American Superconductor (NASDAQ: AMSC) is a green energy company, and helping electric grids “optimize network reliability, efficiency and performance” provides roughly 84% of the company’s revenue, while providing control systems for wind turbines accounts for the remaining 16%. But did you know that in its spare time, American Superconductor also moonlights as a defense stock?
I know. I was as surprised as you to hear this. But it’s true.
It’s also the reason American Superconductor stock is up 8.7% through 1 p.m. ET today.
American Superconductor’s big military contract
American Superconductor announced today that it’s won a $75 million “multi-year and multi-unit delivery contract” with Canadian shipbuilder Irving Shipbuilding, the company that builds 80% of Canada’s navy ships. Beginning in 2026, American Superconductor will deliver Ship Protection Systems (SPS) to Irving for installation aboard Royal Canadian Navy vessels.
SPS is a sea mine protection system already used on U.S. Navy large amphibious warfare vessels, and it will soon be installed on much smaller RCN Surface Combatant Ships, a new ship class roughly similar in size to U.S. (Flight I) Arleigh Burke-class destroyers. SPS operates by “degaussing” the vessel to reduce a ship’s magnetic signature, making it less “visible” to mines. American Superconductor described the ability to produce SPS in a “reduced footprint” size as a “breakthrough … in world class mine protection.”
The company also mused that the breakthrough could help it to drive international growth in this new military segment of the business.
Is American Superconductor stock a buy?
American Superconductor has been growing pretty well without the new military business, by the way. According to data from S&P Global Market Intelligence, sales have grown about 21% annually over the last five years.
While the stock is not yet profitable, American Superconductor generated positive free cash flow for the first time since the start of the pandemic last year and is expected to turn non-GAAP profitable this year — with GAAP profits arriving sometime after 2025. While not yet an obvious buy, I think the stock bears watching.
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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 a disclosure policy.
Why American Superconductor Stock Popped 8% Today was originally published by The Motley Fool
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