SA Asks: What's the best satellite stock right now?

[Communication Satellite Orbiting Earth]
3DSculptor

What's the best satellite stock right now following news that Rocket Lab (RKLB [https://seekingalpha.com/symbol/RKLB]) plans to acquire Iridium Communications (IRDM [https://seekingalpha.com/symbol/IRDM]) through a cash-and-stock deal valued at around $8B?

Seeking Alpha analysts Dhierin Bechai [https://seekingalpha.com/author/dhierin-bechai] and Daniel Jones [https://seekingalpha.com/author/daniel-jones] gave us their picks.

Dhierin Bechai [https://seekingalpha.com/author/dhierin-bechai]: Satellite and telecommunication equipment names are increasingly of interest to space companies as they provide an essential combination of constellation, licensed frequency bands, and customers. Space-based connectivity is also increasingly becoming of interest for defense purposes.

Marking the best satellite stocks is tricky for the simple reason that many space companies with satellite exposure have already seen a significant increase in the stock price. I do like MDA Space (MDA [https://seekingalpha.com/symbol/MDA]), but its valuation has already significantly increased, and insourcing is a risk to MDA’s business. Similarly, names such as Redwire (RDW [https://seekingalpha.com/symbol/RDW]) and AST SpaceMobile (ASTS [https://seekingalpha.com/symbol/ASTS]) saw substantial increases leading up to the SpaceX (SPCX [https://seekingalpha.com/symbol/SPCX]) IPO and still bleed cash.

Pure-play operators that have not been acquired yet include Viasat (VSAT [https://seekingalpha.com/symbol/VSAT]), Eutelsat (EUTLF [https://seekingalpha.com/symbol/EUTLF]), and SES (the latter two are European companies). Of these companies, Viasat (VSAT [https://seekingalpha.com/symbol/VSAT]) saw a substantial increase in the stock price in recent trading sessions, but the company has no strong growth in the years ahead. That leaves emerging Earth observation companies such as Planet Labs (PL [https://seekingalpha.com/symbol/PL]), Satellogic (SATL [https://seekingalpha.com/symbol/SATL]), and Spire Global (SPIR [https://seekingalpha.com/symbol/SPIR]) focusing on RF intelligence as the more interesting satellite stocks at this moment.

_Dhierin Bechai leads the SA investing group The Aerospace Forum [https://seekingalpha.com/checkout/mp_1087]._

Daniel Jones [https://seekingalpha.com/author/daniel-jones]: Historically, I have always been a big fan of all things related to outer space. I firmly believe that humanity has to reach to the heavens if we want to survive in the long run.

This does not mean, however, that I am bullish about all the companies that operate in the industry. I am always skeptical of companies that generate significant net losses and cash outflows. That is why I am neutral or negative on most of these enterprises.

That said, one company that I was bullish on for quite some time and only recently downgraded from a ‘buy’ to a ‘hold’ is Iridium Communications (IRDM [https://seekingalpha.com/symbol/IRDM]). The only reason for the downgrade was because I see further upside as limited following news that it is being acquired by Rocket Lab.

However, because of its fundamental health compared to other players in the satellite space, Iridium is undeniably the best satellite prospect there is right now. It's also an interesting play, thanks to the fact that half of the buyout price will be in the form of Rocket Lab (RKLB [https://seekingalpha.com/symbol/RKLB]) stock.

Because it is heavily tied to Rocket Lab (RKLB [https://seekingalpha.com/symbol/RKLB]), Iridium (IRDM [https://seekingalpha.com/symbol/IRDM]) should see very little in the way of volatility between now and the time the transaction closes unless the deal falls through. In a market that I consider to be increasingly dangerous for investors, this stability could make sense for more defensive market participants.

_Daniel Jones runs the investment newsletter Crude Value Insights [https://seekingalpha.com/checkout/mp_1209]._

MORE ON ROCKET LAB USA

* Rocket Lab: The Iridium Deal Changes The Game (Rating Upgrade) [https://seekingalpha.com/article/4919140-rocket-lab-the-iridium-deal-changes-the-game-rating-upgrade]
* Rocket Lab: Vertically Integrating With Iridium [https://seekingalpha.com/article/4918916-rocket-lab-vertically-integrating-with-iridium]
* Rocket Lab: Half Cash, Half Stock Multiple Compression [https://seekingalpha.com/article/4918826-rocket-lab-half-cash-half-stock-multiple-compression]
* Tech stocks continued to drag Nasdaq for the week; Sandisk plunged 26% [https://seekingalpha.com/news/4609774-tech-stocks-continued-to-drag-nasdaq-for-the-week-sandisk-plunged-26]
* SA analyst upgrades/downgrades: RKLB, XOM, QCOM, DELL [https://seekingalpha.com/news/4609752-sa-analyst-upgrades-downgrades-rklb-xom-qcom-dell]