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 Lockheed Martin Corporation (NYSE:LMT) 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 military aircraft in flight, showing the strength of the company’s combat & air mobility capability.
Lockheed Martin Corporation (NYSE:LMT)
Average Share Price Upside Potential as of January 16: 21.96%
Number of Hedge Fund Holders: 58
Lockheed Martin Corporation (NYSE:LMT) is the largest defense contractor in the world. In fiscal 2023, it generated over $67 billion in revenue, of which 96% came from defense-related sales. The company specializes in the research, design, and development of advanced technology systems, products, and services.
It is the maker of the famed F-35 fifth-generation fighter jet. For the last several decades, the company has also been partnering with government and commercial customers to deliver breakthrough technologies aimed at further discovering space. This has included projects to enhance space exploration, create climate observation satellites, and defend the U.S. from adversarial threats.
In early 2024, the Pentagon awarded Lockheed Martin, L3Harris, and Sierra Space a $2.5 billion contract to build 54 satellites as part of the Proliferated Warfighter Space Architecture network of the U.S. military. Each company will be responsible for building 18 satellites, of which 16 will be dedicated to missile tracking and warning, while two will come with missile defense infrared sensors. Lockheed Martin Corporation (NYSE:LMT)’s share of the contract is valued at $890 million.
In its Q3 2024 earnings call on October 21, the company reported net sales of $17.1 billion for the quarter, up 1.2% year-over-year, driven by robust performances from Missiles and Fire Control, and Rotary and Mission Systems segments. Net earnings stood at $1.6 billion, translating to an EPS of $6.80 per share, which beat expectations of $6.54.
Lockheed Martin Corporation (NYSE:LMT) generated $3.075 billion in sales from its Space segment, down 1% from last year, due to lower net sales for the commercial civil space. A major highlight of the quarter was NASA awarding a $297 million contract to design and build GeoXO Lightning Mapper (LMX) instruments for NOAA.
Geopolitical tensions in different parts of the world have positioned Lockheed Martin Corporation (NYSE:LMT) for continued growth as it is the partner of choice for most American allies. Wall Street analysts are bullish on the stock with a consensus Buy rating and an average share price upside potential of nearly 22, making it one of the best space stocks to buy according to analysts.
Overall LMT ranks 6th on our list of the best space stocks to buy according to analysts. While we acknowledge the potential of LMT 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 LMT 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.
