The space economy’s potential has drawn a lot of attention from investors in the past couple of years. An array of privately held space stocks are listed on the stock exchange, of which many have taken the SPAC route.
In fact, according to a Morgan Stanley report, the space economy could surge more than $1 trillion by 2040. Therefore, investing in space stocks could be a megatrend for investors with a considerable risk appetite.
There are several reasons why the space industry has taken off the way it has of late. First, the technological hurdles have smoothened out considerably, with the advancements in multiple technologies such as nanotechnology, AI and others. These rapid developments have also led to a decline in the cost of potential space travel.
On top of that, you have existential crises such as overpopulation and climate change, threatening life on Earth. Therefore, researchers suggest that space commercialization could provide greater resources and space for humans in reversing many of its problems. With that being said, let’s look at three of the most promising space stocks at this time.
Space Stocks To Buy: Virgin Galactic (SPCE)
Richard Branson’s Virgin Galactic aims to make space tourism a reality. It went public back in 2019 after its merger with Chamath Palihapitiya’s SPAC Social Capital Hedosophia. Since then, it has had its fair share of ups and downs, but long-term investors remain hopeful of SPCE stock’s ability to develop a revenue-generating business for space tourists.
Virgin Galactic has an impressive fleet of spaceships which it continues to refine and expand over time. Its current spaceflight system includes the SpaceShipOne, SpaceShipTwo and a carrier jet called the WhiteKnightTwo. Additionally, the SpaceShipThree is also under construction, which has a better design, efficiency, and a higher turnaround time.
In terms of activity, it is still mid-way in its test flight schedule and hopes to resume test flights in May after suffering continued setbacks. Therefore, it appears it won’t begin flying passengers until next year. Regardless of the time, if it can continue polishing its systems, it could have generated multi-million dollars in revenues in the coming years.
Lockheed Martin (LMT)
Lockheed Martin is a juggernaut of the aerospace and defense business providing highly specialized services to its customer base. Despite the challenges presented by the pandemic, it is coming off one of its strongest years to date, generating over $65 billion in revenues.
We are only in April, and the company has already secured $8 billion worth of contracts. LMT stock is up a healthy 12% in the past three months.
Its fourth quarter results recently reported, where revenues were up 7.2% to $17.03 billion, comfortably beating analyst estimates. Moreover, it forecasts revenues to fall between $67.1 billion and $68.5 billion in 2021.
It has started the year off with a bang, gathering multi billion-dollar contracts. Perhaps the most lucrative one involves the provision of satellites to replace the space-based infrared system. Other contracts involve the provision of defense systems, including anti-ship missiles, air-to-surface missiles, and the Presidential Helicopter Replacement Program.
Therefore, Lockheed Martin is positioned incredibly well in expanding its product portfolio and engineering capabilities into developing refined solutions for its clients.
Northrop Grumman (NOC)
Northrop Grumman is a highly diversified aerospace and defense company. It is among the leading companies in its sector, along with Lockheed Martin.
Similar to Lockheed, it has stayed resilient in the face of the pandemic, raking over $36 billion in revenues in the year. Moreover, it continues to hit the ball out of the park, securing highly lucrative defense contracts from the US and its allies.
It’s been a busy year already, for NOC stock winning multi billion-dollar worth of contracts. It secured a $3.93 billion missile defense agency contract in March. The contract will have a duration of more than five years. It also won a $450 million modification to its existing contract with the Navy and Air Force. It is also partnering with Raytheon Technologies (NYSE:RTX) to develop the next-generation military interceptor.
Therefore, with so much on its plate, NOC stock should continue posting sizeable gains for its investors.
On the date of publication, Muslim Farooque did not have (either directly or indirectly) any positions in the securities mentioned in this article.