The bull case for MDA (TSX:MDA) and Cameco (TSX:CCO) is getting clearer as both stocks continue to beat the market. Although they belong to different sectors, their growth spurt is identical. Growth investors should include them in their watchlists; if not, buy them before their prices skyrocket.
High-growth technology investment
American companies dominate the aerospace and defence industry, but MDA might be the better investment option. The $1.78 billion Canadian space technology company has become a trusted space mission partner, evidenced by several landmark achievements and over 450 missions in the global space industry.
MDA’s expertise includes space-based communications systems for custom-built satellite missions. The team can assist customers in civil, commercial and defence sectors in low and medium Earth orbit (LEO and MEO) missions and meet demand for a growing range of communications services and applications. They include broadband, direct to service, and Internet of Things.
The firm also provides advanced Earth and space observation solutions that instantly produce actionable imagery and insight. For the space exploration and infrastructure segment, MDA boasts flight-tested robotics that fit any mission. The Canadarm technology is suits NASA’s space shuttles and the International Space Station.
What is the investment takeaway? If you want exposure to the expanding global space industry, you’d want to invest in the most advanced technology and service provider in addition to world-class engineering capabilities. In short, MDA is a high-growth technology investment. The stock performance validates this.
At $13.70 per share, the year-to-date gain is 20.57%, while the one-year price return is 107%. Also, the change in name to MDA Space this year signals management’s complete focus on being at the forefront of a new era of space innovation.
In 2023, revenues and net income rose 26% and 86% to $808 million and $49 million versus 2022. Notably, order bookings and backlog jumped 119% and 125% year over year to $2.5 billion and $3 billion, respectively. Satellite systems accounted for 45% of revenues, while robotics & space operations contributed 31%. The customer breakdown is 56% commercial and 44% government.
For the first quarter (Q1) of 2024, the backlog climbed 169% to a record $3.3 billion compared to Q1 2023. Its chief executive officer (CEO), Mike Greenley, said, “MDA is well positioned to capitalize on strong customer demand and robust market activity. Our growth pipeline is significant and underpinned by existing and new programs, and our book of business is healthy.”
Competitive industry position
Cameco provides uranium fuel globally and holds a competitive industry position. The $31 billion company has a controlling ownership in the world’s largest high-grade uranium reserves and low-cost operations. At $71.43 per share, current investors enjoy a 25.03% year-to-date gain. The energy stock is up 94.7% from a year ago.
In Q1 2024, adjusted net earnings were $56 million compared to $115 million in Q1 2023. The decline was due to Westinghouse’s $123 million net loss in the first quarter. Cameco owns 49% of Westinghouse Electric Company, the world’s largest nuclear services businesses. Cameco has long-term contracts in place. It expects to produce 22.4 million pounds of uranium in 2024.
Niche markets
MDA and Cameco are winning investments. Their common competitive advantage is an expanding and in-demand niche market.
