Early investments in space stocks can be interesting for long-term investors looking to take more risk in a new, volatile sector.
In the last few years, holding the best space stocks has become more popular in the market. People lie. Elon Musk, Jeff Bezos and Richard Branson are working to reach the stars first.
It is estimated that by 2040, the space industry will be worth more than $1 trillion. This shows how important this new and untapped field is.
This article explains how to invest in space stocks this year, the best space stocks to watch out for, and how to invest with competitive fees.
Why should you buy space stocks ?
According to Morgan Stanley research, the global space industry could be worth more than $1 trillion by 2040. Unused space, such as broadband by satellites and sending people into space, has vast potential for growth.
While most space companies are privately owned and few are publicly owned, governments have only recently started taking space seriously. For example, in 2019, the United States made the Space Force its sixth military force.
NASA did not send people to the International Space Station (ISS) until 2020.
Early investments in space stocks can be interesting for long-term investors looking to take more risk in a new, volatile sector.
The 10 Best Space Stocks To Buy After 2022
1. Astraspace Co., Ltd. (Market: ASTR) (Market: ASTR)
Space exploration has always been a problem, but people’s efforts to reach the stars continue to improve. In February, NASA lost four satellites to the Astra rocket problem. This led to a significant drop in the company’s stock price.
Randy Baron, Portfolio Manager at Pinnacle Associates, said, “Astra’s recent problems show how difficult it can be to join a club of startups looking to get things into space cheaper.”
After the mission failed, the organization looked at what went wrong and found a problem. It also made progress in its business, announcing multiple launch contracts with launch services companies and announcing contracts to sell engines to companies that design and build satellites.
Its share is still low, but it could be a good deal if you hit your goal of launching a new product every day by 2025.
2. Rocket Lab USA (NASDAQ: RKLB)
Most investors don’t know about it, as it’s the only company that regularly launches rockets. However, it is the second most profitable space company after privately owned SpaceX.
Rocket Lab’s electronic launch vehicle has placed 23 successful flights and 109 satellites into orbit since its first orbital launch in January 2018. Customers use these satellites to take pictures of the Earth, monitor the weather, and track ships.
It has also built three launch sites, one of which is located in New Zealand. It was the first launch pad in Korea owned by a private company.
Every 72 hours a new rocket can be sent into space from there. The facility in the Wallop Islands, Virginia, is only used for rocket launches for the US government.
Rocket Lab went public in August 2017 when it merged with a Special Purpose Acquisition Company (SPAC) and started trading at $11.55 per share on the same day. Over the next few weeks it rose to almost $21 per ticket, but slowly declined.
This is partly because EBITDA (income before interest, taxes and depreciation) increased to more than $25 million in the third quarter and revenue halved to $5.3 million.
This is mainly due to continued difficulties in launching in Q4 due to COVID-19. Only two rockets were launched in the fourth quarter, but the number of launches is expected to increase again this year.
3. Minarik AG (MYNA)
The space business is more than just entrepreneurs trying to get as many people as possible to use launch services. Baron says the successful software-as-as-service (SaaS) model for IT is giving birth to new business models.
Space data-as-a-service, satellite-as-a-service, and ground stations as a service are a few examples. All of this, Baron says, provides the benefits of space without the need for one-time satellite production, government regulation, launch integration, or space data transmission.
Space as a Service depends on how well the next generation of Internet services enables people to talk to each other. Baron likes Mynaric because he knows a lot about communication networks that use lasers.
4. Virgin Galactic (NYSE: SPCE) Company
Virgin Galactic is another space company about to take off. Like Rocket Lab, it has a lower valuation, but more often investors burn out.
As the launch was delayed, the market lost credibility and tried to make more money. But Virgin is poised to start space tourism soon. Virgin is an interesting stock that investors should not overlook because it offers a small niche.
Virgin also successfully launched rockets, but not often as often as Rocket Lab, but with long delays. However, the company believes it is ready to launch space tourism in the fourth quarter of this year.
Seating on one of Virgin’s spacecraft is over $250,000, so it doesn’t replace cars, trains and planes as most people’s preferred means of transportation.
With over 2,700 billionaires and over 60 million millionaires worldwide, Virgin has no problem finding customers.
Last summer, it was revealed that 600 people had reserved seats on Virgin flights. This shows that people are very interested in space tourism.
Analysts believe these trips will cost more than $120 billion, and Virgin Galactic is the only company that can take advantage of it. Sales are expected to reach $1.7 billion by 2023.
Virgin’s stock is currently priced at less than $9. However, 250% growth is likely next year, below the 400% growth predicted by Canaccord Genuity analyst Austin Moeller.
Now, space tourism has begun and investors may want to join this stock that can grow.
5. Space X
Russia has invaded Ukraine, but SpaceX is still building a Starlink satellite internet network. According to CNBC, more than 150,000 Ukrainians use the Internet service Starlink every day.
SpaceX is one of the most valuable pre-IPO companies in the world as investors are very hopeful about the company. According to an internal full share deal last October, the company was valued at $100 billion, up 33% from its previous value. However, Tesla (TSLA) CEO Elon Musk has no plans to disclose information about the company at this time.
Still, SpaceX’s Starlink satellite business could go public. SpaceX has launched about 2,000 Starlink satellites to provide high-speed Internet connections . The company is said to have 250,000 individual and business users.
NASA and the Department of Defense often use SpaceX ‘s Falcon 9 rockets to send stuff into space. Falcon Heavy also sent government and commercial items into space.
SpaceX always sends people to the International Space Station in the Crew Dragon capsule. The earliest dragon flight was on April 27, lasting less than 16 hours. SpaceX is also making starships for deep space missions and for those who want to visit space.
Industrial technology company Trimble (TRMB -0.58%) can help advance the space industry with software solutions that enable customers to use data information to perform tasks. For example, we may use satellite data to help our customers get the most out of their physical assets.
Therefore, the focus is on buildings and infrastructure, geospatial data, goods and utilities, and transportation.
For example, the company’s technology helps farmers get the most out of their crops. As the space sector grows, Trimble’s ability to simplify some of these complex industries and applications could be a great fit.
The immaturity of the space makes Trimble a good company for broad exposure. It is also the largest holding of ARK’s ARK Space Travel & Technology ETF, which focuses on space.
7. Black Sky Technology
As technology advances, satellites can send and receive information between space and Earth faster.
BlackSky Technology (BKSY -9.24%) is a geospatial data company that builds satellite networks to enable software-as-a-service (SaaS) platforms to rapidly monitor the Earth’s topography.
U.S. intelligence agencies and corporations in the commodities and insurance industries are some of its users. It’s a new company competing against other satellite providers on the market.
Nonetheless, BlackSky’s $2.5 billion trading pipeline should bring stable earnings to the company for years to come. Investors will want to keep an eye on how backlogged work turns into billed revenue and how it makes BlackSky’s satellite network grow in a good way over time.
With a market value of only $370 million, there is a lot to be gained when things go well.
Boeing was one of the first companies to work in space. They helped build the rocket that took the Apollo 11 crew to the moon in 1969. Now the Space Launch System rocket is being built in New Orleans.
The SLS is the most powerful rocket in the world, capable of sending astronauts and spacecraft into deep space. NASA rockets suffered from delays and over-budget problems.
Boeing also built the Starliner spacecraft, which astronauts use to travel between the ISS and Earth. During a test flight in December 2019, the capsule did not enter the correct trajectory and there was also a slight delay.
NASA also hires Boeing to build satellites and operate the International Space Station. The United Launch Alliance (ULA) is a partnership between Boeing and Lockheed Martin, which manufactures rockets for NASA, Amazon and other companies.
9. Lockheed Martin (LMT)
Regarding the more prominent company, Kalkine Group CEO Kunal Sawhney talks about this major defense contractor.
“The market is always changing, so smart investors will want to take advantage of those companies that are least affected by supply chain disruptions,” he said.
Large companies generally have the flexibility to deal with these short-term issues as they tend to have more stable and diversified income streams due to their market power.
In its most recent quarter, Lockheed generated nearly $15 billion in sales. More than $2.5 billion of that came from the space sector. Sawhney says dividend yields are still not as good as investing in space stocks.
Keep in mind that even if the space sector is doing well, the Pentagon’s budget cuts could result in losing money elsewhere in the company, as there are many different ways companies make money.
10. Space ETF Trust II Procurement (UFO)
If you want to invest in the space industry, but don’t want to do the research required to select a specific stock, a space-themed exchange-traded fund may be for you.
Michelle Connell, owner and president of Portia Capital Management, said, “Investing in one Space Company at a time is very risky and has a high potential for loss. She points to UFOs and suggests investing money in a group of companies.
Since none of the ETF’s top 10 stocks account for more than 6% of the total, she said, some of these companies are likely to provide services and make money for investors.
How can you buy stocks in space?
Before buying space stock, it is important to understand how the company makes money. For most businesses, this is a simple matter. For example, Starbucks makes money by selling coffee.
Here are some of the best stocks in the coffee industry. But while few launch rockets every day, most people drink coffee every day.
One important thing to remember is that space companies can make money in several ways:
- Moving things into space costs money.
- They are employed by NASA or the Department of Defense to build rockets, satellites, and more.
- You charge for the services a satellite provides when it is in the air.
Most aerospace companies think they can make money by making rocket parts and selling them to NASA. NASA’s budget for 2020 was approximately $22.7 billion.
Should you buy space stocks?
Most of these stocks are the same way. Many of these companies have the potential to change the world in extraordinary ways, but it is likely that one or more of them will not acquire the right skills and reach their full potential.
Space stocks can be a good choice for investors who want to take risks. Be aware of the risks of exploring new territory and keep space stocks as a small, risky part of your broad portfolio.
Related Questions: FAQ
1. Is space a good way to spend money?
In the near future, investments in space will only affect aerospace and defense. For example, the IT hardware and telecom sectors are likely to be affected. Morgan Stanley believes that the global space industry could generate more than $1 trillion by 2040 from $350 billion today.
2. Are there stocks in space?
The Procure Space ETF (UFO) and the ARK Space Exploration ETF are two choices (ARKX). Both funds can buy stock in space industry companies such as Boeing, Airbus (EADSY) and Amazon (AMZN).
3. What is the future of space business?
According to a recent study by Morgan Stanley, the global space industry could generate more than $1 trillion in revenue by 2040. In 2020, it earned $350 billion. Similarly, Mordor Intelligence predicts that the spacecraft market will grow at a compound annual growth rate (CAGR) of over 8% between 2021 and 2026.
4. How do businesses invest money in space?
Investing in an exchange-traded fund (ETF) may be a less risky way to buy space stocks as many of these companies are still young and the future is uncertain. The Procure Space ETF (UFO) and the ARK Space Exploration ETF are two choices (ARKX).
5. How do space companies make money?
NASA’s most recent commercial contracts were with SpaceX (Dragon) and Boeing (CST-100). Both companies are getting funding from the government to build private space taxis. A company must reach certain goals before making money.
Investing in space gives you long-term benefits. Most space companies remain private, so only a handful of players are open to the public in this niche area. However, as with any themed investment, there are also many risks to be aware of.
So, before investing, you may want to go through all the information you can find to see how space exploration can fit into your portfolio.