The space race was recently reignited when a SpaceX crew hooked up with the International Space Station; it’s a windfall for space exploration, asserts technology expert Jon Markman, editor of Pivotal Point.
The new economics of satellites is breathing life into the communications businesses of legacy aerospace firms. In addition to their defense contracting businesses, Teledyne (TDY) and Lockheed Martin (LMT) have significant exposure to extraterrestrial communications.
Northrop Grumman (NOC) in 2017 spent $9.2 billion to acquire Orbital ATK, a maker of launch vehicles and satellite systems. And L3Harris Technologies (LHX) builds components to make satellite data actionable for the military.
Maxar Technologies (MAXR) may be a small fry compared to big aerospace firms, but the Colorado company is on the cutting edge of space imagery and data analytics.
The company operates a constellation of geospatial satellites that managers claim is the evolution of GPS. Their tech helps application developers understand where things are in the world and where they are moving to.
Meanwhile, many companies are still working through the heavy lifting of traditional aerospace. They are still building infrastructure to get machinery and supplies to space.
Boeing (BA) is building the Space Launch System (SLS), the most powerful rocket ever conceived. If all goes according to plan, SLS will carry astronauts to the moon and possibly Mars. Space News reports that the first SLS launch is expected in the second half of 2021.
Components companies like Raytheon Technologies (RTX) are helping build spacecraft for crewed missions, space suits, and momentum and reaction wheels, which are cooling devices used to control the altitude of a space vessel without rockets.
Heico Corp. (HEI) and TransDigm Group (TDG) make mission-critical specialty electronics and specially engineered parts. Often, these firms are the sole supplier of such items, resulting in extremely high-profit margins. As the sector expands, sales momentum is also certain to grow.
All of these businesses are possible because the aerospace industry is at an inflection point. Innovations are leading to new business models and new end markets. Savvy investors should look for weaknesses to get in on some of these positions. The future is here.
Aerojet Rocketdyne Holdings (AJRD) operates in a similar capacity. Since 1945, the California company has been involved in the design and manufacture of aerospace and defense components.
The company has helped power 1,600 rocket launches and is a major contractor to NASA, the U.S. government, and leading aerospace companies like Boeing.
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