Space Stocks Are in a Trillion-Dollar Race: Get in Early!

Space stocks like MDA (TSX:MDA) should be on your radar if you’re seeking growth investments. 

| More on:

What was science fiction a few years ago is a tangible reality now. Two of the richest men in the world have created reusable rockets that have lowered the cost of space entry. As a consequence, several space stocks and startups have emerged to service this new frontier industry. 

American space stocks are in a heated battle to dominate a sector that could be worth well over US$1.4 trillion by the end of the decade. If you’re a growth investor with a long-term time horizon, this emerging trend should certainly be on your radar. Here’s a closer look. 

The final frontier

Governments already have infrastructure in space. The Global Positioning System (GPS) has been around since the late-1970s. Today, the 33 satellites in the GPS constellation help billions of people navigate. Similarly, other governments have satellite communications systems and spyware infrastructure built in space. 

However, these satellites were prohibitively expensive to develop. Getting them into orbit via rocket launches was just as capital-intensive and complicated. Both these issues have been resolved in recent years. The cost of creating a mini satellites has declined, while reusable rockets have made space entry cheaper than ever. 

That’s opened up the industry to corporations and startups from across the world. Bank of America believes the sector could be worth well over US$1.4 trillion by 2030. That’s nearly as big as the cryptocurrency sector today. Fortunately, investors can get into this industry early by betting on publicly-listed space stocks. 

Canadian space stocks

The Toronto Stock Exchange is home to several space stocks. In fact, these are well-established and profitable companies with existing government and private contracts. 

Montreal-based CAE Inc. (TSX:CAE)(NYSE:CAE) is a good example. The company has been developing and deploying simulation and training technologies for aerospace engineers and pilots since 1947. Its facilities are now spread across 35 countries and the company registered over $3 billion in revenue over the past year.

Unsurprisingly, the company is profitable, cash flow positive and has a backlog of contracts worth over $7.8 billion. I imagine this backlog could expand as more companies enter the space race in the years ahead. 

Another noteworthy space stock listed just this week: MDA Ltd. (TSX:MDA). The company developed the Canadarm program in the 1980s. Upgrades to this program are still ongoing and the team has outstanding contracts with several government agencies and private enterprises. 

MDA raised $400 million in its Initial Public Offering (IPO) this week. That influx of cash coupled with the company’s existing backlog of contracts and talent pool of 2,000 employees puts it in an excellent position to dominate the space race. Unsurprisingly, the stock has surged since listing. It’s currently trading 22.8% higher than its IPO price. 

Steady cash flow and hundreds of millions in cash allows MDA to acquire emerging spacetech startups. This should help it sustain the head-start it has in the space race and generate tremendous value for shareholders as the nascent sector matures. Keep an eye on this one. 

Bottom line

Space stocks like MDA should be on your radar if you’re seeking growth investments.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

More on Investing

money goes up and down in balance
Dividend Stocks

Is Fiera Capital Stock a Buy for its 8.6% Dividend Yield?

Down almost 40% from all-time highs, Fiera Capital stock offers you a tasty dividend yield right now. Is the TSX…

Read more »

tsx today
Stock Market

TSX Today: What to Watch for in Stocks on Wednesday, December 11

In addition to the U.S. inflation report, the Bank of Canada’s interest rate decision and press conference will remain on…

Read more »

Blocks conceptualizing Canada's Tax Free Savings Account
Dividend Stocks

How to Use Your TFSA to Double Your TFSA Contribution

If you're looking to double up that TFSA contribution, there is one dividend stock I would certainly look to in…

Read more »

Income and growth financial chart
Investing

A Top-Performing U.S. Stock That Canadian Investors Really Should Own

Amazon (NASDAQ:AMZN) is starting to run faster in the AI race, making it a top U.S. pick for 2025.

Read more »

Person uses a tablet in a blurred warehouse as background
Tech Stocks

2 Canadian AI Stocks Poised for Significant Gains

Here are two top AI stocks long-term investors may want to consider before the end of the year.

Read more »

man touches brain to show a good idea
Investing

3 No Brainer Tech Stocks to Buy With $500 Right Now

Here are three no-brainer tech stocks long-term investors on a limited budget may want to consider right now.

Read more »

woman looks at iPhone
Dividend Stocks

Retirees: Is TELUS Stock a Risky Buy?

TELUS stock has long been a strong dividend provider, but what should investors consider now after recent earnings?

Read more »

Concept of multiple streams of income
Dividend Stocks

Is goeasy Stock Still Worth Buying for Growth Potential?

goeasy offers a powerful combination of growth and dividend-based return potential, but it might be less promising for growth alone.

Read more »