Is Space the New Frontier for Investors?
These are the voyages of 2021. Our mission today is to explore strange new investment opportunities, seek out companies that will thrive and grow in the recreational space race, and boldly go where Jeff Bezos and Sir Richard Branson went, just this month.
As a science fiction fan in the seventies, I spent countless hours reading Heinlein, Clarke, Asimov, and Bradbury. I also watched the Challenger disaster in 1986, the Columbia explosion in 2003, and the SpaceX debacle back in March. Never did I think this day would come.
Two millionaires went into space this month, proving once again that money can truly buy you anything, but that’s not the real story. I’m excited because space stocks, once a comical conversation at the water cooler, are finally in play for real. Let’s take a look.
Virgin Galactic is a Premium Business Model
I was beginning to think Sir Richard Branson had retired from the spotlight. What better way to make a splash (not a splashdown) than by taking off in his own “space plane,” proving that recreational space flight is feasible, albeit not yet practical for the average man.
Virgin Galactic Holdings Inc (SPCE) isn’t worried about TSA lines or Covid-19 restrictions. They’re charging $250,000 for a flight on the VVS Unity. Six hundred people from fifty-eight countries have already signed up, including Tom Hanks, Justin Bieber, and Lady Gaga.
As for the stock, it was trading at $49.20 on Friday, July 9th, shortly before Branson got his five minutes (literally) in outer space. That Monday, it dropped to $40.69. Today, it’s at $31.19. Will it go up again? Yes. I believe it’s the best deal in the space right now. I’m buying.
Blue Origin and SpaceX Are Not Going Public
Neither Jeff Bezos’ Blue Origin nor Elon Musk’s SpaceX are public companies, so investment opportunities are simply not available yet. There are rumors that Bezos may take Blue Origin public, but Musk has already stated that he “fears” investor ownership of the company.
The Tesla (TSLA) CEO may be taking the high road and putting progress before profits, but SpaceX is partially owned (7.5%) by Alphabet (GOOG), so you can hold a small piece of it if you invest in Google. I know, that’s reaching, but we are talking about space here.
For those interested in real opportunities down here on earth, it’s a good time to buy Nokia (NOK). They recently made a deal with NASA to build and deploy an end-to-end LTE solution on the lunar surface in late 2022. The stock is trading at $5.81, up 49.36% YTD.
If you’re a day trader, look at Astra Space Inc. (ASTR). They facilitate space launches, with fifty launches already in their portfolio. The stock is volatile and trading low right now at $8.31. It peaked at $19.55 earlier this year. Check the chart patterns. It looks like a big hitter.
Are there ETFs in Outer Space?
Say what you will, but I love ETFs. When I feel like gambling, I go to Tickeron and trade on volatility. If I’m looking for a solid, safe investment that will earn me 10% a year, I buy ETFs. It’s not sexy, but it keeps me in the black. Occasionally, I do much better than that.
The Procure Space ETF (UFO) looks like it might double that expectation. It’s up 19.47% YTD and 43.27% over the past twelve months. The fund invests 80% into companies that earn 50% or more of their revenue from the space industry. Definite buy recommendation on this one.
For conservative investors, I like SPDR S&P Kensho Final Frontiers ETF (ROKT). With a focus on aerospace and defense companies like Maxar Technologies (MAXR), Honeywell International Inc (HON), and Lockheed Martin (LMT), they’re up a solid 10.16% this year.
Space exploration has always been a big deal, but it’s never had a private sector component like we saw this past month. Recreational space flight is a game changer, so I’m going to watch this sector carefully. There may be a unicorn or two out there in the stars.