Best Canadian space stock to buy. Magellan Aerospace (TSE:MAL)
Magellan Aerospace Corp supplies components to the aerospace industry, trading under the ticker symbol MAL. It has two major product groups: aerostructures and aeroengines. Its engines and parts may be applied to new aircraft or as replacement parts for existing platforms.
The company provides aftermarket support by conducting specific repairs and other maintenance services. It serves both commercial (approximately three-fourths of total sales) and defence markets.
The company has more than 60 years of experience providing solutions for suborbital, Earth orbit, and deep space missions. The company also supplies high-level satellite assembly, integration, and testing services.
Magellan isn't entirely a pure-play space stock. Although it does manufacture and service parts for spacecraft, among many other things, it is also a general supplier of aircraft parts. In fact, in 2022, it signed a multi-year contract with Lockheed Martin to supply components for the F-35 Aircraft.
Its exposure to the airline industry was also the reason the stock completely collapsed amid the COVID-19 pandemic and has struggled to recover since because of the hardships in the industry. However, this does leave an attractive opportunity for those looking at Magellan now, as it is the cheapest it's been in a while.
Trading at only 14.8 times trailing cash flows at the time of writing, this isn't a super cheap stock but not outlandishly expensive either. It is also one of the only companies in the Canadian space sector that pays a dividend, albeit a small one at a low 1% yield.
Fiscal 2022 was hard on Magellan. However, analysts are expecting a large-scale turnaround in 2023. Margins are expected to increase, with a double-digit revenue jump and a return to growing earnings.