In this article, we discuss the 11 best space stocks to buy according to hedge funds.
The space market has advanced by leaps and bounds in the past few years, driven by massive investment from billionaires like Elon Musk, Jeff Bezos, and Richard Branson who have succeeded in bringing down the cost of a satellite launch from $200 million ten years ago to around $60 million. Further innovation is expected to bring this price tag down to $5 million within the next few years. Another possible reason for the increased private sector interest in space is the development of reusable rockets by companies like SpaceX.
Reusable rockets have made possible the commercialization of space, with human spaceflight, satellite broadband, and even the hunt for rare earth minerals dominating headlines in the space industry. According to investment bank Morgan Stanley, the global space industry has the potential to generate around $1 trillion in revenues by 2040, up from $350 billion presently. Professional services firm Deloitte estimates that the sector will grow at a compound annual growth rate of over 15% this year.
Investors poured more than $25 billion into space-related programs in 2020. Despite the pandemic, there were 41 successful satellite launches during the year, compared to an annual average of 43 successful launches over the preceding five years. Even institutional investors like hedge funds have warmed up to the idea of investing in space, traditionally considered a highly risky domain. This has coincided with increased retail investor interest in the sector as well, giving the industry a further boost in the past few months.
Investors keen to explore the explosive growth opportunities in the sector should follow where the smart money is flowing. Some of the best space stocks to buy right now according to hedge funds include The Boeing Company (NYSE:BA), Lockheed Martin Corporation (NYSE:LMT), and Raytheon Technologies Corporation (NYSE:RTX), among others discussed in detail below. The space sector is also bracing for record IPOs in the coming years, with the likes of SpaceX and Blue Origin – valued at $74 billion and $10 billion respectively – set to lead this boom.
Our Methodology
With this context in mind, here is our list of the 11 best space stocks to buy according to hedge funds.
We used the data of over 873 funds tracked by Insider Monkey for this analysis. We picked the most famous space stocks among these elite hedge funds.
Why should we pay attention to hedge fund sentiment while choosing stocks? Insider Monkey’s research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 86 percentage points since March 2017. Between March 2017 and July 2021 our monthly newsletter’s stock picks returned 186.1%, vs. 100.1% for the SPY. Our stock picks outperformed the market by more than 86 percentage points (see the details here). That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to. You can subscribe to our free newsletter on our homepage to receive our stories in your inbox.
Best Space Stocks To Buy According To Hedge Funds
11. Maxar Technologies Inc. (NYSE:MAXR)
Number of Hedge Fund Holders: 15
Maxar Technologies Inc. (NYSE:MAXR) is a Colorado-based firm in the space infrastructure solutions business. It is placed eleventh on our list of 11 best space stocks to buy according to hedge funds.
On August 30, investment advisory Barclays initiated coverage of Maxar Technologies Inc. (NYSE:MAXR) stock with an Equal Weight rating and a price target of $35. David Strauss, an analyst at the advisory, issued the ratings update.
Out of the hedge funds being tracked by Insider Monkey, New York-based firm Simcoe Capital Management is a leading shareholder in Maxar Technologies Inc. (NYSE:MAXR) with 2.4 million shares worth more than $96 million.
At the end of the second quarter of 2021, 15 hedge funds in the database of Insider Monkey held stakes worth $247 million in Maxar Technologies Inc. (NYSE:MAXR), down from 22 the preceding quarter worth $367 million.
Just like The Boeing Company (NYSE:BA), Lockheed Martin Corporation (NYSE:LMT), and Raytheon Technologies Corporation (NYSE:RTX), Maxar Technologies Inc. (NYSE:MAXR) is one of the stocks attracting the attention of elite investors.
10. AST SpaceMobile, Inc. (NASDAQ:ASTS)
Number of Hedge Fund Holders: 15
AST SpaceMobile, Inc. (NASDAQ:ASTS) is ranked tenth on our list of 11 best space stocks to buy according to hedge funds. The firm markets space-based cellular broadband services and is headquartered in Texas.
On July 12, investment advisory Barclays initiated coverage of AST SpaceMobile, Inc. (NASDAQ:ASTS) stock with an Overweight rating and a price target of $29, underlining that the firm represented a compelling investment opportunity.
At the end of the second quarter of 2021, 15 hedge funds in the database of Insider Monkey held stakes worth $74 million in AST SpaceMobile, Inc. (NASDAQ:ASTS).
Out of the hedge funds being tracked by Insider Monkey, Connecticut-based firm Point72 Asset Management is a leading shareholder in AST SpaceMobile, Inc. (NASDAQ:ASTS) with 1.3 million shares worth more than $17 million.
Alongside The Boeing Company (NYSE:BA), Lockheed Martin Corporation (NYSE:LMT), and Raytheon Technologies Corporation (NYSE:RTX), AST SpaceMobile, Inc. (NASDAQ:ASTS) is one of the stocks that hedge funds are buying.
9. Virgin Galactic Holdings, Inc. (NYSE:SPCE)
Number of Hedge Fund Holders: 18
Virgin Galactic Holdings, Inc. (NYSE:SPCE) is placed ninth on our list of 11 best space stocks to buy according to hedge funds. The company operates as an aerospace and human spaceflight firm. It is headquartered in New Mexico.
On August 31, investment advisory Jefferies initiated coverage of Virgin Galactic Holdings, Inc. (NYSE:SPCE) stock with a Buy rating and a price target of $33. Greg Konrad, an analyst at the advisory, issued the ratings update.
Out of the hedge funds being tracked by Insider Monkey, Chicago-based investment firm Citadel Investment Group is a leading shareholder in Virgin Galactic Holdings, Inc. (NYSE:SPCE) with 4.5 million shares worth more than $209 million.
At the end of the second quarter of 2021, 18 hedge funds in the database of Insider Monkey held stakes worth $181 million in Virgin Galactic Holdings, Inc. (NYSE:SPCE), up from 17 the preceding quarter worth $210 million.
In addition to The Boeing Company (NYSE:BA), Lockheed Martin Corporation (NYSE:LMT), and Raytheon Technologies Corporation (NYSE:RTX), Virgin Galactic Holdings, Inc. (NYSE:SPCE) is one of the stocks that institutional investors are buying.
8. Astronics Corporation (NASDAQ:ATRO)
Number of Hedge Fund Holders: 19
Astronics Corporation (NASDAQ:ATRO) is a New York-based firm in the aerospace and defense business. It is ranked eighth on our list of 11 best space stocks to buy according to hedge funds.
On September 20, investment advisory Colliers upgraded Astronics Corporation (NASDAQ:ATRO) stock to Buy from Neutral with a price target of $19. Richard Ryan, an analyst at the advisory, issued the ratings update.
At the end of the second quarter of 2021, 19 hedge funds in the database of Insider Monkey held stakes worth $95 million in Astronics Corporation (NASDAQ:ATRO), up from 17 the preceding quarter worth $84 million.
Out of the hedge funds being tracked by Insider Monkey, Sydney-based investment firm Paradice Investment Management is a leading shareholder in Astronics Corporation (NASDAQ:ATRO) with 1.2 million shares worth more than $21 million.
The Boeing Company (NYSE:BA), Lockheed Martin Corporation (NYSE:LMT), and Raytheon Technologies Corporation (NYSE:RTX) are some of the top space stocks on the market, just like Astronics Corporation (NASDAQ:ATRO).
7. Aerojet Rocketdyne Holdings, Inc. (NYSE:AJRD)
Number of Hedge Fund Holders: 29
Aerojet Rocketdyne Holdings, Inc. (NYSE:AJRD) is a California-based firm that makes and sells aerospace and defense products. It is placed seventh on our list of 11 best space stocks to buy according to hedge funds.
Aerojet Rocketdyne Holdings, Inc. (NYSE: AJRD) was recently awarded a contract by NASA to build the Orion engine for deep space missions. The 10-year contract includes delivery of twenty new Orion engines for use in future space missions.
Out of the hedge funds being tracked by Insider Monkey, New York-based investment firm Steel Partners is a leading shareholder in Aerojet Rocketdyne Holdings, Inc. (NYSE:AJRD) with 3.9 million shares worth more than $190 million.
At the end of the second quarter of 2021, 29 hedge funds in the database of Insider Monkey held stakes worth $845 million in Aerojet Rocketdyne Holdings, Inc. (NYSE: AJRD).
The Boeing Company (NYSE:BA), Lockheed Martin Corporation (NYSE:LMT), and Raytheon Technologies Corporation (NYSE:RTX) are some of the elite space stocks to buy now, along with Aerojet Rocketdyne Holdings, Inc. (NYSE: AJRD).
6. HEICO Corporation (NYSE:HEI)
Number of Hedge Fund Holders: 41
HEICO Corporation (NYSE:HEI) is ranked sixth on our list of 11 best space stocks to buy according to hedge funds. The firm markets electronics products for the aerospace industry and is headquartered in Florida.
On September 8, investment advisory Bank of America upgraded HEICO Corporation (NYSE:HEI) stock to Neutral from Underperform with a price target of $135, appreciating the consistency in the topline growth of the firm over the past year.
Out of the hedge funds being tracked by Insider Monkey, China-based investment firm Gobi Capital is a leading shareholder in HEICO Corporation (NYSE:HEI) with 929,879 shares worth more than $115 million.
At the end of the second quarter of 2021, 41 hedge funds in the database of Insider Monkey held stakes worth $644 million in HEICO Corporation (NYSE:HEI).
5. Northrop Grumman Corporation (NYSE:NOC)
Number of Hedge Fund Holders: 42
Northrop Grumman Corporation (NYSE:NOC) is placed fifth on our list of 11 best space stocks to buy according to hedge funds. The firm operates in the aerospace and defense industry. It is headquartered in Virginia.
On September 23, investment advisory Goldman Sachs upgraded Northrop Grumman Corporation (NYSE:NOC) stock to Neutral from Sell with a price target of $350, noting the firm was best positioned for growth in light of increased opportunities in the space realm.
At the end of the second quarter of 2021, 42 hedge funds in the database of Insider Monkey held stakes worth $1 billion in Northrop Grumman Corporation (NYSE:NOC), up from 40 in the preceding quarter worth $1.5 billion.
In its Q4 2020 investor letter, Artisan Partners Limited Partnership, an asset management firm, highlighted a few stocks and Northrop Grumman Corporation (NYSE:NOC) was one of them. Here is what the fund said:
“New purchases include Northrop Grumman. Northrop Grumman is a leader in manned aircraft, unmanned aircraft, spacecraft and missile-defense systems. We initiated a position in November 2020, as we believe the name is trading at an undeserved discount, despite having the potential to accelerate revenue over the next 24 months. In 2020, Northrup signed a contract to work with the US Air Force on their Ground Based Strategic Deterrent (GBSD) and B21 bomber. We believe the company’s portfolio is well-positioned with a highly desirable space segment business, significant classified content and GBSD driving growth. While the market has been focused on a “blue wave” risk to the defense budget, the industry is typically driven by threat assessment rather than budget constraints. If budget cuts were ever to affect the US Army, that customer represents less than 10% of the company’s revenue. This reinforces our belief that Northrop is well-positioned for the future and trades at an attractive valuation.”
4. Howmet Aerospace Inc. (NYSE:HWM)
Number of Hedge Fund Holders: 47
Howmet Aerospace Inc. (NYSE:HWM) is a Pennsylvania-based firm that markets engineering solutions for the aerospace industry. It is ranked fourth on our list of 11 best space stocks to buy according to hedge funds.
On September 27, investment advisory UBS initiated coverage of Howmet Aerospace Inc. (NYSE:HWM) stock with a Buy rating and a price target of $40, noting the firm was attractively positioned to benefit from a recovery in the aerospace sector.
At the end of the second quarter of 2021, 47 hedge funds in the database of Insider Monkey held stakes worth $3.8 billion in Howmet Aerospace Inc. (NYSE:HWM), down from 51 in the preceding quarter worth $3.9 billion.
In its Q4 2020 investor letter, FPA Crescent Fund, an asset management firm, highlighted a few stocks and Howmet Aerospace Inc. (NYSE:HWM) was one of them. Here is what the fund said:
“Howmet saw its stock price decline by around two-thirds from their Q1 2020 highs. Howmet’s price increased about three times from its low and ended the year at its all-time high. The value of its necessary and large market share business did not fluctuate as much as its stock price.”
3. Raytheon Technologies Corporation (NYSE:RTX)
Number of Hedge Fund Holders: 53
Raytheon Technologies Corporation (NYSE:RTX) is a Massachusetts-based aerospace and defense company. It is placed third on our list of 11 best space stocks to buy according to hedge funds.
On August 11, investment advisory Morgan Stanley reiterated an Overweight rating on Raytheon Technologies Corporation (NYSE:RTX) stock and raised the price target to $110 from $97, predicting that the margins of the firm would expand earlier than expected.
At the end of the second quarter of 2021, 53 hedge funds in the database of Insider Monkey held stakes worth $2.1 billion in Raytheon Technologies Corporation (NYSE:RTX), down from 58 in the preceding quarter worth $2.4 billion.
In its Q4 2020 investor letter, Davis Funds, an asset management firm, highlighted a few stocks and Raytheon Technologies Corporation (NYSE:RTX) was one of them. Here is what the fund said:
“In today’s uncertain economy, we believe we have found such businesses trading at bargain prices in two sectors: industrials and financials. In the industrial space, concerns about the impact of the economic downturn on short-term profitability led to a wave of selling in a select group of leaders with durable competitive advantages, long records of profitability and bright long-term prospects. Companies like Raytheon Technologies is a wonderful example of attractive investments in this sector.”
2. Lockheed Martin Corporation (NYSE:LMT)
Number of Hedge Fund Holders: 58
Lockheed Martin Corporation (NYSE:LMT) is ranked second on our list of 11 best space stocks to buy according to hedge funds. The company operates as a security and aerospace firm. It is headquartered in Maryland.
On September 27, investment advisory Morgan Stanley maintained an Overweight rating on Lockheed Martin Corporation (NYSE:LMT) stock with a price target of $458, underlining that investor interest in the firm was the highest level in a decade.
Out of the hedge funds being tracked by Insider Monkey, New York-based firm Arrowstreet Capital is a leading shareholder in Lockheed Martin Corporation (NYSE:LMT) with 536,001 shares worth more than $202 million.
In its Q4 2020 investor letter, RiverPark Advisors, LLC, an asset management firm, highlighted a few stocks and Lockheed Martin Corporation (NYSE:LMT) was one of them. Here is what the fund said:
“Despite better-than-expected third quarter results, LMT shares were weak for the quarter as defense spending is expected to be flat for the coming year. With a record $150 billion backlog and almost 30% of its revenue coming from building F-35 aircraft with deliveries forecast to reach 180 per year in 4-5 years (3Q’s revenue upside was from the F-35), we believe LMT should grow at a higher rate than overall defense budget growth and Street expectations over the next several years. Further, strategic acquisitions (LMT acquired AJRD for $4 billion in late December), debt pay down, a 3% dividend yield, and continued share buybacks from $6 billion per year of free cash flow should lead to even greater shareholder returns.”
1. The Boeing Company (NYSE:BA)
Number of Hedge Fund Holders: 59
The Boeing Company (NYSE:BA) is placed first on our list of 11 best space stocks to buy according to hedge funds. The company makes and sells aerospace products. It operates from Illinois.
On September 29, investment advisory Bernstein upgraded The Boeing Company (NYSE:BA) stock to Outperform from Market Perform and raised the price target to $279 from $252, noting that the global travel industry was rebounding and would benefit the aerospace firm.
At the end of the second quarter of 2021, 59 hedge funds in the database of Insider Monkey held stakes worth $1.3 billion in The Boeing Company (NYSE:BA), the same as in the preceding quarter worth $1.4 billion.
In its Q1 2020 investor letter, Miller Value Partners, an asset management firm, highlighted a few stocks and The Boeing Company (NYSE:BA) was one of them. Here is what the fund said:
“We’ve known Boeing for a long time. It’s always been a high quality company that’s traded for a premium valuation owing to its position as a global duopoly. We’d looked at it recently after weakness due to its highly publicized Max 737 issues, but it never got cheap enough for us to pull the trigger. After the pandemic, the stock went into freefall as its customer bases’ business dried up and people worried about its liquidity. The stock fell from $338 on February 19th when the S&P hit its high to a low of $89. We bought the stock after the new CEO Dave Calhoun said publicly that it would not take government capital if it required equity dilution because it had many other options. Our average price is just above $120 where it was trading for less than 7x what it earned in 2018. It will likely take a while to normalize to those earnings levels, but this business will survive and ultimately we will own a leader in a global duopoly. Even on depressed forecasts, the company currently has about a 10-15% free cash flow yield. If and when the economy normalizes, we think Boeing could be worth more than double its current price.”
You can also take a peek at 10 Best Stocks to Buy According to Billionaire Ken Fisher and 10 Best Stocks to Buy for the Next Ten Years.
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Disclosure. None. 11 Best Space Stocks To Buy According To Hedge Funds is originally published on Insider Monkey.
