Three Ways to Profit from Low-Earth Orbit

Three ways to profit from Low-Earth orbit can be reached by investors without leaving the ground.

The three ways to profit from Low-Earth orbit feature stocks that each play a role in bringing communication services to the military, other government agencies, enterprises, non-profits and consumers. A big appeal of low-Earth orbit (LEO) services, 160-2,000 km above the ground, is that they can avoid communication delays that occur in geostationary orbit (GEO), 35,000 km away, where spacecraft are positioned in high-Earth orbit.

One of the best known companies to operate in LEO is McLean-Virginia-based Iridium Communications Inc. (NASDAQ: IRDM). The Iridium constellation is in Low-Earth Orbit (LEO), approximately 780 kilometers (485 miles) above the Earth, providing stronger signals and faster connections through smaller antennas with lower power requirements.

Most other satellite networks use geostationary orbit (GEO) at about 35,000 kilometers (22,000 miles) from the planet. The unique structure of Iridium’s Low-Earth Orbit allows satellites to converge at the poles, ensuring coverage in the remote high-latitude regions that other satellite providers may not be able to serve.

Market volatility has caused some recent pullbacks but that movement is quite good for the Tactical Trader portfolio that had many of its holdings vault higher on “strong buying,” Woods wrote in his Tuesday, Feb. 10, update for his readers. Several positions were “particularly” buoyant, he added.

Jim Woods heads the Tactical Trader service.

Three Ways to Profit from Low-Earth Orbit: 66 Satellites

The first Iridium satellite was deployed in 1997, with its full network of 66 satellites becoming operational in 1998. In 2019, Iridium completed an upgrade to the Iridium constellation, replacing all its satellites without disrupting service.

The satellites of the Iridium network cover the entire earth in a way that no other communications provider thus far can match. Iridium’s LEO network uses L-band frequencies to communicate with the users. Those frequencies are more resilient to weather than the ones used by most GEO networks, providing reliable communications amid adverse conditions in the air, on the sea or on the ground.

L-band, in 1–2 GHz, is essential for military operations to provide long-range, weather-resistant, and secure communications. The L-band also is heavily used for Global Positioning Services (GPS), satellite communications (SATCOM) with low interception probability and military telemetry that records and transmits instrument readings. That particular band also supports essential air-to-ground, air-to-air, and radar operations.

Together, the Iridium satellites create a global mesh of coverage. In orbit, each satellite is cross-linked to four others, providing advantages in reliability and resiliency. The cross-links provide network optimization and redundancy, ensuring that data can be rerouted and transmitted at the fastest possible speeds, regardless of what happens on Earth or in space.

On Earth, the gateway processes the message or call, then delivers it to the carrier, internet or customer. Each satellite uses systems controlled by an expert team of engineers from Leesburg, Virginia, allowing the uploading of new instructions or software to troubleshoot anomalies and to optimize the user experience, company officials said.

When the satellites in the network eventually reach the end of their lives, Iridium engineers can de-boost and de-orbit each one from space safely. It helps to avoid orbital debris in space to and sustain it for future use.

Iridium CEO Matthew Desch recently told listeners of his company’s fourth-quarter earnings call that its 2025 guidance was achieved.

Service revenue came in “on target,” and the company grew its Operating Earnings Before Interest, Taxes, Depreciation and Amortization (OEBITDA) 5% for the full year, Desch said.

“In addition, pro forma free cash flow was almost $300 million,” Desch continued. Free cash flow is important, since it measures the funds a company generates after covering its operating expenses and capital expenditures.

“Our business remains robust, and we feel confident in our ability to continue generating significant free cash flow as we transform our business and add new services, Desch said.

Chart courtesy of www.stockcharts.com.

Three Ways to Profit from Low-Earth Orbit: VSAT

ViaSat (NASDAQ: VSAT), a satellite operator headquartered in Carlsbad, California, is rated “outperform” by Louie DiPalma, the defense and aerospace analyst at the Chicago-based William Blair & Co. investment firm. DiPalma also rates Iridium as “outperform.”

In a recent research note, Di Palma highlighted Southwest Airlines (NYSE: LUV) announcing that it is equipping more than 300 aircraft this year with SpaceX’s Starlink system. DiPalma confirmed with ViaSat that Southwest will not be installing Starlink across the aircraft that are equipped with ViaSat.

“Rather, Starlink will replace the Anuvu system that is installed on older Southwest aircraft,” DiPalma wrote. “Southwest plans to continue having ViaSat’s system line-fit installed on all of its brand-new B737 MAX aircraft. ViaSat’s downlink and uplink capacity for its North American customers is expected to surge after its new $1 billion ViaSat-3 F2 Ka-band satellite comes online over the summer.

“In addition, ViaSat plans to add support for LEO satellite connectivity from Telesat (NASDAQ: TSAT) when that service becomes available. Our inflight connectivity tracker documents how Starlink has gained major momentum. Some of this momentum has come at the expense of ViaSat as several non-U.S. airlines that connect to Inmarsat’s network have switched over to Starlink. However, it seems that Delta (NYSE: DAL), American Airlines (NYSE: AAL) and Southwest remain committed to using ViaSat, with ViaSat set to add ViaSat-3 capacity.”

However, the commitments could change if the ViaSat-3 service does not live up to expectations, DiPalma cautioned.

“Investors increasingly view ViaSat as a ‘double special situation’ because of ViaSat’s ability to unlock value associated with its defense tech division and its trove of global L-band spectrum assets,” DiPalma wrote. “ViaSat’s defense and advanced technologies business is on pace to generate $1.4 billion in revenue for its fiscal 2026 on 12% growth with a 22% EBITDA margin.”

Defense contractor L3Harris’s (NYSE: LHX) planned initial public offering (IPO) of its solid rocket motor missile solutions business increases the probability that seek to take its defense and advanced technologies business public, too, DiPalma wrote. Defense tech remains as strategic as ever, with the Trump administration floating a potential $1.5 trillion budget, he added.

Three Ways to Profit from Low-Earth Orbit: ViaSat’s Valuation

DiPalma wrote that he values ViaSat using a sum-of-the-parts analysis. His analysis is that ViaSat’s defense tech business is worth $5 billion, based on a 16-times EBITDA multiple, a discount to the 21-times EBITDA multiple for Leonardo DRS (NASDAQ: DRS $37.87). Leonardo DRS, Inc. is an Arlington, Virginia-based defense contractor originally founded as DRS Technologies, Inc. trading at that time on the NYSE. DRS Technologies was acquired by Leonardo’s predecessor, Finmeccanica, in 2008. Leonardo DRS provides advanced defense technologies and systems primarily to the U.S. military, along with U.S. national security customers and allies around the world.

William Blair estimates that ViaSat’s satellite communications business is worth at least $4 billion. In addition, it estimates that ViaSat’s L-band spectrum assets are worth $3.5 billion with a wide range of potential uses.

“When taking into account $5 billion in net debt, we estimate that ViaSat shares may be valued at greater than $60 per share over the next 12 months,” DiPalma wrote in his latest research note. “As a result, we rate shares outperform. The main risks for ViaSat include challenges associated with monetizing its L-band spectrum, the potential that the company elects not to IPO or sell its defense tech business, and intense competition from SpaceX.”

Viasat is incorporating LEO capacity into its services through a “multi-orbit” strategy by partnering with Ottawa, Canada’s Telesat (NASDAQ: TSAT) to use that latter’s Lightspeed LEO network starting around 2027, mainly to enhance connectivity for aviation, maritime and energy sectors. While traditionally a GEO (Geostationary) operator, Viasat now offers hybrid, managed services combining LEO with its existing high-throughput GEO satellites.

Chart courtesy of www.stockcharts.com.

Three Ways to Profit from Low-Earth Orbit: Gilat

Shares of Israel’s Gilat Satellite Networks Ltd. (NASDAQ: GILT) recently traded down 20% lower after the company reported strong underlying trends but mixed fourth-quarter results. That giving back some of some gains after a 49% surge should not alarm anyone, wrote DiPalma, who rates the stock as “outperform.”

Gilat’s share price likely benefited from investor enthusiasm related to the widely reported potential SpaceX IPO, DiPalma wrote. While consolidated financials at Gilat were above consensus, much of the strength came from the company’s Peru division, with defense revenue slipping below the company’s guidance, he added.

“Results were also impacted by the U.S. government shutdown,” DiPalma wrote. “Management expects that Gilat will receive a large Stellar Blu award in the second quarter and reported progress with both Boeing (NYSE: BA) and Airbus for line-fit. In addition, the company is making progress with forging a partnership with a major ecosystem operator.

“Another plus is that during the quarter, the company raised $100 million via a private placement offering. Gilat intends to use the proceeds for defense mergers and acquisitions (M&A), potentially in the area of electronic warfare,” DiPalma wrote.

“We believe shares remain attractive as the satellite communications industry is not a winner-take-all market, despite SpaceX’s leadership,” DiPalma wrote. “Gilat is one of the leading global providers of modems, antennas and solid state power amplifiers (SSPAs) in the highly strategic $3 billion satellite communications infrastructure market.”

The company’s “high-performance systems” are used by satellite operators, mobile network operator customers and defense contractors, DiPalma wrote. Plus, satellite operators seek redundancy and many governments desire sovereign networks. he added

“In response to the tremendous success of SpaceX’s Starlink, a litany of low-Earth orbit, or LEO, copycat satellite constellations is planned,” DiPalma wrote. “LEO satellite networks have proved indispensable on the battlefield and offer significant performance enhancements over traditional geostationary networks.”

Chart courtesy of www.stockcharts.com.

Three Ways to Profit from Low-Earth Orbit: UFO

Procure Space ETF (NASDAQ: UFO), an exchange-traded fund focused on the space industry, is another way to gain exposure to companies that operate LEO businesses or engage in other activities that are out of this world. A money manager who likes the fund and its potential for strong returns is Michelle Connell, who heads the Dallas-based Portia Capital Management.

 Michelle Connell heads Portia Capital Management.

Space industry revenue will grow to $1.8 trillion by 2035, compared to only $613 billion in 2024, according to the World Economic Forum. Therefore, investment opportunities in the companies that provide space and satellite technologies will do well over the long term, Connell counseled.

“However, over the last 12 months, so many of the individual stocks in this industry have become very expensive,” Connell cautioned. “So, I prefer an ETF that provides exposure to the industry’s winners. UFO, the Procure Space ETF, looks particularly compelling.”

UFO is required to have at least 80% of its assets in companies that receive at least 50% of their revenues or profits from space-related businesses. The fund holds several space-related industry “winners” including: VSAT, MDA Space Ltd.  (OTCMKTS: MDALF) and IRDM, Connell added.

Three Ways to Profit from Low-Earth Orbit: Geopolitical Risk

Geopolitical risk remains elevated. Bryan Perry, who heads the Cash Machine investment newsletter, said he can offer investors an alternative that is proving to be resilient during the market’s current volatility. Perry also offers  Space Race Portfolio in his Hi-Tech Trader service that currently features a LEO recommendation, as well as both stocks and options.

Bryan Perry heads Cash Machine.

Perry provided a new recommendation in his Feb. 17 update of a speculative high-yield asset for Cash Machine’s Extreme Income Portfolio that places risk in what he described as “deeply distressed markets” in Mexico, Argentina and Ukraine.

“One depends on an uptick in tariff relations, another on the already turnaround efforts of the Argentine government to stabilize the economy and the other is a bet on a winding down of the Ukraine war with Russia,’” Perry wrote. “Investors should get paid well to place capital into this area, and they are.”

Cash Machine’s blend of convertible debt, mortgage REITS, preferred stocks, emerging market debt, covered-call closed end funds, covered-call ETFs, investment grade bonds, tax-free bonds, energy infrastructure and gold continue holding their value and climbing, Perry wrote Feb. 17 in the weekly update of his monthly investment newsletter. When considering the current level of market volatility, having a high-yield payout that is averaging more than 10% among nearly 30 positions gives investors cushion to navigate current and growing uncertainty, he added.