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4 Stocks to Watch as Space Tourism Looks Ready for Take Off

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Taking a luxury vacation, may soon have a new meaning. Forget exotic islands or French castles or a five-star resort on the Amalfi Coast, the era of “space tourism” is about to begin. Billionaires like Jeff Bezos, Elon Musk, and Richard Branson are putting in billions to win the race to open up space travel.

If you once saw Interstellar or Lost in Space and said, “It ain’t possible,” you should turn on the news to see the first commercial spacecraft take off on Jul 11.

FAA Allows Customers to Fly to Space

On Jun 25, the Federal Aviation Administration (FAA) granted approval to Virgin Galactic Holdings Inc.’s (SPCE - Free Report) full commercial space-launch license, allowing the company to now take commercial passengers on flights. Virgin Galactic had a successful test flight in May and plans to fly CEO Richard Branson aboard the first fully manned flight of its SpaceShipTwo space plane on Jul 11. Space enthusiasts can watch the livestream on Virgin Galactic.com, Virgin Galactic Twitter, YouTube, and the company’s Facebook channels.

While the flight is not cheap (nearly $250,000 for the ride), it has more than 600 ticket reservations already, per Branson. What’s more, the company plans to make the suborbital tour cheaper by bringing ticket price to around $40,000, as full commercial service begins in 2022.

Space Tourism Rivalry to Intensify

While the space race in 1960s was a battle between the Cold War rivals, the Soviet Union and the United States, in this new era of space tourism, it is surely the battle of the billionaires. Bezos, Branson, and Musk will soon be carrying paying customers into space. Virgin Galactic did surely downplay Bezos' Blue Origin, which is planning its first flight on Jul 20 but is yet to receive FAA approval. Musk’s SpaceX has already taken a crew to the International Space Station (ISS) and plans its first all-civilian sub-orbital flight in September.

This niche industry holds huge potential and these first flights could determine the journey of future space passengers and the unique experience people expect from space travel. In fact, both Branson and Bezos are counting on their maiden voyages to check cabin environment, seat comfort, the weightless experience, and views of Earth. Virgin Galactic's reusable Space Ship Two system can hold six passengers: two crew and four passengers, while Blue Origin's New Shepard rocket-and-capsule combo takes six passengers and flies autonomously. Musk’s SpaceX Dragon capsule is capable of carrying up to seven people and has an edge over the other two as the mission is expected to last three to four days from launch to splashdown. Whereas Virgin Galactic offers a flight time of around 90 minutes from take-off to landing, which includes several minutes of weightlessness, Blue Origin's capsule suborbital flight is around 10 minutes after separation.

4 Stocks to Watch Out For

New constellations of satellites are scheduled to enter low-Earth orbit in the coming years and cheaper launches and satellites may finally make the sector more accessible to space travel enthusiasts. Additionally, small satellites are gaining popularity across the globe, for expanding Internet access. In fact, per a Morgan Stanley report, the global space industry could surge to more than $1 trillion by 2040.

The space industry is also witnessing several mergers, acquisitions and initial public offerings. Rocket builder, Astra Space began trading on the Nasdaq on Jun 30 under the ticker ASTR. The company merged with Holicity, a special purpose acquisition company (SPAC), totaling about $500 million in new capital.

Given the new milestones in space tourism and the scope that the initial full-crew lift-offs bring to the industry, we have shortlisted four stocks that can benefit in the long term .

Northrop Grumman Corporation (NOC - Free Report) operates as an aerospace and defense company. The company is currently working on OmegA heavy-lift rocket and received Air Force funding in 2020 to help the country end its reliance on Russian engines used in the Atlas 5 rocket.

The company that belongs to the Zacks Aerospace - Defense industry has a projected earnings growth rate of 3.6% for the current year. The Zacks Consensus Estimate for this company’s current-year earnings has been revised nearly 1% upward over the past 60 days.  Northrop Grumman holds a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Raytheon Technologies Corporation (RTX - Free Report) is an aerospace and defense company. The company designs, produces, and supports spacecraft cabin interior, communications and aviation systems, oxygen systems, food and beverage preparation, storage and galley systems, and lavatory and wastewater management systems and more.

The company’s expected earnings growth rate for the current year is 37% compared with the Zacks Aerospace - Defense Equipment industry’s projected growth of 4.9%. The Zacks Consensus Estimate for this company’s current-year earnings has been revised 0.8% upward over the past 60 days.  Raytheon carries a Zacks Rank #3 (Hold).

Teledyne Technologies Incorporated (TDY - Free Report) designs sensors that help to power, sense and analyze the chemical composition of the surface and minerals in planetary exploration. This Zacks Rank #3 company’s expected earnings growth rate for the current year is 21.4% compared with the Zacks Aerospace - Defense Equipment industry’s projected growth of 4.9%. The Zacks Consensus Estimate for this company’s current-year earnings has been revised 7.4% upward over the past 60 days. 

Lockheed Martin Corporation (LMT - Free Report) is a security and aerospace company that offers satellites and space transportation systems. The company is currently working with NASA to take astronauts to the moon and Mars.

This Zacks Rank #3 company that belongs to the Zacks Aerospace - Defense industry has a projected earnings growth rate of 9.1% for the current year. The Zacks Consensus Estimate for this company’s current-year earnings has been revised 0.4% upward over the past 60 days.

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