$1.2B Sovereign SpaceX Bet: 2 Space Stocks to Buy, 4 to Avoid

Norway just dropped $1.2 billion on SpaceX, and suddenly every space stock out there is going to look tempting. Don't fall for it.

The obvious names were ranked one by one, and the fundamentals absolutely crushed some of the market's favorites. But buried in this list are 2 stocks that actually deserve your attention.

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In today’s email, we went through the list … Below, you’ll find our full findings on 3 space stocks to avoid and 2 to buy now.

What Happened? 

Some background first. Norway runs the largest sovereign wealth fund on the planet, worth about $2.3 trillion. They move slow, they move big, and when they step into something new, people pay attention.

On August 12th, they released a $185 billion profit report and disclosed a $1.2 billion stake in SpaceX. And remember, SpaceX only went public in June. So one of the most disciplined institutions in the world is backing a stock that's been trading for about two months.

No matter how you look at it, this is a huge catalyst for space stocks. But which ones are actually worth buying? We took a look … Here’s our roundup of stocks to avoid, and stocks to buy.

Let’s start with the obvious one…

Space Exploration Technologies (SpaceX)

The biggest sovereign fund on Earth just put a billion dollars to work here, so SpaceX (SPCX) is worth a closer look.

Here’s an interesting wrinkle: The same fund voted against Elon Musk's Tesla pay package not once, but twice. They have reservations about the man. And they bought anyway. That tells you how badly the smart money wants space exposure.

Wall Street is dreaming big, too. 24 analysts cover the stock, and their average price target implies an upside of more than 65%. But the panel is split: you have 5 Hold recommendations and 1 Sell recommendation to take into account.

But here's where we bring it back to Earth. Our Zen Ratings system weighs 115 different factors when evaluating a stock. And SpaceX comes in a C, a Hold recommendation, in the top 67% of all stocks. 

C is average … Not great. Or as our Editor-in-Chief says … When you see a C, the immediate response is: C-ya later.

Looking at the Component Grades that shape the overall grade, Sentiment is the one strong spot. But Value, Financials, and Safety all land in the bottom quarter of the market. That's a serious tell. This is a company that just went public, and still runs at a loss. So one bright spot up top, and a soft foundation underneath. Not a disaster, just not yet a reason to buy.

There's also a wrinkle: The post-IPO lockup is expiring right around now, and more shares floating around can mean more turbulence. So this one goes on the watch list, not the buy list. Let's keep it moving and look at the name everyone used to call the public version of SpaceX.

So if the most obvious pick isn’t worth buying now, what stocks are?

Get 3 more stocks to avoid and 2 to buy…

Rocket Lab Corp (RKLB)

That name is Rocket Lab (RKLB), and they're the other company actually putting rockets into orbit. This is not vaporware, it's an operating launch provider, which is why retail investors love it.

The consensus on Wall Street is a Strong Buy recommendation, and the average price target implies an upside of almost 40%. But here's the thing: 2 highly-rated analysts see things quite differently, either projecting downside or limited upside. So there is a split here.

Well, here's the kicker. Our system rates Rocket Lab a D, a Sell recommendation, down in the bottom 17% of the market for overall fundamentals.

There's one decent mark, Growth lands in the top 24%, above average. But Value drops into the bottom fifth, and the single ugliest number on the page is Sentiment, an F, all the way down in the bottom 2%.

And here's why that matters. Sentiment is our smart-money gauge, and it's flashing the opposite of what the analyst headlines say. You've got a strange split, the published targets say Strong Buy, but the quiet signals underneath say something's off.

Until there's a huge improvement on that front, it's a watch, not a buy. For now, let's forge ahead to a name that's been absolutely electric this past year.

AST SpaceMobile (ASTS)

Meet AST SpaceMobile (ASTS). Wild pitch: beam a cell signal from satellites in space straight to the ordinary phone in your pocket, no special hardware, no dish, nothing. If it works at scale, it's huge.

And investors have treated it that way, the stock is up more than 46% over the past year. So this is not some undiscovered gem. The crowd has shown up. The question is whether they're early or wrong.

Wall Street is still split. There are only 7 analysts on it, and the consensus sits at a Buy recommendation, but the targets are all over the place, which tells you nobody really knows how to value a company that is still pre-revenue on its core dream.

Our system doesn't mince words. AST SpaceMobile earns a Zen Rating of F, a Strong Sell recommendation, with overall fundamentals in the bottom 3% of everything we track. No thanks.

The only even remotely decent grade is Growth, in the top 41%, the rest is a wall of red. Value, Sentiment, Financials, and Safety all grade out as F's, most in the bottom few percent of the entire market.

AST is burning enormous cash to build a network that's still mostly a promise. It could change how the world connects, or run out of runway first. Until those satellites turn into paying revenue, this is a lottery ticket, not an investment, fascinating to watch from a safe distance. Now let's move to a name that's been to the Moon, literally.

Intuitive Machines (LUNR)

This is Intuitive Machines (LUNR). They earned a real place in the history books with the first American soft landing in over 50 years. Spectacular for a company this small, and they've got NASA contracts to keep going back.

Now the price chart: up more than 110% in the past year, and down 47% in the past 3 months, and that's already enough reason to stay away.

The analyst crowd is fully on board, however. Every single one of the 7 analysts covering it rates it a Strong Buy recommendation, and the price targets are incredibly bullish.

And yet our system rates Intuitive Machines a D, a Sell recommendation, down in the bottom 9% of all stocks we track. On the numbers, it's the weakest space name looked at yet.

The 1 genuine bright spot is Growth, in the top 23%. Momentum sits mid-pack. Everything else is a problem. Value, Safety, and Financials all land in the bottom tenth of the market, and the floor is Sentiment, in the bottom 2% of every stock we track. The smart money has simply not shown up for this one. A company that lands on the Moon one quarter and posts a huge loss the next is wildly inconsistent, the ambition is not in question, the consistency is. Watch it, root for it, but the data says don't buy it yet.

That's four names now with incredible stories and grades that don't back them up. Which raises the real question here: is there anything in this space that the fundamentals actually support?

And remember, these Zen Ratings are updated daily, so visit the quote pages on wallstreetzen.com to see the latest ratings for this, or any stock you're curious about.

Now back to that question. Because the answer is yes. And it comes in two flavors.

Lockheed Martin (LMT)

Let's start with the steady one, Lockheed Martin (LMT). So why is it on a space list? Because when the whole sector lights up, the disciplined move is asking which established name has real space exposure and real fundamentals. Lockheed has both.

They run a space division doing around $13 billion in revenue a year. They build the Orion capsule NASA is using to send astronauts back to the Moon. Satellites, deep-space probes, missile-defense systems, this is a genuine space business, just wrapped inside a defense giant instead of a hot IPO.

Lockheed does something none of the previous 4 do, it makes real money, consistently. The analysts settle into a consensus Buy recommendation, with modest upside to the average target, nothing explosive, but grounded in a profitable business rather than a someday story.

And that's where our system finally starts nodding along. Lockheed earns a Zen Rating of B, a Buy recommendation, up in the top 6% of all stocks. A completely different neighborhood from everything seen so far.

And there's a real cluster of strength driving it. Start with Growth, in the top 24%. Value lands in the top 9%. Next up, Financials, better still, the top 7%. And the standout, Safety, in the top 6% of the entire market.

Put those 4 together, and you've got the picture that's been missing so far: a company whose earnings and cash flow exist, and are steady and predictable, quarter after quarter after quarter.

Lockheed is big and mature, and grows at a steady clip rather than a rocket's pace. That's the trade. You give up the moonshot for a fortress balance sheet, and results you can count on.

So Lockheed is the grown-up in the room. But it's not the single highest-rated name on this list.

Before we get to the last stock, one quick thing. If you want to stay one step ahead of the market, join the Live training every Monday. That is when we share the updated market outlook and trading plan to outperform, plus the Trade of the Week based on our proven Zen Ratings quant model.

It's a free event, but you do need to register. Just go to wallstreetzen.com/live.

Moog (MOG.A)

Alright, here's the one hinted at back at Rocket Lab. Moog (MOG.A). It'll be a shock to no one that the one true A-rated stock was saved for last. Moog makes precision motion-control components, the actuators that go inside aircraft, defense systems, and yes, satellites and launch vehicles. When a rocket steers, when a satellite adjusts, something like Moog's hardware is often doing the work. It's the classic picks-and-shovels play.

And unlike almost everything else today, this is a real, profitable, decades-old business that's been quietly compounding. In fact, the stock is up over 130% this past year, so this is not some hidden name nobody's noticed. The crowd has started to find it. The question is whether the run can keep going.

There's a real engine underneath it. This is not a story stock hoping to turn a profit someday. They've beaten earnings estimates for 12 consecutive quarters, 3 years, back-to-back-to-back, like Michael Jordan and the Chicago Bulls. The results are worth a closer look: big beats, and strong double-digit EPS growth in a vast majority of quarters. Just beautiful.

The analyst coverage is thin, 3 analysts follow it, but each one gives it a Strong Buy recommendation. Thin coverage can be its own kind of opportunity. It means Wall Street's big research machine largely hasn't shown up yet, which is often when the most interesting setups hide.

Now here's the payoff. Moog earns a Zen Rating of A, a Strong Buy recommendation in the top 2% of every stock we track. And stocks with an A rating have been our strongest performers over time. So follow the climb.

Growth grades in the top 18%, comfortably above the pack. Safety, better still, the top 13%, steady, predictable results. Financials, better again, the top 9%. Then Momentum, way up in the top 4%, the price action confirming all of it. And the standout, right at the summit, Sentiment, the top 3% of the entire market.

The one honest knock is Value, it grades right around average, the top 43%, a polite way of saying Moog isn't dirt cheap anymore after a run like that.

But a genuinely profitable space-and-defense supplier with growth, safety, financials, momentum, and sentiment all firing, and a top 2% rating across 115 factors, and you've got the profile of a quality company the market is actively waking up to. That's what an A-rated space play actually looks like.

Conclusion

So there you have it. Norway's $1.2 billion bet lit up every space stock in sight, but run the obvious names through the data and most light up red. They're worth keeping an eye on, but right now, the data doesn't support any of them.

Lockheed is the steady B with a real space business underneath it. And Moog is the one true A, the picks-and-shovels name doing the quiet work while everyone else chases the rockets.

What to Do Next?

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