Stars lining up for Newsat

Newsat jumped this morning on an update on its project to launch its satellite.

Newsat (NWT) rocketed to a four-month high this morning after it took a big step forward in its plan to become the first Australian company to launch its own satellite.

Management said it has completed the financing documents for its Jabiru-1 satellite with a number of parties, including the US and French governments.

The financing facility has enabled Newsat to make a further $US45 million progress payment to Lockheed Martin, which is building Jabiru-1. The launch of the satellite by French company Arianespace is targeted for 2015.

Shareholders would be pleased to see the stock gain 2 cents, or 5%, to 42 cents in early trade as Newsat has been one of the worst performing stocks in the last financial year with its capital raising depressing its share price.

But as I have written this week, I believe Newsat will redeem itself over the next 12 months as the market gets more confident about the launch.

It is also worth noting that Credit Suisse has initiated coverage on Newsat with an "outperform" recommendation and 69 cent price target as the broker said the returns made by satellite companies are "highly attractive" given that they typically generate a 20% plus return on invested capital.

Those who follow technical indicators would also be encouraged to see the stock bounce hard from its double bottom of 33.5 cents. If Newsat can keep its head about 43 cents in the coming weeks, it will put the stock on a higher trading band.

Newsat is a member of the Uncapped 100.