3 Space Stocks to Buy in October

Rocket Lab has a $2.36 billion backlog and generated approximately 78% of Q3 2026 revenue from its space-systems product segment, though it remains unprofitable. Intuitive Machines' Q2 2026 revenue rose 310% year over year to $206.2 million, with its Lanteris acquisition contributing $166.7 million, or 81% of sales, but the company is also still loss-making. Karman Holdings offers the strongest current earnings profile, with Q2 net income up roughly 106% to $14 million and a record $1.3 billion backlog, although its 127x P/E valuation is a significant risk.

Analysis

The investable distinction is not “space” exposure but where each company sits in the value chain. RKLB’s component and systems business should command a better revenue multiple than pure launch because it is less cadence-sensitive and can sell across multiple launch platforms; successful Neutron execution would add a material embedded-option value, but any schedule slip risks turning that option into a cash-burn discount. LUNR’s reported growth is currently acquisition-weighted, so the key underwriting variable is Lanteris backlog conversion, gross-margin retention, and working-capital consumption—not the headline growth rate.

KRMN is the cleanest beneficiary of missile replenishment and launch-vehicle demand, but its valuation leaves little room for ordinary execution. At a triple-digit earnings multiple, even sustained profit growth can fail to support the equity if defense-program mix shifts toward lower-margin development work or if backlog converts more slowly than expected. Its broader defense linkage also makes it less correlated to civil-space funding than RKLB or LUNR, creating a useful relative-value hedge rather than a standalone momentum short.

Over the next 1-3 months, quarterly bookings, funded backlog, gross margin, and cash-flow guidance matter more than launch announcements. Over 6-18 months, the likely winners are suppliers with repeatable production economics and qualification barriers; that favors KRMN operationally, while RKLB has the strongest path to becoming a vertically integrated prime if Neutron stays on schedule. The contrarian risk is that investors are extrapolating government-space enthusiasm into revenues before appropriations and contract awards are fully funded; a continuing resolution, procurement delay, or launch failure would hit the unprofitable names disproportionately.

Key Decisions for Investors

• Initiate a 6-12 month long RKLB / short KRMN pair, sized beta-neutral: RKLB offers upside from improving systems mix and Neutron milestones, while KRMN supplies a valuation hedge. Target 20-30% relative upside; exit if RKLB reduces Neutron timing confidence or KRMN delivers sustained earnings growth materially above consensus.
• Keep LUNR on a catalyst watch rather than chase revenue growth. Upgrade to a long only after management discloses Lanteris organic bookings, segment gross margin, and a credible path to positive operating cash flow; failure to show sequential margin improvement over the next two reports would invalidate the acquisition-synergy thesis.
• For KRMN holders, use defined-risk downside protection into the next earnings report via 3-6 month put spreads rather than adding outright. The central risk is multiple compression, not necessarily an earnings collapse; reassess if backlog growth decelerates or book-to-bill falls below 1.0x.
• Monitor US defense appropriations, NASA award timing, and each company’s funded-versus-unfunded backlog. A federal funding disruption is a near-term reason to reduce LUNR and RKLB exposure first, while a sustained missile-procurement acceleration would favor retaining KRMN despite its premium multiple.