia, Planet Labs PBC, and Rocket Lab. The Motley Fool has a disclosure policy.
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