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Monday, January 30, 2023

Is 2020 The Year Of Space Tourism? 3 Stocks In Focus

The Russian Space Agency was the first to offer facilitated orbital space tourism in the early 2000s. However, the company ceased space tourism operations in 2010. At present, the United States pays $86 million per seat to Russia to fly NASA’s astronauts to the International Space Station (ISS), after its Space Shuttle program ended in 2011.

After Russia closed space tourism in 2010, many private players started exploring the space tourism arena, which is helping the industry grow. With the current pace of successful trials and nods by NASA, it looks like man can finally visit space in the 2020s.

Successful Trials Boost Space Tourism

Over the past decade, several private and public companies have been running trials and working with NASA to develop spacecraft and send man to space on vacation. This includes private players like Blue Origin which intends to place nearly six passengers on each flight, with room to perform weightless somersaults.

On Jan 19, SpaceX’s Crew Dragon capsule passed a major test, the in-flight abort test, a necessary milestone before crewed missions are given the green signal by NASA. This successful test will allow SpaceX to opt for a crewed test flight of the Dragon capsule in the first half of this year. Elon Musk’s space technology company, SpaceX, is now worth more than Tesla, Inc. (NASDAQ:TSLA) .

Not far behind, The Boeing Company’s (NYSE:BA) CST-100 Starliner capsule took its first uncrewed test flight into space and back in December 2019. However, the company needs to redo the test due to technical issues. On the brighter side, if SpaceX and Boeing succeed in going through final tests and put humans on board before the end of the year, they can restart the human spaceflight to the United States.

Future of Space Tourism

The space tourism space has been highly speculated but with recent developments and further research in the pipeline, the industry can surely expand in the near term. In fact, over the next five years, the space tourism market is expected to register a 16.9% CAGR in terms of revenues, and the global market size will reach $ 1167.3 million by 2024, from $ 624.4 million in 2019.

Additionally, Morgan Stanley (NYSE:MS) estimates that the global space industry will generate revenues of $1.1 trillion or more by 2040. Bank of America (NYSE:BAC) projects the space economy to grow to $3 trillion in the same time period.

Coming to individual companies, in 2020, Virgin Galactic Holdings, Inc. (NYSE:SPCE) plans to launch 16 flights. The projected numbers for 2021, 2022 and 2023 are 115, 170 and 270, respectively. The company also hopes to achieve profitability by the end of next year. The company had been pre-booking tickets for $250,000 (but closed at present), and Virgin’s space flights once launched will see big names from Hollywood like actor Leonardo DiCaprio and pop star Justin Bieber.

What’s more? NASA has recently allowed Axiom Spaceto attach a commercial habitation module to the ISS before 2024. This Axion space station will be connected to ISS’s Harmony module, providing the crew a natural environment, research and manufacturing facility and Earth observatory. In fact, the company plans to act as a power platform and turn its hardware into a free-flying commercial space station once the ISS stops functioning.

Axion, a private player intends to develop its technology further with partners that include Boeing, Thales Alenia Space (Italy), Intuitive Machines and Maxar Technologies Inc. (TSX:MAXR) .

Stocks in Focus

Given the positive developments in the space tourism space we have shortlisted five stocks that cannot be overlooked as the industry grows.

Airbus SE (OTC:EADSY) provides aerospace products, services and solutions. The company is engaged in a mammoth task to launch the Bartolomeo platform to the ISS in March 2020. The platform gives new opportunities for research at ISS. It can accommodate up to 12 different experiment modules, supplying them with power and providing data transmission to Earth.

This Zacks Rank #2 (Buy) company’s expected earnings growth rate for the current year is 40% compared with the Zacks Aerospace – Defense industry’s projected earnings growth of 12.3%. You can see the complete list of today’s Zacks #1 Rank stocks here.

Virgin Galactic Holdings, Inc. is an aerospace company that intends to monetize space tourism and space mining. The business operates in two main divisions, namely Virgin Galactic, that offers consumer-facing tourism and customer experience arm, and The Spaceship Company, which aims to manufacture and test spacecraft. Galactic’s ownership of The Spaceship Company gives it an edge over competitors, who are not involved in designing and manufacturing their own spacecraft.

The company’s expected earnings growth rate for the next year is 87.5% compared with the Zacks Aerospace – Defense industry’s projected earnings growth of 14.2%. Virgin Galactic carries a Zacks Rank #3 (Hold).

The Boeing Company designs, develops, manufactures, sells, services, and supports commercial jetliners, military aircraft, satellites, missile defense, human space flight and launch systems, and services. NASA agreed to pay $5.1 billion to Boeing to develop a spacecraft capable of safely transporting astronauts to ISS and back, over the next couple of years.

Boeing is a Zacks Rank #3 company, with an expected earnings growth rate of more than 100% for next year compared with the Zacks Aerospace – Defense industry’s projected earnings growth of 14.2%.

5 Stocks Set to Double

Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.

Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.

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