Al Bentley
5 min read
The latest nationwide ground stop of nearly 14,500 US flights has thrown a harsh spotlight on how much modern life leans on reliable systems in the sky. When old infrastructure creaks, attention shifts to the companies building the next layer of global connectivity. That is where the new space economy can matter for your portfolio. This article breaks down 3 stocks from our global space infrastructure shortlist worth a closer look.
The three stocks covered below are only a starting sample from this space infrastructure theme, and the full screen surfaced 20 more listed companies with equally compelling narratives that are not included in this article. If you want to identify your own high conviction angles in the global space race, head straight to the Global Space Race Stocks screener.
Hexcel (HXL)
Overview: Hexcel supplies advanced carbon fiber composites, honeycomb cores, prepregs and engineered structures that lighten commercial jets, defense aircraft and space hardware.
Operations: Hexcel generates about US$1.7b from Composite Materials and US$419.8 million from Engineered Products, offset by US$109.1 million in corporate items.
Market Cap: US$6.0b
Hexcel matters in the Global Space Race Stocks theme because its lightweight composites help launch providers and satellite builders squeeze more capability into every kilogram. The analyst consensus Narrative on Simply Wall St notes that volume growth on long running aerospace programs could be important for turning that material science into cash flow.
“The anticipated ramp up in commercial aircraft production on programs like the Airbus A320neo, A350 and Boeing 787 and 737 MAX is now backed by management guidance that reaching OEM peak build rates could add about US$500 million in annual commercial revenue over the next 3 to 4 years.”
What happens to that earnings picture if one quiet cost pressure keeps margin restoration from matching those higher aerospace and space related volumes?
If that quiet cost pressure is what keeps you up at night, read the full narrative for Hexcel to see how margins could decouple from volumes and cash flow.
Lockheed Martin (LMT)
Overview: Lockheed Martin is a global defense contractor whose Space segment builds satellites, space transport systems and national security space infrastructure.
Operations: Lockheed Martin generates about US$13.9b from Space, US$32.2b from Aeronautics, US$17.3b from Missiles and Fire Control, and US$20.0b from Rotary and Mission Systems, with most sales coming from the United States and Europe.
