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5 Stocks to Watch as Space Industry is Set to Skyrocket

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Sreoshi Bera
·6 min read
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The space industry witnessed an exciting trajectory last year despite the pandemic slump. Per a Space Capital report, 2020 turned out to be a record year for the space infrastructure segment specifically, that hauled in $8.9 billion. Space companies have recorded a total of $25.6 billion investment in last year. In the years to come, space exploration and infrastructure projects will yield outstanding returns for investors.

Here’s Why Space Stocks Are Poised to Grow

In the coming years, the space industry will be boosted by news on new constellations of satellites entering low-Earth orbit, satellite-based Internet, space travel and point-to-point transport around the Earth.

Orbital and suborbital aerospace companies that are engaged in the launch, construction, service and operation of satellites or launch vehicles are gaining momentum. Companies like Virgin Galactic Holdings, Inc. SPCE, which focuses on space tourism, hope to ferry customers beyond Earth's atmosphere for $250,000 per seat this year.

Additionally, the companies engaged in creating technologies that provide value addition to aerospace operations, like AI, robotics, 3D printing, materials and energy storage, are growing. Maxar Technologies is one such pure-play space stock that is also poised to grow. This maker of space hardware and provider of satellite-based Earth imaging and data service is constantly working with SpaceX.

Public Listing Boosting the Space

Funding and research are constantly boosting the space. ARK Invest, which has several exchange traded funds (ETFs) in its portfolio, filed with the United States Securities and Exchange Commission (SEC) to launch a space-focused ETF under the ticker ARKX on Jan 14.

Blank check investing is an alternative way to create a publicly-listed company and has been a growing trend of late. Earlier, Social Capital had created a special purpose acquisition company (SPAC) called IPOA, which eventually merged with Virgin Galactic and the company began trading under the ticker symbol SPCE. Hence, investors who had bought IPOA shares before the merger automatically had Virgin Galactic shares. This alternative to initial public offering (IPO) is quite visible in the space industry.

On Feb 2, Astra Space Inc., maker of small rockets, announced plans to go public by merging with Holicity (HOL), a SPAC. Astra Space expects the transaction value at $2.1 billion and hopes to close the deal in the second quarter of this year. The company plans to carry out monthly launches in the latter half of 2021, with the capacity to launch satellites weighing 100 pounds.

Momentus, another pure-play space company that plans to provide "last-mile delivery" in space, also announced last year that it will be going public through its merger with blank check company Stable Road Capital (SRAC). The deal, valued at $1.2 billion, is expected to close early this year. The company has entered into a partnership agreement with Lockheed Martin and NASA.

5 Stocks to Watch Out For

Morgan Stanley estimated that the global space industry will generate revenues of more than $1 trillion by 2040, suggesting a rise from $350 billion in 2020. According to a Research and Markets report, the space industry, valued at $350 billion in 2020, is projected see a CAGR of 5.6% and reach a value of $558 billion by 2026. Given the encouraging estimates, we have shortlisted five space stocks that investors can look out for.

AeroVironment, Inc. AVAV designs and develops unmanned aircraft systems and has been working with NASA to design and develop the first Mars drone -- a helicopter. The company’s expected earnings growth rate for the current year is 1.6% against the Zacks Aerospace - Defense Equipment industry’s projected earnings decline of 12.3%.

The Zacks Consensus Estimate for the company’s next-quarter earnings has been revised 37.7% upward over the past 60 days. AeroVironment flaunts a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Leidos Holdings, Inc. LDOS offers commercial low earth orbit and cislunar spaceflight services, including payload design, mission integration, and human factors engineering. It has processed, packaged and shipped International Space Station cargo for 87 visiting vehicles that includes SpaceX and Orbital ATK. The company that belongs to the Zacks Aerospace - Defense industry has an expected earnings growth rate of 10.2% for the current year.

The Zacks Consensus Estimate for the company’s current-year earnings has been revised 1.1% upward over the past 90 days. Leidos carries a Zacks Rank #2 (Buy).

Iridium Communications Inc. IRDM operates a satellite constellation, a system of 66 active satellites which is used for worldwide voice and data communication. The company’s expected earnings growth rate for the current year is 58.7% compared with the Zacks Satellite and Communication industry’s projected earnings growth of 5.7%. The Zacks Consensus Estimate for its current-year earnings has moved 24% up over the past 60 days. Iridium Communications carries a Zacks Rank #2.

Virgin Galactic is an integrated aerospace company that develops human spaceflight for private individuals and researchers. The company’s expected earnings growth rate for the current year is 64.3% compared with the Zacks Aerospace – Defense industry’s projected earnings growth of 15.5%. The Zacks Consensus Estimate for its current-year earnings has moved 14.8% up over the past 60 days. Virgin Galactic carries a Zacks Rank #3 (Hold).

Lockheed Martin Corporation LMT is a security and aerospace company that engages in the research, design, development, manufacture, integration, and sustainment of technology systems, products, and services. The company’s expected earnings growth rate for the current year is 7.6% against the Zacks Aerospace – Defense industry’s projected earnings decline of 5.6%. The Zacks Consensus Estimate for its current-year earnings has moved 0.5% up over the past 60 days. Lockheed Martin carries a Zacks Rank #3.

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Lockheed Martin Corporation (LMT) : Free Stock Analysis Report
 
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