Three space stocks to buy rise beyond the sky offer investors opportunities to reach for the stars.
The three space stocks to buy add appeal due to their inclusion of defense products that help to broaden their appeal, especially during a time when wars are occurring. Investors can choose between an established aerospace and defense giants along with two less well-known industry companies.
A pair of seasoned financial market followers chose the aerospace and defense giant as their preferred investment, while a Citigroup analyst opined that two other companies are looking strong to him.
Three Space Stocks to Buy to Rise Beyond the Sky: RTX
RTX Corp. (NYSE: RTX), of Arlington, Virginia, reported fourth-quarter 2024 adjusted earnings per share of $1.54, beating the BofA estimate of $1.35 due to strong organic growth, according to BofA Global Research. Revenues exceeded expectations in the quarter with RTX reporting 11% organic growth year over year, BofA added.
“We think a multiple in line with the market fairly reflects RTX turning the corner of the recent GTF (geared turbofan) issue, strong demand tail winds and defense exposure entering a period of reignited growth,” wrote Ron Epstein, an aerospace and defense analyst with BofA Global Research.
RTX entered 2025 with strong demand buoyed by a backlog of $218 billion, along with a total company book-to-bill ratio of 1.39 times, BofA added. The investment firm set a $145 price objective on RTX, based on 2025 estimated Enterprise Value (EV)/Earnings before interest, taxes, depreciation and amortization (EBITDA) 15x multiple vs. the S&P500 of 15x.
A chance for RTX to outperform the price objective set by BofA is the GTF issues are fixed faster and smoother than anticipated, if the commercial aero and bizjet recoveries top expectations and if margins fare better than forecasts. Further upside could come from RTX executing on existing programs better than expected, or if gains share in the international market or makes a materially accretive acquisition, BofA wrote.
Risks to achieving the price objective include a possible downturn in commercial aviation due to the natural business cycle or an exogenous event such as a terrorist attack or a pandemic, as well as complications related to the GTF powder-metal issue. BofA warned. Additional slippage could come from a severe global economic slowdown affecting top-line growth as 45% of company sales are produced outside the United States.
Other risks include any loss of defense contracts, or unexpected cancellations to programs, as well as uncertain timing around receiving orders from international programs.
Chart courtesy of www.stockcharts.com
Three Space Stocks to Buy to Rise Beyond the Sky: Portia Perspective
Michelle Connell, president and owner of Dallas-based Portia Capital Management, LLC, also like RTX as a buy, but sees the stock as temporarily overvalued. For that reason, Connell counseled that the wisest move may be waiting for the company to report quarterly results on April 23 before buying shares.
Michelle Connell heads Porsche Capital Management.
“If an investor likes its long-term prospects, I would wait until the earnings announcement gives clarity or the stock comes back to support — the 200 day average — $115 per share, Connell said. “As of this write up, RTX was trading at $128/share. Overall, I like the stock.”
RTX has the following going for it. Connell counseled.
-Revenue is split between commercial and defense – 60%/40%
-RTX currently has a $218 billion backlog, with 30% of from defense
-The total backlog is equivalent to 2.5 times RTX’s sales, with only 25% expected to be converted to revenue in 2025.
-This will cover 65% of 2025’s estimated sales
-The remaining 75% of the backlog will be completed and recognized after 2025, Connell counseled.
“If one buys into this argument, new defense orders will not affect RTX until the middle of Trump’s term,” Connell continued. “Maybe Trump won’t have as much leverage on defense spending at that point.”
Plus, RTX is also in the middle of a cost reduction program for procuring outside materials, Connell said. The cost-cutting program has allowed RTX to boost its margins on an ongoing basis, she added.
Three Space Stocks to Buy to Rise Beyond the Sky: Connell’s Concerns
RTX is not without concerns, Connell cautioned. They include the potential impact of tariffs on RTX’s materials, including steel; 39% of the company’s sales are international; the European Union (EU) and other areas may decide tohttps://www.markskousen.com/offer/fma-promo-default/?source=GURUFMA1 handle their own defense aerospace needs. In addition, President Trump’s ultimatums may also affect the commercial aerospace needs of the same countries.
Like every other stock, the current political environment creates much uncertainty for RTX, Connell warned. She predicted RTX could have 20% upside over the next 12-15 months. However, the stock is up 45% over the last year.
While 2025 has not been kind to the S&P 500, RTX has accrued 12% year to date-even with a slight pullback. In terms of its fundamentals, price to earnings and price to sales, it’s only trading at slight premiums.
Seasoned stock picker Jim Woods, the head of the Investing Edge newsletter, likes big dividend-paying defense giants, too. As a former Army paratrooper, Woods has a keen interest in defense issues and follows them closely for his Investing Edge and Fast Money Alert advisory service subscribers.
Insert photo and caption of Jim Woods
Three Space Stocks to Buy to Rise Beyond the Sky: KRMN
Citigroup recently initiated coverage of Karman Space & Defense (NYSE: KRMN) with a Buy rating and a 12-month price target of $42. The company is uniquely positioned between defense primes and traditional suppliers in the defense ecosystem, with the proposition of leveraging its engineering expertise, material science know-how, and production capabilities to deliver products/sub-systems at costs cheaper than customers can produce on their own.
“Importantly, the company is focused on three of the fastest growing areas of U.S. defense spending, including nuclear deterrence, tactical missiles, and space,” wrote Citigroup’s Jason Gursky. “We expect the company to generate roughly 20% revenue growth and 300bps of margin expansion through 2027, driven by volume ramps and higher shipset on current programs, and operating expense leverage.”
Another plus is that M&A could also drive growth overtime, Gursky wrote. The company’s balance sheet appears to have plenty of flexibility for leverage, he added.
Chart courtesy of www.stockcharts.com
Three Space Stocks to Buy to Rise Beyond the Sky: RKLB
Rocket Lab USA Inc. (NASDAQ: RKLB) is another buy recommendation of Citigroup’s Gursky. The company’s share price fell amid the recent market sell-off but its outlook offers hope for it to become a launch industry success story, Gursky wrote.
The challenge for launchers is to do so reliably. Rocket Lab is gaining customers but the best path to growth and profitabilty is to put the satellites it is entrusted to placing in orbit where they are supposed to go.
Gursky expressed optimism that Rocket Lab will succeed. Investors who like bargains may want to consider purchasing shares in Rocket Lab after its recent price reduction.
Chart courtesy of www.stockcharts.com
The three space stocks to buy to rise beyond the sky offer alternatives that could prove profitable for those who can afford to be patient.
Paul Dykewicz, www.pauldykewicz.com, is an accomplished, award-winning journalist who has written for Dow Jones, the Wall Street Journal, Investor’s Business Daily, USA Today, the Journal of Commerce, Seeking Alpha, GuruFocus and other publications and websites. Paul, who can be followed on Twitter @PaulDykewicz, is the editor of StockInvestor.com and DividendInvestor.com, a writer for both websites and a columnist. He further is editorial director of Eagle Financial Publications in Washington, D.C., where he edits monthly investment newsletters, time-sensitive trading alerts, free e-letters and other investment reports. Paul previously served as business editor of Baltimore’s Daily Record newspaper. Paul also is the author of an inspirational book, “Holy Smokes! Golden Guidance from Notre Dame’s Championship Chaplain,” with a foreword by former national championship-winning football coach Lou Holtz. The book is great as a gift and is endorsed by Joe Montana, Joe Theismann, Ara Parseghian, “Rocket” Ismail, Reggie Brooks, Dick Vitale and many others. Call 202-677-4457 for multiple-book pricing.
