Virgin Group Eyes Space Entrepreneurship: 3 Stocks in Focus
With Virgin Galactic ready to send a rocket to space, Virgin Group is geared up to compete with its industry rivals in the space flight segment. Founder Richard Branson told CNBC last week that he believes Virgin Galactic is ready to be in space within weeks.
Virgin Galactic, the corporate giant’s space flight company, is among the numerous companies worldwide that are aiming to offer space tourism at cheaper ticket prices to grab the huge customer base.
Apart from Virgin Galactic, Blue Origin and SpaceX are also working on their rockets to tap into revenues that space tourism promises to generate. Both companies are developing reusable rockets that could bring the cost of space transportation significantly down.
Blue Origin targets to begin its space tours by 2018 end with its New Shepard rocket. The company’s New Glenn rocket however plans to cater to any customer base, be it military, civil or commercial after its launch in 2020. SpaceX’s reusable Falcon 9 rocket completed its first successful test flight last week above California. The company plans to start cargo missions to Mars by 2022 before preparing to take aboard a human crew by 2024.
Per the CNBC report, a ticket on Virgin Galactic’s SpaceShip Two currently costs $250,000. Branson has said he would like to see the prices reducing to $40,000 over the next 10 years.
Given that competition is getting fiercer in the space industry, it would be a good idea to keep a few stocks in your watch-list that could ride the space segment growth.
Space Industry Anticipates a Boom
According to Bank of America Merrill Lynch, the space industry could reach a valuation of $2.7 trillion in the next three decades. Morgan Stanley, on the other hand, estimates global space industry revenues to rise to $1.1 trillion or more by 2040. As more corporate giants work in the space travel field, the cost of space access should decrease.
More than 80 countries are now working on space programs, pushing for innovation and raising their investments. The space segment is made up of more components than just space flights and tourism. The need for more satellites is felt as internet accessibility has become imperative for internet companies for fast-paced growth.
Less expensive and more efficient satellites are making internet bandwidth easily available worldwide and cost-effective than ever before. "The demand for data is growing at an exponential rate, while the cost of access to space is falling by orders of magnitude," Morgan Stanley said.
More companies are exploring the space segment now with about 70 global stocks prominent in the Bank of America Merrill Lynch report. Major aerospace, defense and technology companies such as Boeing BA, Lockheed Martin LMT, Facebook FB, Microsoft MSFT are also working efficiently in this domain.
Stocks in Focus
Here are a few stocks that could benefit from the growing prospects of the space industry:
Adobe Systems Incorporated ADBE is one of the leading software companies worldwide. They offer an array of products and services for enterprises, developers, creative professionals, marketers etc. The service provider stands to benefit from the rising number of internet users. Adobe carries a Zacks Rank #2 (Buy) and its earnings are expected to grow 57.8% for the current year.
Softbank Corp. SFTBY offers telecommunication services. The company’s business segments consist of mobile and fixed-line communication, Internet culture, broadband infrastructure etc. Softbank has invested $1 billion in OneWeb and its Vision Fund has more scope to invest in the growing space economy. Softbank carries a Zacks Rank #1 (Strong Buy) and its earnings are anticipated to grow 45.6% for the current year.
Shopify Inc. SHOP offers cloud-based commerce platform. The platform allows merchants to design, set up and manage their stores through mobile, web, social media etc. Shopify’s easy-to-use platform has made it popular among the growing number of small entrepreneurs and therefore, the company could see its business grow as more people gain access to the internet. The company sports a Zacks Rank #3 (Hold). Shopify’s earnings are expected to grow 37.5% for 2018.
You can see the complete list of today’s Zacks #1 Rank stocks here.
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