This Canadian Tech Stock Boosts the iPhone 14: Is It a Buy?

This Canadian Tech Stock Boosts the iPhone 14: Is It a Buy?
data analysis, chart and graph icons with female hands typing on laptop in background

data analysis, chart and graph icons with female hands typing on laptop in background

Written by vishesh raisinghani at The Motley Fool Canada

Apple (NASDAQ: AAPL) released the latest version of its flagship smartphone last month. The new iPhone 14 has a host of new features that put it ahead of the competition. However, one feature is particularly “out of this world”.

The Emergency SOS function via satellite distinguishes the latest iPhone. It allows users to contact emergency services, even in the most remote locations. It’s a game changer for private security, but also a milestone for the ongoing commercial space race.

Interestingly, a Canadian technology company enables this new feature. This is what investors need to know.

Satellites of the iPhone 14

Almost all smartphones have the ability to quickly communicate with emergency services. Your phone, for example, can call emergency services instantly with the click of a button. However, these services are connected through local wireless service providers. That means your security could be compromised if you’re in a remote location with no network coverage.

iPhone 14 solves this by transmitting emergency messages and phone calls through a constellation of satellites in low Earth orbit. The service is available in the US (including Puerto Rico and the US Virgin Islands) and Canada.

To enable the feature, Apple has funded a service contract through a company called global star. Globalstar, in turn, has subcontracted a manufacturing and maintenance contract with MDA (TSX: MDA). The contract is worth US$327 million and could see the construction of 17-26 new satellites by 2025.

This contract is already 95% financed. That means the MDA’s revenue is secured for the foreseeable future. However, the company’s valuation does not reflect this. MDA is worth $833 million, roughly double the value of this contract alone! And the company has a huge backlog of other contracts.

race in space

The Ontario-based MDA is at the forefront of the ongoing business demand. space race. The iPhone 14 highlights how mature this industry has become and how lucrative it could be for service providers like MDA.

MDA’s order book reflects this. As of August 2022, the company had an order backlog worth approximately $1.52 billion. That’s nearly twice the size of its current market value.

These contracts include a constellation of satellites for the US Space Development Agency, Canadarm3 for NASA’s upcoming Artemis mission to the Moon, and a Synthetic Aperture Radar (SAR) satellite imaging contract with the Government of Canada to monitor the ongoing conflict in Ukraine.

These missions are critical and well-funded over several years, making the MDA’s future income reliable. I think it also makes the technology stocks devalued. Investors looking for a niche growth stock should definitely add this to their watch list.

Bottom line

Apple iPhone 14 emergency services are based on satellites. These satellites are being manufactured by a Canadian company. The contract is worth half the current market value of MDA. Investors should keep this underrated and undervalued stock on their radar.

The charge This Canadian Tech Stock Boosts the iPhone 14: Is It a Buy? first appeared in The Motley Fool Canada.

Before you consider Apple, you’ll want to hear this.

Our team of leading market analysts just revealed what they think are the top 5 stocks for investors to buy in October 2022…and Apple wasn’t on the list.

The online investment service they have run for nearly a decade, Motley Fool Stock Advisor Canada, is outperforming the TSX by 16 percentage points. And right now, they think there are 5 stocks that are better buys.

See the 5 actions * Returns as of 10/19/22

more reading

dumb taxpayer vishesh raisinghani holds positions at MDA Ltd. The Motley Fool recommends Apple. The Motley Fool has a disclosure policy.

2022

Leave a Comment