The space race is clearly afoot as rockets seem to launch effortlessly everyday around the world. The increased frequency of launches is remarkable, highlighted by the notable launch events of companies like Space X.
With the global space economy estimated at around $600 B currently, McKinsey predicts it could reach $1.8 trillion by 2035, equating to a CAGR of near 13%. There are presently over 14,000 active satellites in orbit.
Satellites facilitate important data transmission for vital uses such as GPS, military communications, weather forecasting, satellite internet, and data centers in space.
Here we highlight 2 small caps with satellite exposure for your watchlist.
Frequency Electronics (FEIM) specializes in providing precision time and frequency control products, primarily for the satellite and terrestrial secure command control and communications markets. Its offerings include master timing systems, power converters, and frequency generation systems, catering to both commercial and U.S. Government clients.
Image Source: Zacks Investment Research
Zacks elected to downgrade Frequency (FEIM) to Neutral last December from Outperform (April 2024 launch) after the stock’s impressive run due to concerns about margin pressure, cash flow headwinds, and valuation. The demand story remains very much intact as evidenced by recent contract awards and robust three-year revenue guidance of $150 m.
Ideally, we are looking for margin stabilization, improved cash flow, and a better entry price.
Syntec Optics Holdings, Inc. (OPTX), is relatively new to the satellite space and hoping to grow this business. The company is a vertically integrated manufacturer of optics and photonics components and sub-systems, including optical elements, opto-mechanical components, and electro-optics assemblies for mission-critical applications.
Image Source: Zacks Investment Research
Syntec Optics Holdings, Inc. (OPTX) recently announced the quadrupling of monthly production of satellite optics as it targets new product lines for the LEO (Low Earth Orbit) satellite market. Zacks currently has a Neutral rating on the stock, waiting for a more ideal entry point due to valuation and looking for improved financial execution. Notably, the company recently solidified the balance sheet by closing a $20 m offering at $7.00/share.
Zacks’ Research Chief Names “Stock Most Likely to Double”
Our team of experts has just released the 5 stocks with the greatest probability of gaining +100% or more in the coming months. Of those 5, Director of Research Sheraz Mian highlights the one stock set to climb highest.
This top pick is a little-known satellite-based communications firm. Space is projected to become a trillion dollar industry, and this company’s customer base is growing fast. Analysts have forecasted a major revenue breakout in 2025. Of course, all our elite picks aren’t winners but this one could far surpass earlier Zacks’ Stocks Set to Double like Hims & Hers Health, which shot up +209%.
Free: See Our Top Stock And 4 Runners Up
Frequency Electronics, Inc. (FEIM): Free Stock Analysis Report
Syntec Optics Holdings, Inc. (OPTX): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).
5 Stocks Our Experts Predict Could Double In the Next Year
By submitting your email, you'll also get a free pivot & flow membership. A free daily market overview. You can unsubscribe at any time.
