Value investors know that the long game is important when picking a stock. Short term gains fluctuate, but solid fundamentals mean that a company will outperform over the long-term regardless of temporary ups and downs in the market.
A few decades ago the field of technology was in its infancy and the computer space was considered highly risky and volatile. Of course, anyone who bought into companies like Apple or Intel back then are certainly reaping the rewards today.
Technology is still an investor's best bet for finding the next breakout industry. Right now IoT (Internet of Things) is the frontrunner with advances being made in data storage, infrastructure, and other forms of "smart" tech. Big data stocks and chipmakers have already seen big gains in the past couple of years and should continue to thrive. But there's another industry that looks very much like computers did back in the late 70's and early 80's – spaceflight.
The introduction of commercial space agencies is brand new. Richard Branson helped kick off the new space race with his Virgin Galactic company and now Elon Musk and Jeff Bezos have joined in with their SpaceX and Blue Horizons companies.
While still privately owned entities, there are still ways for investors to hop aboard this exciting new enterprise. Satellite telecommunications hasn't been an industry in focus for Wall Street analysts, but rapidly growing interest in spaceflight and space-related technology means that these companies may be about to enter a new bullish environment that could last decades.
A Satellite Network With Long-Term Growth In Mind
Iridium Communications Inc. (NASDAQ:IRDM) is a $715 million small-cap communications company known for its Iridium brand telecommunication satellites that services the entire globe. The company's satellite provides a number of services such as data connection, weather reports, global positioning, and virtually any other form of data that requires two-way communication.
Iridium recently launched its new Iridium NEXT satellites and is expected to fully deploy them by 2017. The company is also expanding into the expanding machine-to-machine (M2M) market which is currently its fastest growing segment.
The company reports 1st quarter earnings later this month, and investors should expect to see pleasant results. Iridium has reported an upside surprise for the last three consecutive quarters with an average beat of more than 15%.
Looking at its chart reveals good news as well.
Chart courtesy of StockCharts.com
The stock is trending higher noted by the 50-day moving average very close to eclipsing the 200-day moving average – a bullish sign. There's plenty of room for the stock to run and there's no sign of it being overbought or oversold.
Fundamentally there's a lot for investors to like as well. The stock trades at just 9.5 times earnings – well beneath the industry average of 18 and has a long-term EPS growth rate of 12.5%. The book value of the stock is $12.87 per share making it highly undervalued at its current price.
For investors looking to take advantage of SpaceX, Iridium could be a good play. The new developments in rockets like the Falcon 9 helps lower launch costs and reduce risks associated with putting a satellite into orbit. As SpaceX continues to grow and improve efficiencies, Iridium should benefit.
Looking forward, the stock looks fairly valued at around $13 per share – a staggering 80% potential
Check back to see my next post!
Best,
Daniel Cross
INO.com Contributor - Equities
Disclosure: This contributor does not own any stocks mentioned in this article. This article is the opinion of the contributor themselves. The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. This contributor is not receiving compensation (other than from INO.com) for their opinion.
Don't think they can get their full fleet of sats up in time.