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Investing in the Space Race
Commercial space travel, space infrastructure, and satellite broadband are just a few of the areas where the space industry is foraying into the private sector today. And news of billionaires like Richard Branson and Jeff Bezos soaring into space has certainly caught the attention of investors worldwide.
There is a growing sentiment that space is finally opening up to commercial ventures. And for the smart investor, there are profits to be had. However, before you start switching up and shuffling your resources and portfolios, you need a good grasp of which stocks have the right potential.
With that note in mind, here are some of the most prospective space-related stocks that you should consider today.
Virgin Galactic Holdings (SPCE)
Virgin Galactic remains one of the biggest names as far as space tourism is concerned. With owner Richard Branson becoming the first man to visit space on a self-funded rocket, the company is holding its own against the biggest private players in the space industry. So, the potential for growth and possible returns on early investment certainly look good for many investors.
Prior to its first space flight back in July, Virgin Galactic (SPCE) shares grew by more than 200% in the preceding couple of months. But as Virgin announced their intention of selling $500 million in stock, they experienced about 17% drop in stock prices. Most analysts believe that this trend is a temporary shift that will change as the stock markets look ahead. And drops like these are inevitable because investors don’t want their existing positions diluted any further.
At the time of putting together this article, Virgin Galactic (SPCE) stocks closed around the $31.50 mark. At first glance, this initial figure appears to be a decrease if you compare it to the $60 highs they experienced earlier this year. But SPCE stocks were worth less than $18 around this time last year. So, the growth over the last year is clear and unmistakable. And if you consider how the market cap has grown to $7.41 billion, there’s no doubt that SPCE stocks are on a steady rise.
As the company is set to make commercial space travel a reality, celebrities and billionaires alike are seeking to buy the $450,000 tickets that Virgin Galactic plans to sell. So, for anyone looking to invest wisely in the space race, this one certainly looks good.
Astra Space (NASDAQ: ASTR)
Astra Space is a startup that’s rubbing shoulders with big players like Virgin in the market today. It has already secured contracts of over 50 launches to date. But a recent development has made a huge difference in the way investors see this company – a lucrative contract with the US DOD.
This particular contract was signed with Space Force, which is part of the US Department of Defense. It’s an agreement that includes multiple launches. As a result, Astra Space stock is experiencing increases of up to 30%. Of course, these are short-term bursts that may or may not sustain. But most experts expect a steady increase from here on out. Of course, there are no guarantees with space related stocks (like any other stock). However, Astra Space is surely worth looking into.
Stock prices for Astra Space recently closed at $10.20. And with an impressive market cap of over $2.1 billion, it’s no pushover in the space race. The Department of Defense is probably banking on low-cost, responsive launch capabilities from this space startup. And a few of the programs and tests are scheduled within this year. The first test payload launch for this contract should happen around late August. So, you can expect more developments in stock trends for Astra Space in the immediate future.
Astra Space, live Virgin Galactic, is leveraging the advantages of SPAC (Special Purpose Acquisition Company), which allows it to raise capital without really going public with the company. Whether or not it will guarantee returns remains to be seen, but Astra’s prospects look much better today than it did last year.
AST Space Mobile (NASDAQ: ASTS)
Investing in space related stocks isn’t just about space travel. High-tech space communications is another emerging sub-industry where the future looks bright. And AST Space Mobile is at the forefront of this niche. ASTS is creating the first-ever cellular network with its infrastructure in space. The aim is to give access to any standard mobile device eventually. This implies that the potential market is huge and ever-growing.
Today, AST Space Mobile has a market cap of over $2 billion, and current stock prices are averaging around $11. This stock price is much closer to the steady $10 or so that it enjoyed throughout 2020. The first half of 2021 was a mini-rollercoaster ride for ASTS. It peaked at over $18.61 during early February and plummeted to $7.3 in early June. But stock prices have rallied once again in the last months, and the steady $10-11 we see today is a much better indication of its reliability. Existing stock holders may expect more turbulence, but you can be sure that they aren’t going to abandon their stakes any time soon.
The world is in a relentless pursuit of data and communications technology. And any new infrastructure that can engage the global market on a better and faster network will do well in the future. There are analysts who still consider the ASTS to be a high-risk and high-reward scenario. So, make sure you get a grasp of the risks before putting big money here.
Iridium Communications (NASDAQ: IRDM)
Iridium Communications is another leader in the satellite communications industry. They’re currently run the biggest constellation of communications infrastructure. With 66 low-orbit satellites, their clients include big hitters like the Department of Defense and maritime industries.
IRDM has experienced consistent growth over a long period. There was a clear spike in early 2021 when the stock price almost reached the $50 mark. Other than that, the company has had a reliable and stable increase in stock prices. The price currently sits at $43.83, and the predictable increase has been going on for at least the last five years.
Today, IRDM’s market cap is estimated to be a whopping $5.78 billion, which beats any other space communications company. Given the steady increase in subscribers and clientele, there’s no doubt that Iridium is poised to scale bigger heights in the space race. With great prospects for the long term, investors continue to favor IRDM across the board.
Lockheed Martin (NYSE: LMT)
Lockheed Martin continues to be a long-time player in the defense contracts industry. As far as military-industrial names go, it’s among the biggest and most profitable stocks in the market. While aeronautics makes up about 40% of its sales, its space initiatives have also grown to occupy about 18% of sales. Their segment profits for space alone are only about 15%. But if you consider how over 70% of their sales are for the US government, even the space segment has a lot of potential.
Lockheed Martin (LMT) boasts of some of the most impressive stock figures in the market today. The price is currently hovering around the $360 mark. And with a market cap of over $100 billion, it’s up there among the most valuable military-industrial stocks today.
In the last one year, LMT’s lowest stock prices were about $327. The highest peaks during this period were above $390 during Sept-Oct 2020 and May-June 2021. So, you know that their experience and position in the industry give them stability even in the long run.
Investors who don’t want to be a part of military spending may avoid companies like Lockheed Martin. That aside, it’s a solid stock that has a relatively low price. And it could be a great addition to diversified portfolios that span across different industries.
Loral Space and Communications (NASDAQ: LORL)
Loral is another competitor in the satellite communications industry that’s worth looking into. Their wide range of customers includes corporate buyers and government clients. With over 15 geostationary satellites in orbit, their products include end-to-end communication infrastructure, DTH, satellite-ground networks, video distribution, etc. So, even at first glance, LORL looks like a stock worth owning for the future.
LORL’s stock is currently sitting at $36.09, which has been more or less stable for 2021. The company experienced some lows during 2020 owing to the pandemic and related changes in market trends. Stock prices for LORL went as low as $16.25 in March 2020. Other than this dip in 2020, LORL stocks have consistently stayed at the $30-40 mark for the last five years or so. Even at $36 per stock, the LORL’s market cap is an impressive $1.1 billion today.
In addition to satellite communication products, LORL also has a consultancy branch that deals with satellite control services, space and earth, and R&D solutions. So, the potential for further growth in the next few years is on the cards.
However, the real-world performance will depend on how they navigate this competitive industry. As with any stock, there are risks that come with LORL stocks. But with careful evaluation, you can diversify your investments with some shares in LORL.
Maxar Technologies (NYSE: MAXR)
Maxar Technologies was formed as recently as 2017 with the merging of MDA Holdings Company and DigitalGlobe. Although it’s not the biggest player, it certainly has a presence in on-orbit servicing satellites, satellite products, and earth observation. NASA selected Maxar as the supplier of power and propulsion for their Lunar Gateway.
After a steady price of about $41 in July, Maxar’s stocks experienced a decrease by early August. The company announced a postponement of its imagery satellites. The initial plan was to launch these Worldview Legion satellites by the 4th quarter of 2021. But the launch date is now delayed to March-June of
2022. With this development, Maxar stocks now sit at about $30.56.
However, if you consider the progress over a year, it’s still an increase from the $24 figure it hit in the middle and late 2020. And with a market cap in excess of $2.1 billion, Maxar is not going away anytime soon.
Also, the average investor may be worried about the $0.60 earnings per share that got in the 2nd quarter of 2021. But the $4.94 earnings in 2020 was primarily because the company sold its MDA business. That was a one-time profit that you can’t expect every quarter. So, all in all, Maxar Technologies still looks like a good bet for anyone wanting a taste of space related stocks.
Vector Acquisition (NASDAQ: VASQ)
Vector Acquisition is drawing the attention of investors interested in space related stocks. And the recent surge is primarily because of its merger with Rocket Lab USA Inc. With the support of the private equity company, Vector Capital, VASQ raised over$300 million in September 2020. With the added funds, Rocket Lab intends to develop a specific launch vehicle that can send up satellite constellations, support deep space missions, and facilitate easier human space travel.
Compared to the other big space related stocks here, Vector Acquisition appears more modest in comparison. Their stock price currently sits at $10.22 with a market cap of around $408 million. VASQ has enjoyed a steady price of around $10 since December 2020. Excepting a $13.95 spike back in March 2021, their stocks have consistently been stable as far as the price is concerned.
For seasoned investors with space related stocks already in their portfolios, this one may not be the first choice. But with the prospects that come with Rocket Lab, it’s surely a stock worth considering.
Northrop Grumman Corp. (NOC)
Northrop Grumman Corp. is better known as a manufacturer of defense technology. But they have a subsidiary that is especially dedicated to in-orbit satellite servicing and space logistics. The company is frequently featured in the Fortune 500s and other lists of successful corporations.
As far as satellite services go, their Mission Extension Vehicle (MEV) is an innovative product. The MEV is at the center of the company’s space logistics program, and it’s a huge reason why investors are rallying towards NOC stocks.
NOC has a market cap of more than $57 billion, which puts most other defense corporations to shame. Their stock price last closed at $358, continuing its stellar run since May 2021. The month of February, this year, saw price dips that went below $290 in some cases. But the ascent began by early March, as the stock value started picking up.
Their second vehicle, the MEV-2, recently made a successful docking on April 12, 2021. Also, their next-generation systems like the Mission Extension Pods provide cost-effective solutions to extending the life of aging satellites. With these new developments, the company is set to make new inroads into the space investment race. And any investor keeping track of NOC’s progress will be on the lookout for investment opportunities.
Nokia Corp (NOK)
Most people will be surprised to see Nokia on a list of prospective space related stocks. The telecommunications giant is better known for its domination of mobile phones and electronics throughout the 2000s. But the primary reason it’s here on this list is that NASA has entrusted it with setting up the first lunar cellular network.
Nokia will set up LTE/4G technology that will enable the exchange of consistent, high-volume data on the lunar surface. And communications tech will be a core part of NASA’s Artemis mission which seeks to make human settlements on the moon by the decade’s end.
Nokia’s price has consistently ranged around the $5-6 mark for the last 5-6 years. That makes it an incredibly affordable stock if you consider the $34.6 billion market capitalization that the company commands. There were small dips in March, 2020, but nothing so persistent as to hurt the company’s worth or value.
Also, there has been a steady rise since October, 2020, when Nokia secured the LTE contract for building 4G mobile connectivity for astronauts to use on the moon. The contract is worth over $14 billion. And more importantly, it’s supposed to launch by 2022. So, this means the company’s market value will most likely go up in the next year or so (and subsequently too).
Given their existing hold on telecommunications and their new ventures into lunar mobile networks, any investor would be glad to own shares here.
Bonus Resources – ETFs
While individual companies and stocks are a good way to invest with pinpoint accuracy, diversifying your resources is just as important. And it becomes difficult to stay on top of every space-related development and investment opportunity over time. That’s where space related ETFs come in.
ETFs provide you with the opportunity to gain exposure to a variety of stocks in diverse market segments. And you can get it done without investing thousands of dollars on separate individual companies and stocks. With the space industry, it can make sense for investors to broaden their investments across big and small players so that future prospects are brighter and better.
With that in mind, here are two space related ETFs that you can consider if you prefer a more generalized approach to investing in the space race.
Procure Space ETF (UFO)
Procure Space uses UFO as its ticker (stock symbol). So, keep that symbol in mind because it can often appear unrelated to the company’s name. Procure Space has over 30 companies that deal in a variety of space-related industries. These products and services include equipment dependent on satellite services, satellite manufacturing and operation, satellite communications, space imagery, and intelligence, etc.
By its own estimates, Procure Space expects the space economy to grow to $600 billion by 2030. And their calculations extend it to over $1 trillion by 2040 and beyond. If these estimates do materialize, early investors stand to gain much higher rewards later on.
Procure Space’s holdings today include companies like Garmin LTD (5.51%), Iridium Communications (5.34%), VIASAT Inc (4.89%). With Garmin LTD making up the single biggest net asset at 5.51%, Procure Space offers an incredibly diversified and wide-ranging list of holdings for its clients.
UFO’s price experienced a dip of $7 during March 2020. But there has been a gradual but unmistakable rise in the past year or so. During the time of writing this article, UFO stocks closed at $30.02.
Since its inception, UFO’s net asset value has grown by over 26%. While the exact market cap is uncertain at this point, the steady growth over the last few years reveals that there’s a working formula behind it.
For investors who don’t yet have a good grasp of space technologies, Procure Space (UFO) may be a good place to start. However, like any ETF, remember that UFO is also subject to the fluctuations of the market.
SPDR S&P Kensho Final Frontiers ETF (ROKT)
This is another ETF that covers space-related industries in its wide variety of holdings. As the name suggests, it’s an ETF that invests in explorations and
initiatives that push the boundaries and explore new frontiers. SPDR S&P Kensho Final Frontiers uses ROKT as its ticker.
You should note here that these ‘final frontiers’ include both space and deep sea technologies. So, if you want to invest exclusively in space-related holdings, you can go for individual stocks or an ETF like Procure Space. However, if that’s not an issue for you, SPDR S&P Kensho Final Frontiers offers more diversity in investments that cover both earthly (marine) and heavenly (outer space) avenues.
ROKT stocks opened at $41.35 when we last checked. And it’s a continuation of the steady rise that began back in late November 2020. It has experienced only one slump in the last three years, and that was in March, 2020 when most companies experienced a dip owing to the pandemic. So, worldwide diseases aside, ROKT stocks have consistently depicted a reliable rise in the past.
SPDR S&P Kensho Final Frontiers uses both quantitative methods of assigning weight and artificial intelligence to identify and capture companies that fulfill its aims. These are companies that primarily drive innovation and expand human understanding in the fields of unexplored oceans and space. So, it stands both as an investment and a means of increasing our understanding of the phenomena around us. Some may even say it’s a profitable philanthropic exercise, as contradictory as that sounds.