MDA Space Ltd. (MDA.TO)

Money's coming in on the trade, but what happens if that goes away?

Space industry is in early days. Prone to some disappointments. Likes it. Risk is giant IPO from SpaceX and euphoria around the group. About 20 space ETFs have launched, and they'll all need to fill positions, so demand is probably pretty strong. No problem owning as a proxy on the group.

US space companies have high growth, but not the best balance sheets and have high PEs. MDA trades cheaper and has great growth. Has a good balance sheet and is profitable. Good momentum. Will benefit from the SpaceX fervor.

Stronger-than-expected sales and operating profit, reticent to increase guidance. Space economy is big and growing secularly. Cranked up low-orbit satellite production last year, along with product innovation. Some concern on deal with Globalstar, but doesn't look as though it will have to write down the contract.

Twists and turns in news. AMZN buying out Globalstar should help them. Lumpy, but tailwinds for next 5-10 years.

Massive pipeline for new business. Potential contract from Canadian government. Management's doing a great job. More capacity for new clients. Bright future makes stock look cheap.

Trading at 3x book value, around 21x PE. Not bad, given earnings acceleration that's expected, but not inexpensive either. Overall, seems to be doing very well. Some worry over chips available to meet delivery, now resolved.

OK if you're a long-term investor. Satellite business is growing.

Top Pick in August, stopped out in September. He recently participated in the public offering when it sold shares in New York.

You have to be prepared to change your view when the situation changes. Technically, trading above all the moving averages from 200-day on up. Making relative strength highs. Almost at new highs. Space sector is a leadership group in the market.

Regarded as a US company. He thinks it'll be a success. Underlying theme is defense spending picking up 5% across NATO. Space will be a leading area, and MDA is well positioned.

IPO in the US should have no impact, though fluctuations in the CAD/USD will.

(Note the shortish timeframe.)  Still likes it. More business as space costs come down. Starting to rebuild what it lost from EchoStar contract.

Space sector is capital intensive, not many profitable companies. Space costs have really come down. Profitable, high-quality balance sheet. At 30x PE, not cheap but not expensive at all.

Recent earnings looked pretty good, $4B backlog and $40B pipeline. Not worried about cold shoulder from US, as international demand is there with not many competitors. Will work out for a 3-5 year time horizon.

Still likes it. Brutal year last year. Well positioned. Should get more contracts from Canadian fiscal spending as well as from international partners.