Humans first set foot on the moon only fifty years ago. Today, space tourism is not just a science fiction fantasy, but a real business opportunity from which investors hope to profit. The value of the space economy is forecasted to soar to $805 billion by 2030, a more than threefold increase from $244 billion in 2010. That growth is expected to include contributions not just from increased spacecraft manufacturing, but also from commercial passenger services as well as space hotels and theme parks, according to analysts at UBS.
“While space tourism is still at a nascent phase, we think that as technology becomes proven, and the cost falls due to technology and competition, space tourism will become more mainstream, with the potential for listed companies to exploit,” wrote UBS analysts Jarrod Castle and Myles Walton in a note to clients that included 50 companies they believe could benefit from the new space race, according to Barron’s.
9 Stocks That Can Benefit from the Space Race
- Lockheed Martin Corp. (LMT)
- Northrop Grumman Corp. (NOC)
- Raytheon Co. (RTN)
- Hyatt Hotels Corp. (H)
- Hilton Worldwide Holdings Inc. (HLT)
- Delta Air Lines Inc. (DAL)
- American Airlines Group Inc. (AAL)
- Boeing Co. (BA)
- Airbus (AIR.France)
What It Means for Investors
The evolving developments in space technology continue to reduce the costs of space travel, an essential factor in making such travel accessible to average consumers. Such widespread accessibility is likely still a little ways off, but investors will want to start looking for the companies that are most likely to benefit. “It might be too early to connect risk adjusted earnings forecasts to this theme but ignoring it qualitatively would be in our view short sighted,” wrote the analysts.
Two of the larger diversified companies with exposure to the space economy include U.S. defense contractors Lockheed and Boeing. Aerospace and defense company Northrop Grumman gained exposure to space after acquiring Orbital ATK for $9.2 billion last year. But the space race is not just about launching spaceships; the tourism aspects of space travel could benefit hotel chains like Hilton and Hyatt. Insurance companies are also likely to benefit.
Despite the optimism, there are still a number of hurdles that remain. The technology will need to be ensured of its safety, bringing about the need for new regulation. Consumers will also have to be convinced of the technology’s security before widespread adoption occurs. On that note, a UBS survey indicated that 13% of respondents would be willing to use space travel frequently, with 20% of U.S. respondents saying they would, according to Barron’s.
It will take some time before consumers are taking vacations to space, but that possibility is looking more and more like a future reality. Investors now have options to take advantage of that future reality by investing in dependable companies with some exposure to the race for space.