Canada Has Approved Rocket Launches: Prepare for a Commercial Space Boom

Space tech stocks like MDA are at the forefront of a revolution.

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A few weeks ago, the Canadian government lifted a major barrier to commercial space launches in the country. This is yet another sign that the commercial space tech industry is ready for mainstream adoption and investment. Here’s a closer look at this latest development. 

Canadian space launches

Canada has been at the forefront of space technology for decades. However, rockets have never launched from Canadian soil. That is despite the fact that Canada’s extensive coastline is well-suited to launch missions. Most of Canada’s coastline is rural, which is safer for rocket launches. Many spots are also situated on high altitudes, which makes polar launches possible. 

This is why Canada is seen as a promising destination for future space missions. 

On January 20th, 2023, the government announced the approval of a space launch port in rural Nova Scotia. Maritime Launch Services (OTC:MAXQF), the manager of the spaceport, can now start testing a suborbital mission this year before launching an orbital mission sometime in 2024. 

MLS has several contracts with government space agencies and enterprise customers like Nanoracks and Reaction Dynamics. If its upcoming launch in 2024 is successful, Canada could grab a fraction of the multi-billion dollar space launch industry. 

Canadian space stocks

The government’s embrace of the commercial space tech sector could be a tailwind for domestic tech stocks like MDA (TSX:MDA). The Brampton, Ontario-based company provides geointelligence, robotics and space operations, and satellite systems. It’s a legacy space tech company with a track record that includes iconic projects such as the Canadarm robotic system and RADARSAT-2 Earth observation satellite.

 

Now, the company is working on another version of the robotic arm (Canadarm3) for NASA’s Lunar Gateway missions. It’s also a key supplier of the satellites that power the latest iPhone Emergency SOS via satellite feature. 

Altogether, the company has outstanding orders worth $1.4 billion on its books. Up to $650 million of that is due to be delivered this year. The company also expects to generate $130–$135 million in EBITDA this year. 

MDA’s market value is $931 million. That means it’s trading at 1.4 times annual revenue and 6.7 times annual EBITDA. It’s a relatively undervalued space stock that should be on your radar. 

Bottom line

The Canadian government is ramping up its efforts to support the domestic space tech industry. This year, the authorities approved a new space launch port and new regulations for space launch missions operating on Canadian soil. This is another indication that the industry has matured and deserves the attention of investors. 

Domestic space tech company MDA already has a foothold in this rapidly expanding industry. The company has delivered iconic equipment for the International Space Station (ISS) and is now working on other iconic pieces of space infrastructure. The stock is undervalued and overlooked, which is why it deserves a spot on your watch list. 

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.

Fool contributor Vishesh Raisinghani has positions in MDA. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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