Elon Musk, the outspoken CEO of Tesla Motors Inc (NASDAQ:TSLA) and SpaceX is on a mission to Mars. Well, more specifically, he’s on a mission to take humans to Mars in a new plan to colonize the Red Planet. SpaceX has quickly become one of the top space exploration companies with strong deals in play with NASA and private companies.
Elon Musk outlined a plan for SpaceX to complete journeys to Mars, which would take 80 to 150 days to complete. Over the course of 40 to 100 years, SpaceX would help get one million people to Mars. This is mostly done by SpaceX flights and the fact that they believe they can bring the per person cost down to $200,000.
SpaceX is a private company and unless something big happens, it will likely stay that way for some time. Musk has continued to say the company won’t be going public. This leaves investors hard pressed to invest in Musk’s plan to colonize Mars. SpaceX isn’t the only private company competing for missions to Mars or the Moon.
Blue Origin, led by Amazon.com, Inc. (NASDAQ:AMZN) founder Jeff Bezos is becoming a big player in launching rockets into space as well. Moon Express, a private company, was even approved by the Federal Aviation Administration to land on the moon. This is the first time a private company has ever been approved for such a mission.
Also keep an eye on Mars One, a Netherlands-based private company. Mars One is planning on sending a crew to Mars by the year 2026. It should be noted that Mars One is planning on listing on a major stock exchange sometime in the future to help fund its mission. Furthermore, it is planning on selling television rights to broadcast its missions and will also be looking to partner with a major rocket manufacturer for its missions to Mars.
Investors may be surprised to learn that there are other publicly traded companies that are major players in the space exploration segment. From small cap to large cap, here are several picks to invest in space exploration stocks.
Stocks That Could Outrun SpaceX: Lockheed Martin Corporation (LMT)
Lockheed Martin Corporation (NYSE:LMT) is one of the largest aerospace and defense companies in the United States. LMT has a market capitalization of $71 billion and annual revenue of more than $46 billion. Investors may be surprised to learn how important Lockheed Martin was in the past to space exploration and how it could continue to play a role in the future.
LMT’s space segment is its third largest by revenue, but it is actually the second most profitable division. Lockheed Martin is guiding for fiscal 2016 revenue to hit a range of $50.0 to $51.5 billion. This is an increase from a prior range of $49.6 to $51.1 billion. Its space segment is expected to generate revenue of $8.45 to $8.75 billion for the current fiscal year.
Plans for the segment could help the space exploration business continue to pay off for LMT stock.
Mars Base Camp is Lockheed Martin’s version of the mission to Mars. This plan calls for sending humans into orbit near Mars by 2028. This multi-step process will send humans in this capacity first to make sure they can sustain life near the red planet, before having humans land directly on it.
Sending humans to Mars is one of LMT’s long-term plans. This shouldn’t come as a big surprise to anyone who has followed the company for a long time, as Lockheed Martin has played a major role in every NASA mission to Mars. The company is also helping NASA explore Jupiter through Juno, which launched several years ago to study the planet. Furthermore, LMT is 50% owner of United Launch Alliance with partner Boeing Co (NYSE:BA). United Launch Alliance is a major supplier of rockets for space exploration.
Lockheed Martin shares currently sit in the middle of their 52-week range ($200.47 to $266.93). The company continues to increase its revenue and reward shareholders through dividends and buybacks. Consider space exploration a nice perk for LMT stock holders.
Stocks That Could Outrun SpaceX: Boeing Co (BA)
Boeing stock is a great way to play space exploration. The company is one of the largest commercial plane manufacturers, but is also investing heavily in creating the necessary vehicles that will lead the next space revolution.
Boeing’s CEO Dennis Muilenburg is also pretty committed to beating SpaceX and Elon Musk to Mars. Muilenburg had this to say in the competitive space race, “I’m convinced the first person to step foot on Mars will arrive there riding a Boeing rocket.”
BA has a strong relationship with NASA and is currently working on a heavy lift rocket called the Space Launch System. Boeing was also one of the first commercial companies chosen by NASA to ferry astronauts to the International Space Station. Over the last 50 years, BA has helped get people to the Moon and it also supplies to the International Space Station.
In 2015, Boeing was awarded two deals from NASA to get a human crew to the International Space Station. Flights will start in 2017 to test the safety of this process. If BA receives a human rating certification, then two to six missions will take place later on. These deals could be worth more than $4 billion to Boeing.
Through the first six months of fiscal 2016, BA’s Defense/Space/Security segment has seen revenue of $15.1 billion, an increase of 6% from the prior year. Specifically, Boeing’s Network and Space Systems have revenue of $3.5 billion in the same time period. The company has guided for this segment to see revenue of $7.3 billion, out of the company’s total projected $93 to $95 billion revenue range.
BA is not a pure play on space exploration; the company receives less than 10% of its annual revenue from its space segment, but you’ll have a hard time finding a company that does $7 billion annually in space related revenue. Therefore, Boeing stock is definitely a consideration to get portfolio exposure to the race to Mars.
Stocks That Could Outrun SpaceX: Aerojet Rocketdyne Holdings, Inc. (AJRD)
Aerojet Rocketdyne Holdings, Inc. (NYSE:AJRD) made headlines when it tried to acquire United Launch Alliance, the joint venture owned by Boeing and Lockheed Martin. AJRD offered $2 billion to acquire the competing space company, but was ultimately rejected as BA said the unit was not for sale.
AJRD stock is a pure play on space exploration, but as the acquisition attempt demonstrated, it is vulnerable to competition. The move to acquire ULA was mostly seen as a way to ensure Aerojet engines would be used in future rocket launches from United Launch Alliance. Now, AJRD finds itself trying to create new products and find new partners, as the Boeing and LMT venture has started to back away from Aerojet products.
Through the first six months of fiscal 2016, AJRD has reported revenue of $765 million, an increase from the prior year when a land sale was stripped out. The company has a funded backlog of $2.3 billion and the potential for a backlog worth $3.8 billion.
Aerojet is still committed to working with several big companies. Earlier this year, the United States Air Force selected Aerojet and ULA to jointly develop an engine in a deal valued at $804 million. Aerojet is also helping other companies like ULA explore asteroids. Aside from trying to continue as the ULA supplier of choice, AJRD has branched out to become a major partner of Blue Origin.
With a market capitalization of $1 billion, Aerojet Rocketdyne is a small cap stock. AJRD stock is a compelling way to get direct exposure to space exploration and is a great pure play on the segment.
Stocks That Could Outrun SpaceX: Orbital ATK Inc (OA)
Orbital ATK Inc (NYSE:OA) is an increasingly great way to play the space exploration market. After a recent merger, OA has branded itself as “A new global leader in Aerospace and Defense Systems.” The company remains a major partner with national security firms, NASA and commercial companies.
Orbital operates with three market segments that make up the following revenue split:
- Flight Systems: 33%
- Defense Systems: 40%
- Space Systems: 27%
The company’s space business includes satellites, human space systems, space components and space engineering services. The space segment is worth around $1.2 billion to Orbital ATK. Aside from space, OA is a major supplier of missiles and ammunition.
Orbital currently has two major catalysts going for it. The company is set to see a boost in orders if the defense budget continues to trend favorably by increasing the missile and ammunition budgets. OA is also benefiting from its existing contract with NASA to transport cargo to the International Space Station. The current deal runs through 2018, but Orbital is hopeful it can secure a new deal that would extend transport missions to 2024.
OA currently sits on a huge backlog worth $15.2 billion. That large backlog helps the company reach its annual goals and provides a good chunk of revenue projections. Fiscal 2016 is made up of 95% of backlog revenue. The backlog also already provides 70% of fiscal 2017 revenue and 40% of fiscal 2018 revenue. Orbital’s space segment has a backlog of $3.3 billion, including $1.6 billion in firm orders.
OA sees fiscal 2016 revenue coming in at $4.5 billion and earnings-per-share hitting a range of $5.30 to $5.50. Orbital has a nice revenue split between its three segments, offering great exposure to several areas of growth for investors. Orbital stock remains a great pick for space exploration and the company has proved itself already in the market by transporting cargo to the ISS.
As if this writing, Chris Katje did not hold a position in any of the aforementioned securities.
