Finance
Why US superconductor stocks jumped 8% today
American superconductor (NASDAQ: AMSC) is a green energy companyHelping power grids optimize network reliability, efficiency and performance generates approximately 84% of the company’s revenue, while providing wind turbine control systems accounts for the remaining 16%. But did you know that American Superconductor also plays a role as a defense stock in its spare time?
I know. I was as surprised as you were when I heard this. But it’s true.
It’s also why shares of American Superconductor are up 8.7% today as of 1:00 PM ET.
American Superconductor’s major military contract
American Superconductor announced today that it has won a $75 million “multi-year, multi-unit supply contract” with Canadian shipbuilder Irving Shipbuilding, the company that builds 80% of Canada’s naval vessels. Beginning in 2026, American Superconductor will supply Ship Protection Systems (SPS) to Irving for installation aboard Royal Canadian Navy ships.
SPS is a naval mine protection system already in use on large U.S. Navy amphibious warships, and it will soon be installed on much smaller RCN Surface Combatant Ships, a new class of ships roughly equivalent in size to the U.S. (Flight I) Arleigh Burke- class destroyers. SPS works by “degaussing” the ship to reduce a ship’s magnetic signature, making it less “visible” to mines. American Superconductor described the ability to produce SPS with a “smaller footprint” as a “breakthrough … in world-class mine protection.”
The company also thought the breakthrough could help it drive international growth in this new military segment of the business.
Is American Superconductor stock a buy?
American Superconductor has grown quite well without the new military activities. According to data from S&P global market informationturnover has grown by approximately 21% annually over the past five years.
While the stock isn’t yet profitable, American Superconductor generated positive free cash flow for the first time since the pandemic began last year and is expected to become non-GAAP profitable this year – with GAAP earnings arriving sometime after 2025. Still an obvious buy, I think stocks are watching it.
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Rich Smith has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has one disclosure policy.
Why US superconductor stocks jumped 8% today was originally published by The Motley Fool
