2 Space Stocks to Buy in February

When you think of the space economy, you may think of SpaceX or publicly traded companies like Rocket Lab or AST Space Mobile. These stocks are up-and-coming companies with upside potential, but they are also not currently profitable and are still in relatively early stages of establishing their business.

If you ever want to play the growing space economy and are looking for more established companies, Lockheed Martin (NYSE: LMT) and Honeywell (NASDAQ: HON) are worth considering. Here's why these two stocks are a buy in February.

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Lockheed Martin will help humans return to the Moon

When you think of Lockheed Martin, you probably think of it primarily as a defense contractor, but it also plays a key role in the growing space economy. The company helps build space infrastructure and is one of the world's leading satellite manufacturers. Its spacecraft allow GPS navigation, missile warnings, weather forecasting, earth observation, and secure communication channels.

The company develops a satellite for the Next Generation Overhead Persistent Infrared system, which provides missile warning capabilities. In December, the Space Development Agency (SDA) awarded Lockheed a contract worth up to $1 billion to produce 18 satellites for the Tranche 3 Tracking Layer constellation, which provides missile tracking capabilities through a layered network of missile defense and military communications satellites in low Earth orbit.

The company also develops spacecraft that go beyond Earth. For example, it is a prime contractor for NASA's Orion crew capsule. Orion is NASA's next-generation exploration-class crewed vehicle designed for exploration to the Moon and throughout the solar system. Last year, Lockheed's space segment generated $13 billion in sales, while its backlog grew to nearly $40 billion.

Honeywell plans to spin off its aerospace business later this year

Honeywell is an industrial conglomerate that plays a role in space exploration and provides inertial navigation systems, sensors, and avionics used in satellites and launch vehicles. These components help spacecraft orient themselves and maneuver in outer space. It also provides power electronics and thermal management technology for crewed spacecraft and long-duration missions.

While Honeywell isn't a prime contractor with NASA, it does provide key components to prime contractors that enable spacecraft exploration. In the fourth quarter, the company's defense and space sales rose 10% due to "elevated global demand."

For investors looking to get in now, Honeywell will spin off Honeywell Aerospace into an independent, publicly traded company in the third quarter of this year. The company will be led by Jim Currier, a longtime veteran who has worked at Honeywell Aerospace for two decades. As a pure-play aviation and space entity, Honeywell Aerospace aims to simplify its operating structure, which could position it better to bid and win future government contracts.

Courtney Carlsen has positions in Rocket Lab. The Motley Fool has positions in and recommends Honeywell International and Rocket Lab. The Motley Fool recommends Lockheed Martin. The Motley Fool has a disclosure policy.