If I Could Only Buy 1 Space Stock After the Rocket Lab Crash, It Would Be This One

Rocket Lab (NASDAQ: RKLB), a developer of orbital rockets, shed over a fifth of its value in the week ending on Oct. 16, marking its worst weekly drop since its public debut in 2021. That decline was mainly caused by its decision to delay the first launch of its larger Neutron rocket, which was aimed at competing against SpaceX's (NASDAQ: SPCX) Falcon 9, to 2027. The Neutron's arrival would have diversified Rocket Lab's launch services segment beyond its Electron rockets, which carry much smaller payloads, and HASTE testbed launch vehicles.

Another challenge that exacerbated the sell-off was Ligado Networks' request for the FCC to probe Rocket Lab's planned takeover of the satellite network operator Iridium (NASDAQ: IRDM). Ligado claims the acquisition would be anti-competitive, since Iridium previously tried to block its partnership with AST SpaceMobile (NASDAQ: ASTS).

Image source: Getty Images.

Rocket Lab has plenty of irons in the fire, but it was priced for perfection. Even after its latest decline, it still trades at nearly 34 times this year's sales. So instead of rushing to buy Rocket Lab, I'd rather buy a much cheaper space stock: Intuitive Machines (NASDAQ: LUNR).

What does Intuitive Machines do?

Intuitive Machines develops lunar landers, lunar exploration vehicles, and satellite buses for NASA. It's launched two lunar landers for NASA so far: IM-1 in 2024 and IM-2 in 2025.

Neither mission was flawless -- since both landers eventually tipped over after transmitting data back to Earth -- but IM-1 marked NASA's first successful moon landing since 1972. It plans to launch IM-3 and IM-4 in 2027, followed by its larger IM-5 lander by 2030.

In addition to those five lunar missions, Intuitive is producing two satellite buses (IM 300 and IM 500) for NASA's orbital science missions. It plans to launch IM 300 in 2025 and IM 500 in 2030, then use them as nodes to sell near-space network service (NSNS) data back to NASA.

Over the past year, Intuitive acquired Lanteris, which develops satellites and other spacecraft, and Goonhilly Earth Station, a satellite and deep-space communications facility. Those acquisitions should further diversify its business and boost its near-term revenue.

Why does Intuitive Machines look more attractive than Rocket Lab?

Unlike Rocket Lab and many other smaller space companies, Intuitive Machines doesn't directly compete against SpaceX's rocket-building and satellite internet businesses. Instead, it's carving out a comfortable niche and tethering itself tightly to NASA's future lunar and orbital projects.

From 2025 to 2028, analysts expect Intuitive Machines' revenue to grow at an 84% CAGR. They also expect its adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) to turn positive in 2026 and grow at a 403% CAGR over the following two years.

Yet with a market cap of $1.9 billion, Intuitive Machines trades at just two times this year's sales. Nearly 28% of its float was also being shorted at the end of September. Therefore, any positive news could spark a short squeeze and drive its stock a lot higher.

By comparison, analysts expect Rocket Lab's revenue to grow at a 43% CAGR from 2025 to 2028. They expect its adjusted EBITDA to turn positive in 2027 and grow 31% in 2028. That outlook is also impressive -- but compared to Intuitive Machines, it's growing more slowly, trading at higher valuations, and has a narrower moat.

Both of these space stocks are speculative and could struggle to attract new investors as long as interest rates and Treasury yields remain elevated. But once those investors look beyond SpaceX and start scooping up the hidden gems in the nascent space industry, Intuitive Machines could soar a lot higher than Rocket Lab and many other spacecraft makers.

Leo Sun has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends AST SpaceMobile, Intuitive Machines, and Rocket Lab. The Motley Fool has a disclosure policy.