3 Best Canadian Space Stocks for June 2024

Canada has the distinction of being the third country to have built and operated a satellite in space, after Russia and the US.

The Canadian Space Agency (CSA) is the most prominent entity in the Canadian space industry, but even though the private sector is not as potent as the American or Chinese space industry, there are a few strong Canadian space stocks that can give you exposure to this industry.

Pros and Cons of Canadian Space Stocks

  • Powerful cyclical growth potential.
  • Mature organizations with strong legacies.
  • Diversity within the industry.
  • Weak dividend stocks.
  • Unpredictable nature of the industry.

Factors to Consider When Investing in Canadian Space Stocks

Space is costly, and this is one of the reasons why it is still mostly dominated by the government.

But the trend is slowly changing, especially now that commercial opportunities are emerging. Most of the Canadian private space companies are concentrated around satellites, which is becoming an increasingly competitive space.

Growth opportunities in this segment are tied mostly to the innovations in the sector and not just to the size and scale of the satellite network.

The largest satellite company in the world, i.e., Luxembourg-based SES, only has around 70 satellites, and its annual revenue is more than double the market capitalization of the four Canadian satellite stocks listed below.

So when analyzing and comparing Canadian space stocks, you should look into the innovations the companies have made in the past and determine whether they are capable of replicating the feat in the future as well.

Canada’s proximity to the US is both a benefit and a problem for space companies. The US has clear dominance in the space industry, and if it’s seen as a competition, it weakens the position of Canadian space companies.

On the other hand, the proximity allows it to tap into the mature US space segment. It also allows Canadian space companies to collaborate with NASA and private space companies in the US, which are often at the cutting edge of space technology.

The financial stability of space stocks may differ from one company to another based on their business models. Companies that offer long-term, contracted services like satellite time may have steadier financials than companies that depend upon individual contracts like developing a new satellite.

Top Canadian Space Stocks

The Canadian space stocks represent a variety of companies, though most of them lean heavily towards the development and operation of satellites.

1. MDA Ltd.

MDA Ltd. logo
  • Ticker: MDA.TO
  • Forward Dividend Yield: N/A
  • Upcoming Dividend Date: Jun 22, 2024
  • Market Cap: $1.57 Billion
  • Forward P/E Ratio: 26.28

MDA is a Brampton-based company that has been operating since 1969 and has a long and diverse history with space.

The company developed the first low-cost earth observation ground station that could be transported from one place to another in 1974. This was the first in the series of many innovative contributions of the company to not just Canada’s space program but the space community at large.

The company offers three main services, including geo-intelligence. From the world’s first Earth Observation satellite launched in 2007 to its successor, Chorus, which is capable of taking in 500 km images (image swath), it’s a major player in this category.

It also offers satellite system services honed from over 350 successful missions. Another service it offers is space robotics. Its Canadarm 1 and 2 (robotic arms) have a 100% success rate.

MDA Ltd. images

MDA has a strong presence in multiple space-related domains and a history of working with major global space agencies, giving it a strong organic edge.

As for the stock, we have relatively limited history to draw conclusions from since the company only started trading publicly in 2021, and the performance in the two years between April 2021 and April 2023 has been relatively dismal – over 60% decline.

But it would be smarter to make a decision about this stock, especially if you are planning on holding it long-term, based on its market presence and future potential, rather than its performance in a weak market.

2. Magellan Aerospace Corporation

Magellan Aerospace Corporation
  • Ticker: MAL.TO
  • Forward Dividend Yield: 1.30%
  • Upcoming Dividend Date: Dec 29, 2023
  • Market Cap: $452.55 Million
  • Forward P/E Ratio: 11.62

Mississauga-based Magellan was formed in 1996 from the pieces of an older company – Fleet Industries, which started out in 1928 in the US. It built smaller aircraft but closed down that business in 1957.

A few decades later, the remaining Canadian operations of the company were spun out to a different entity – Magellan. Thanks to its roots, aerospace has been the primary focus of the company’s business, but it has also ventured into other market segments, including space.

Its space-related products include creating mechanical parts for spacecraft and satellites, space avionics, as well as small satellite bus platforms, and cost-effective solutions capable of carrying loads as small as 50 kg for one series and as large as 530 kg for another.

It also offers a range of satellite-related services, including assembly, integration, and testing.

Magellan Aerospace Corporation image

Even though it’s counted among the Canadian space stocks, it’s not as exposed to the space industry as the other stocks on this list, as its aerospace business can provide a buffer.

But it may also make the stock vulnerable to aerospace market headwinds, something that other space stocks may be immune from. The stock has experienced two bullish phases in the decade between 2012 and 2022.

The first phase lasted between 2012 and 2017 and pushed the stock up 500%, and the second pushed its value up by almost 120% in less than a year (between March 2020 and May 2021).

3. Telesat Corporation

Telesat Corporation Logo
  • Ticker: TSAT.TO
  • Forward Dividend Yield: N/A
  • Upcoming Dividend Date: Jun 22, 2024
  • Market Cap: $675.26 Million
  • Forward P/E Ratio: 0

Telesat is a satellite operating company that has been around since 1969. It was originally established by the Canadian parliament to provide satellite communications. In 1971, the company launched Anik A1, which was the first commercial domestic communications satellite in our geostationary orbit.

Over the years, the company has made several breakthroughs in space technology.

Its main service to the commercial sector of North America is a range of connectivity solutions for different private and government entities, like telecom operators and defence.

It has two major satellite clusters at its disposal – 188 Lower Earth Orbit (LEO) Satellites and 14 Geostationary (GEO) Satellites. The teleport network on the ground act as the primary communication bridge.

Telesat Corporation image

Telesat is an old company with a long history of successful operations and decent space-based infrastructure that allows it to produce a range of communication services to the commercial and public sectors.

But the stock is relatively new and has suffered the same fate as MDA – a powerful decline since inception. However, it would be a good idea to look at its financials and underlying strengths to determine whether the stock has what it takes to turn things around.

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Even though it doesn’t feel like the space race of the twentieth century, space is experiencing a boom and increasing attention from the private sector.

Canadian space stocks that may not look healthy short-term prospects may prove to be powerful long-term holdings, assuming you analyze each stock for its strengths and weaknesses instead of betting on the industry as a whole.

If you are looking for a different innovative market segment to invest in, these biotech stocks may be worth looking into.

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Author Bio - Christopher Liew is a CFA Charterholder with 11 years of finance experience and the creator of Wealthawesome.com. Read about how he quit his 6-figure salary career to travel the world here.

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