Typically, a company’s revenue and earnings growth are key drivers of its share price. So, investing in profitable growth stocks is a proven strategy to grow long-term wealth. In this article, I have identified one TSX growth stock you can buy now with $2,000.
An overview of MDA Space
Valued at a market cap of $2.95 billion, MDA Space (TSX:MDA) is a company that operates in the space technology sector. It has evolved into a global leader in verticals such as satellite communications, earth/space observation systems, and space exploration infrastructure.
MDA Space has successfully completed more than 450 space missions, developed advanced robotics systems for space operations, created and maintained communication satellites, and provided earth observation and data analysis capabilities.
Today, MDA Space is a preferred partner to emerging space companies seeking technological expertise, prime contractors requiring mission support, and government agencies pursuing space exploration objectives.
The company is focused on growth areas that include space-based connectivity solutions, enhanced earth observation capabilities, and technologies that support human space exploration.
A steady growth in revenue and earnings
MDA Space’s sales increased from $394.1 million in 2020 to $807.6 million in 2023. In the last 12 months, its revenue has risen by 19% year over year to $938.5 million. MDA is profitable, with a gross margin of 31.7% and an operating margin of 9.7%. In fact, in the last 12 months, its operating profit increased to $90.7 million, up from $18.6 million in 2021.
The company’s growth story is far from over, given its research and development expenses totalled $33.5 million in the last four quarters. Moreover, its capital expenditures have totalled $133.7 million, while it spent over $50 million in cash acquisitions over the past year. According to consensus estimates, MDA Space will invest more than $400 million in capital expenditures over the next two years, which should drive future earnings and cash flows higher.
Earlier this month, MDA announced it signed a definitive contract with Globalstar to be the prime contractor for the satellite’s next-generation low Earth orbit constellation. The contract, valued at $1.1 billion, requires MDA Space to manufacture over 50 MDA software-defined digital satellites for Globalstar.
“We are pleased to once again be working with Globalstar as they develop their next generation LEO constellation,” said Mike Greenley, chief executive officer of MDA Space. “With the full contract now in place, we are moving full speed ahead on the program.”
Is the TSX growth stock undervalued?
Analysts tracking MDA Space expect its revenue to increase from $807.6 million in 2023 to $1.4 billion in 2024. Comparatively, adjusted earnings are forecast to expand from $0.4 per share in 2023 to $0.88 per share in 2025, while free cash flow growth is forecast at $423 million for 2024.
Given its growth estimates, MDA Space stock is priced at 27.5 times forward earnings and seven times trailing FCF, which is very reasonable.
MDA Space stock went public in April 2021 and has since returned 67% to shareholders. Given consensus price targets, the TSX stock traded at a discount of almost 40% in February 2025.
