We recently compiled a list of the 10 Best Space Stocks To Buy According To Analysts. In this article, we are going to take a look at where Iridium Communications Inc. (NASDAQ:IRDM) stands against the other space stocks. We also dive deep into American dominance in space technology.
Space exploration continues to be a key area of research for scientists. In recent decades, it has attracted interest from security experts globally, given the wide use of satellites for peaceful military purposes, such as navigation, intelligence gathering, and military communications.
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Both the United States and the Soviet Union had come close during the Cold War to developing satellites that were capable of striking targets on the surface of Earth. However, all efforts were put to a halt with the 1967 Outer Space Treaty that bans countries from non-peaceful activities in space, including stationing weapons of mass destruction.
The United States continues to dominate space, with the most number of active satellites and the largest space budget. Home-based aerospace companies have played a key role in ensuring this strength. Space Based-Infrared System, or SBIRS, which is one of the United States Space Force’s high priority programs, has further enhanced the country’s space power with capabilities to detect missile launches and provide early warning.
Several pure-play space stocks have surged following Trump’s victory in the November 2024 presidential elections, driven by what analysts are describing as the ‘Trump-Elon trade’. While talking to CNBC, Andrew Chanin, the CEO of ProcureAM, LLC, which runs an ETF with exposure to space stocks, believes the Trump-Elon partnership will prove to be a significant driving force for the industry.
“I don’t think anyone can underplay the potential catalyst that I don’t think many people were talking about before: the most important human in the history of the space industry having the ear of the president-elect, who in his past term found space important enough to create a separate branch of the military.”
Strong financial results during the third quarter of 2024 have also partly led the stock rally. Cantor Fitzgerald analyst, Andres Sheppard, has said there is a broader sentiment driving the stocks, such as demand for national security and ongoing work on key space projects.
“We’re seeing a big increase in investor inbounds. We’re getting calls and emails from institutional investors, which are finally starting to realize that this market is only going to continue to accelerate. It’s only going to continue to proliferate because of national security, because of the Artemis program to get the U.S. astronauts back on the moon, because of Elon’s ambitious goals of getting to Mars.”
Sheppard also stated that space stocks are benefitting from SpaceX being privately held, as investors look toward other companies in the industry to enhance their exposure to the space sector.
Methodology
We sifted through ETFs with exposure to the space sector and our previous articles on the industry to get a pool of space stocks. From there, we picked 10 stocks with the highest average share price upside potential and ranked them in ascending order of the metric.
We have only considered stocks that had at least three analyst ratings. All data is as of January 16, 2025. For perspective, we have also shared the hedge fund sentiment toward each stock, based on Insider Monkey’s database of over 900 prominent hedge funds as of Q3 2024.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
A technician inspecting a satellite dish, highlighting the Mobile Voice and Data Services scope.
Iridium Communications Inc. (NASDAQ:IRDM)
Average Share Price Upside Potential as of January 16: 48.98%
Number of Hedge Fund Holders: 35
Iridium Communications Inc. (NASDAQ:IRDM) is an American company, headquartered in Virginia, that provides communication services through its wide satellite network that leverages weather-resistant L-band frequencies. The company continues to attract investor interest because of its strong market presence, growth prospects, and recent shareholder-focused initiatives. Iridium Communications Inc. (NASDAQ:IRDM) also boasts a dependable customer base, featuring major companies such as Honeywell, Garmin, and Caterpillar.
The satellite market is witnessing impressive growth, spurred by ongoing geopolitical tussles and the rise of the AI era, which has led to increased demand for autonomous technologies and national security applications. In June 2024, the Space Systems Command awarded Iridium Communications Inc. (NASDAQ:IRDM) a $94 million contract – with a potential value of $103 million should a need arise – for Enhanced Mobile Satellite Services (EMSS) capabilities and security sustainment services (ECS3).
The stock’s appeal has also been bolstered through substantial shareholder returns. The company has a robust share repurchase program. During the third quarter of fiscal 2024, it approved another $500 million in buybacks, raising the total authorization amount to $1.5 billion since 2021. Iridium Communications Inc. (NASDAQ:IRDM) also paid a dividend of $0.14 per share during Q3, putting it on track to return $65 million to shareholders through cash dividends in 2024.
Revenue for the quarter stood at $212.8 million, up 8% from last year. The improvement was fueled by growth in the company’s commercial businesses and strength in engineering and support revenue. Operational EBITDA reached a record $124.4 million in Q3, driven by an expansion in service revenue.
Iridium Communications Inc. (NASDAQ:IRDM) is one of the best space stocks to buy according to analysts, with a consensus Buy rating and an average share price upside potential of nearly 49%.
Overall IRDM ranks 4th on our list of the best space stocks to buy according to analysts. While we acknowledge the potential of IRDM as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than IRDM but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
