Maxar Technologies (MAXR) recently suffered a 10% decline immediately after a 27% spike. Risk-tolerant investors are giving serious consideration to this high-flying space and defense stock for good reason.
Based in Westminster, Colorado, Maxar makes satellites, products used on satellites and other advanced communication equipment. The purpose of Maxar’s creations is to observe activity on Earth and provide radar essential for safe flights. The company is the result of a merger between MDA Holdings Company and DigitalGlobe. Maxar is the parent company of Vancouver’s MacDonald, Dettwiler and Associates, Ltd. Maxar is listed on the New York Stock Exchange as well as the Toronto Stock Exchange.
Maxar is currently priced around $7.50 on the NYSE. Take a look at the company’s 5-year chart and you will be dismayed. The stock traded at $80 and change in the spring of 2014. Though Maxar has suffered quite the precipitous decline in the past half-decade, there is hope for a massive rebound in the near future. Earlier this month, Maxar was chosen as the primary provider of the propulsion and power element for NASA’s Gateway lunar orbital platform. The company’s most notable products include the International Space Station’s Dextre and Canadarm2 remote manipulation systems. Maxar’s Candarm is also employed on NASA’s Space Shuttle to boot. If the United States forms a “space force” as President Trump has indicated, Maxar will benefit. Investors confident in Trump’s re-election are wise to consider a stake in Maxar.
Aside from the products detailed above, Maxar also provides myriad operational services to government and commercial organizations across the globe. The company provides everything from aviation information systems to airborne surveillance solutions, communication satellites including payloads, robotic surgery through its NeuroArm program, optical remote sensing and imagery, maritime information systems and geospatial information services. These services will undoubtedly prove critically important in the years and decades to come as the human race ventures into space in search of natural resources and other habitable planets. Unlike many other tech companies, Maxar has clearly diversified its products and services to serve a variety of purposes.
Maxar’s stock increased by about 30% after NASA revealed the company was selected for its 50-kW solar electric propulsion system that powers NASA’s upcoming lunar mobile service and command module. This project is a key component of the aforementioned Lunar Gateway space station. If America ever returns to the moon, it will likely be accomplished through this uber-complex lunar mobile module. Unfortunately, investor enthusiasm for Maxar fizzled shortly after the announcement. The stock declined nearly 10% after its initial increase.
Maxar rakes in about $2 billion of revenue each year. Space and defense investment analysts insist this high-tech company deserves much more credit than it gets for its creative tech products and services. However, Maxar’s stock is down more than 80% in the past year alone. Subpar earnings have scared away potential investors. Maxar will likely receive upwards of $400 million as a result of its work with NASA. This contract is sweet music to investors’ ears, especially after company leaders exited a contract previously awarded by the infamous DARPA.
DARPA is an acronym that stands for the United States military’s secretive Defense Advanced Research Projects Agency. This unexpected exit alarmed investors as Maxar currently has more than $3.3 billion in net debt. The fact that Maxar has zero free cash flow to offset this debt is startling to say the least.
So, should investors buy, sell, or hold?
Hold or buy. If you are a gambler willing to roll the dice on tech stocks, Maxar is right up your alley. It appears as though the Trump administration is hell-bent on returning to the moon, establishing a military wing in space and re-establishing the United States’ dominance in the skies above. Maxar is poised to benefit from this 21st century space race. It is certainly possible the company’s deal with NASA will lead to even more contracts.
Investors confident in President Trump’s anticipated re-election should consider a stake in this beaten-down tech stock. If Maxar scores another significant contract, investors will have the opportunity to capitalize on yet another “dead cat bounce” that might prove quite profitable.
Regards,
Ethan Warrick
Editor
Wealth Authority
