There is a good chance that space technology stocks might capture the investor imagination over the next two decades. Valued at a market cap of $3.4 billion, MDA Space (TSX:MDA) has already emerged as a standout performer in Canada's aerospace sector.

MDA Space is a Toronto-based company transforming from a domestic success story into a global player in satellite systems, space robotics, and geo-intelligence solutions.

As space exploration and satellite deployment accelerate globally, MDA stock is well positioned to dominate broader market returns in 2025 and beyond, given its strategic shift in the booming low earth orbit (LEO) satellite market and upcoming lunar missions. Let's dive deeper.

The bull case for investing in MDA Stock

MDA Space offers solutions that provide satellite-generated imagery and analytics services to deliver insights in verticals such as national security, climate change monitoring, and maritime surveillance, serving government agencies, prime contractors, and space companies.

MDA Space went public in April 2021 and has almost doubled investor returns since its initial public offering. A stock's performance is closely tied to its ability to increase revenue and earnings over time. MDA Space has seen its top line expand from $394 million in 2020 to $938.5 million in the last 12 months. Unlike several other space tech companies, MDA reports a consistent profit. Over the past year, its operating margin has expanded to 9.7%, up from 3.9% in 2020.

In Q3 2024, MDA delivered impressive results, showcasing strong momentum across its space technology portfolio. MDA Space reported revenue of $282 million in Q3, up almost 38% year over year due to its satellite systems division and space robotics operation. Its adjusted EBITDA (earnings before interest, tax, and depreciation) grew by 30% to $55.5 million, while operating cash flow stood at $259 million.

MDA ended Q3 with a revenue backlog of $4.6 billion, providing significant revenue visibility to shareholders. With $140 million in cash, $155 million in net debt, and a leverage ratio of just 0.8 times, MDA is well capitalized.

The company's top line was driven by 78% growth in the satellite systems business, which accounted for 60% of sales in the September quarter. Due to strong Q3 results, MDA's management revised its full-year revenue guidance to $1.55 billion, at the midpoint estimate, up from $1.4 billion.

What next for the TSX space tech stock?

MDA began expanding 185,000 square feet of a satellite facility in Quebec in Q3. It also inked a contract with NASA for earth observation services worth up to $476 million. Additionally, MDA is forecast to allocate roughly $400 million towards capital expenditures over the next two years, which should be a key driver of earnings and revenue growth.

Bay Street expects MDA's adjusted earnings to expand from $0.40 per share in 2023 to $1.25 per share in 2026. Comparatively, revenue is forecast to grow to $1.7 billion in 2026. So, priced at 22.7 times forward earnings, MDA stock is relatively cheap and trades at an 18% discount to consensus price targets in December 2024.

MDA's growth trajectory is supported by secular tailwinds, which include rising demand for satellite constellations, space exploration initiatives, and intelligence services. Canadian investors may consider gaining exposure to this profitable mid-cap TSX stock and benefit from market-beating gains.