What are some of the top space stocks to buy this year? Well, the universe, which was once governed by governments, has been democratized by technological advancements, opening up new business prospects for the private sector. The private sector has enthusiastically responded, providing investors with a wide range of options when considering making an investment in space.
Several people in the mission control center observe a successful launch of a space rocket. Employees of the flight control station watch the crewed mission on computers in front of them.
One of the most thrilling moments in human history was the 1969 American moon landing. Since then, there haven’t been many significant advancements in the space business. All of that has altered recently, though, as a number of new businesses have entered the space race.
If you’re anything like me, you’re aware of how significant the space business will be but are unsure of how to profit from it. I’ve done some study on a handful of the top stocks in the space business to be of assistance. Your portfolio may receive the boost it needs from these space stocks.
How Can I Invest in Space Stocks?
Make sure you comprehend how the companies make money before making an investment in any space stocks. This is really simple for the majority of businesses. Starbucks, for instance, generates revenue by selling coffee. And now for a list of some of the best coffee stocks. But while most individuals consume coffee on a daily basis, hardly anyone launches a rocket every day.
There are a few different ways for space enterprises to make money, which is something to keep in mind:
- Building rockets, satellites, or other equipment for NASA or the Department of Defense.
- Charging for space launch services.
- After satellite services are in the air, charging for them.
The majority of space businesses that first spring to mind generate their money by producing rocket parts and selling them to NASA. NASA’s budget in 2020 was almost $22.7 billion, for comparison.
Top Space Stocks to Buy This Year.
The government has been primarily responsible for space exploration. Many of the businesses engaged in spaceflight today are privately held. This indicates that there isn’t any stock on hand for customers to purchase. Both Jeff Bezos’ Blue Origin and Elon Musk’s SpaceX are examples of this.
Fortunately, you can still invest in a few businesses that deal with public spaces.
Northrop Grumman, Boeing, and Lockheed Martin.
For the purposes of this article, I’ve combined Northrop Grumman (NYSE: NOC), Boeing (NYSE: BA), and Lockheed Martin (NYSE: LMT). These businesses manufacture satellites, rockets, and other spacecraft. The space sector has a large number of up-and-coming players. But for years, these three space stocks have been getting contracts from the government. They carry out tasks that are not merely related to space. This guarantees that even if one rocket launch fails to reach space, their earnings won’t be destroyed.
Consider the fact that in 2020, NASA had a budget of slightly more than $20 billion. For comparison, Boeing estimated that their sales in 2020 will be close to $60 billion. Boeing would still only receive a small portion of NASA’s overall earnings, even if NASA paid Boeing 100% of the available contracts.
In the last five years:
- The share price of Lockheed Martin is up 39%.
- Boeing’s stock has increased by 72%.
- The share price of Northrop Grumman is up 63%.
Even though these businesses are more appropriately categorized as defense contractors, they still offer a strong entry point into the space sector, these put them in our list of top space stocks to buy this year.
NASA contracts are not something Virgin Galactic Holdings (NYSE: SPCE) is interested in. Instead, it is one of the few space tourist businesses in existence. In other terms, it launches affluent individuals into space.
In 2019, Virgin Galactic became publicly traded through a SPAC merger with Social Capital Hedosophia.
It only claimed $238,000 in actual income and $273 million in losses in 2020.
The organization has gained attention after declaring intentions to start taking reservations and selling tickets to the general public on February 16th. One thousand tickets are available. The catch is that tickets are outrageously expensive—$450,000. A $150,000 deposit is required to hold a spot, with the remaining balance due on the day of the flight.
Although $450,000 a ticket may sound exorbitant, keep in mind that there are roughly 20 million millionaires in the US. There are 788 billionaires as well. For somebody with that kind of money, $450,000 is simply another automobile. However, traveling to space is a once-in-a-lifetime opportunity.
Virgin Galactic currently has the market cornered for space travel. It’s possible that space travel will turn profitable if it begins to become popular.
Only a few few businesses have successfully launched rockets into space on a regular basis. One is SpaceX, and the other is Rocketlab. This makes Rocketlab one of the top space stocks to buy this year. Through a SPAC merger with Vector Acquisition Corp., Rocketlab is going public (Nasdaq: VACQ).
A track record of successful launches has been established by Racketlab. Launch failures can have disastrous results. Time, money, and even human lives may be lost as a result of a failed launch.
One of the few businesses capable of successfully launching a rocket is Rocketlab, which has demonstrated this.
There have been 21 launches in total, including four in 2020. Rocketlab will be well-positioned to dependably offer this service as demand for space launches increases.
Procure Space ETF.
Consider the Procure Space ETF if you don’t want the strain of having to choose just one space stock.
An exchange-traded fund (ETF), in case you’re not familiar, is a vehicle that can hold a variety of stocks. Consider that you are purchasing chips for your friend’s party at the grocery store. You don’t want to get a 24-pack of any one kind of chip because you don’t know what flavor they prefer. As an alternative, can get a variety pack, which includes three bags and eight distinct flavors. ETFs use equities as a vehicle for this similar idea.
You may invest in a fund that tracks the S&P 500 rather than just one stock, such as Google or Amazon. 500 of the largest American firms are tracked by this index.
This has been done exclusively with space companies via the Procure Space ETF (Nasdaq: UFO). You can invest in a variety of businesses through this fund as opposed to having to pick just one.
The top holdings of the Procure Space ETF at this time are:
- Iridium Communications
- Virgin Galactic.
- MDA LTD.
- Dish Network.
- Maxar Technologies.
- Sirius XM]
The aforementioned are only a few of the various space equities you may buy. Remember that your choice of which ones to purchase will always be a personal one.
Before purchasing space stock, always remember to conduct your own study. Returns on investments are never guaranteed, so you should always be cautious.