3. Terran Orbital Corporation (NYSE:LLAP)
Number of Hedge Fund Investors: 19
One of the best penny stocks to buy under $1 is Terran Orbital Corporation (NYSE:LLAP), with a price of $0.82. The company produces and markets small satellites for the aerospace and defense sectors in the United States and across the world. In February 2024, the company revealed good news that a lunar satellite manufactured for a customer had completed 450 days of journeying around the Moon.
The share price of LLAP has historically dropped dramatically, returning over -92% during the last five-year period. Double-digit daily percentage movements in the share price of Terran Orbital have become the norm, indicating the company’s volatility. However, over the previous several years, the share prices of other comparable small space firms have also seen significant decreases, such as Redwire Corporation (NYSE:RDW) which is still trading at $7.10. The high expenses, need for technical competence, and space operating rules are major problems affecting these tiny space companies. Notwithstanding these obstacles, if launch costs are lowered, the space sector may witness increased profitability and $1 trillion in yearly revenue by 2040, per research. Investment in small space firms may therefore involve high risk but also tremendous gain.
Terran Orbital Corporation struggles to construct satellites profitably, as indicated by a slightly positive gross profit in 2023 and a negative gross profit in 2022, despite a strong yearly revenue increase over the years, with 44.23% in 2023. However, in Q1 2024, the firm received more than $100.0 million in new contracts, suggesting a backlog of nearly $2.8 billion. Significant worries include the company’s heavy debt load, expensive share-based remuneration, and dependence on the Rivada contract. The $171 million long-term debt that is due in 2026 and the company’s recent cash balance of $71.66 million, which only covers a few quarters of cash burn, with negative cash growth of -23.41%, serve as more evidence of the company’s financial fragility. These elements raise serious concerns about investment risks and call into question LLAP’s long-term sustainability. However, 4Q23 results were above expectations, with sales of $31.6 million over the estimated $30.7 million, showing LLAP’s capacity to outperform financially. The $500 million buyout offer made by Lockheed Marti, an American aerospace and defense manufacturer, which works out to $1 per share, highlights the strategic importance of LLAP’s technology and assets.
Analysts have recommended a “strong buy” based on the average price objective of $4.75, implying that investors may potentially profit by 505.33% from the current stock price of $0.78.
In the first quarter of 2024, there were 19 hedge funds for Terran Orbital Corporation (NYSE:LLAP) in IM’s database. The company’s biggest shareholders are Andrew Cohen, Peter Cohen, and Greg Davis’s Difesa Capital Management.
