Maxar Technologies: Is Space the Next Investing Frontier?

Maxar Technologies was acquired but there are other alternatives.

| More on:
bulb idea thinking

Image source: Getty Images

While growth investors are focused on artificial intelligence and ChatGPT, another wave of serious innovation is emerging in the commercial space sector. We could be in the midst of a space race that attracts trillions of dollars in investment from the world’s largest corporations and government agencies. 

Maxar Technologies (TSX:MAXR) could be at the forefront of this trend. Here’s why the space race is heating up and investors should keep this underrated growth stock on their radar. 

The space race

Commercial space technology has improved enough to reignite another space race. This time, the frontrunners are America and China, who see space as a strategic frontier. China already has missions to the moon and Mars. Meanwhile, NASA has completed initial phases of the Artemis mission to the moon and is collaborating with Elon Musk’s SpaceX to eventually carry humans to Mars. 

Back on Earth, satellites in orbit are helping your iPhone connect to emergency services and giving Ukraine’s military intel on the ongoing battles with Russian forces. These critical applications cement the value of space technologies and could attract more funding from governments and corporations in the future.  

Maxar has always been a key supplier in this sector, which is why it’s a top pick for investors. 

Maxar stock

Maxar Technologies offers geospatial imagery and robotics to government and corporate clients. Its contract with the U.S. National Geospatial-Intelligence Agency has been instrumental in the Ukraine-Russia conflict. The company also has contracts with the government of Guyana to map out its terrain and a similar project with the U.S. Army’s One World Terrain (OWT) project.

Altogether, Maxar had orders worth U.S.$2.9 billion (C$3.9 billion) on its books at the end of 2022. The spacetech also projected free cash flow of U.S.$290 million (C$390 million) in 2023. Yet, the company was grossly undervalued, which is probably why it attracted the attention of private equity firm Advent.

Advent completed its acquisition of Maxar at U.S.$53.00 per share in cash, valuing Maxar at approximately U.S.$6.4 billion.

Fortunately, there are other ways for Canadian investors to gain exposure to this space race. 

MDA 

Brampton-based space tech firm MDA (TSX:MDA) used to be a part of Maxar, before the company was spun off. Now, the firm is developing the satellites for the iPhone’s emergency services and Canadarm robotic appendage for NASA’s Artemis missions. 

MDA’s market value is just $959 million, which implies a price-to-earnings ratio of 28.9. Last year, the company generated $641.2 million in revenue, which means the stock is currently trading at a price-to-sales ratio of 1.5. The company also reported $141.1 million in adjusted EBITDA, which means the small-cap stock is trading at 6.8 times EBITDA. 

Similar to Maxar, this company has a robust order backlog of $1.4 billion. Put simply, MDA is an undervalued target just like its former parent company. Growth investors looking for a stake in the space race should add this stock to their watch list.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Vishesh Raisinghani has positions in MDA. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

More on Tech Stocks

Nvidia Voyager Headquarters
Tech Stocks

Why Nvidia Stock Rallied (Again) on Tuesday

The chipmaker is expected to report earnings this evening.

Read more »

hand stacking money coins
Tech Stocks

3 Growth Stocks That Are Screaming Buys in November

The market might be soaring, but there are still lots of deals to be had. Here are three discounted stocks…

Read more »

Rocket lift off through the clouds
Tech Stocks

Why I’d Buy Constellation Software Stock, Even at Today’s Prices

Despite trading at a relatively frothy multiple, Constellation Software (TSX:CSU) stock still looks like a buy right now.

Read more »

profit rises over time
Tech Stocks

2 Reasons to Buy Kinaxis Stock Like There’s No Tomorrow

Solid revenue growth, improving profitability, and its focus on AI-powered supply chain solutions make Kinaxis stock really attractive to buy…

Read more »

Muscles Drawn On Black board
Tech Stocks

3 No-Brainer Tech Stocks to Buy Right Now for Less Than $500

If you have a bit of cash you're looking to set aside, these are the easiest tech stocks for some…

Read more »

how to save money
Tech Stocks

3 Reasons to Buy Shopify Stock Like There’s No Tomorrow

Here's why Shopify (TSX:SHOP) stock certainly looks like a buy for long-term growth investors looking for a top TSX stock.

Read more »

A child pretends to blast off into space.
Tech Stocks

2 Compelling Reasons to Snap Up Constellation Software Stock Now

Here's why I think Constellation Software (TSX:CSU) is a top-tier growth stock to own for the long-term right now.

Read more »

hot air balloon in a blue sky
Tech Stocks

3 TSX Stocks Still Soaring Higher With Zero Signs of Slowing

These three stocks may be soaring higher and higher, but don't let that keep you from investing – especially with…

Read more »