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Bezos, Branson and Musk vie for space race lead

Space tourism is sexy, but building spacecraft and launching satellites is where investors should look for now.

As the new space race gets going in earnest space tourism is in the headlines.

Sir Richard Branson’s Virgin Galactic Holdings Inc. plans to start commercial flights next year. Branson was aboard the inaugural Virgin Space Ship (VSS) Unity flight to the edge of the atmosphere in July. Since then, the company has decided to offer flights beginning next year. It is selling tickets starting at US $450,000 a seat.

Branson’s milestone was followed nine days later by Amazon Inc.’s Jeff Bezos whose Blue Origin space program competes with Branson. Blue Origin plans two more paying flights this year, but has not committed to commercial service beyond that.

 And for those wishing for a little longer stay, a California company, the Gateway Foundation, has an ambitious plan to build a space hotel with room for 400 people by 2027. It will have a rotating wheel to create gravity and offer such amenities as a health spa,  cinema and gym  along with lounges for viewing the Earth.  It has indicated that it would like to work with  Tesla’s Elon Musk and his Space X program.

Sir Richard Branson floats in zero gravity during his sub orbital flight on July 11 2021. Credit: Virgin Galactic

 While space travel is capturing public imagination, it is just one of three areas of opportunity for investors interested in this sector. Space construction, which includes subcontracts for the crafts and components, is much larger as is satellite communications in all its forms. The latter is needed for 5G communications and growing global demand for the internet.  

Global manufacturers and aerospace companies are playing a bigger role exploring inner and outer space as governments are turning the nuts and bolts over to them.

Tech titans like Branson and Bezos are joining Musk to develop landers and spacecraft and are  forming partnerships with defence and aerospace multinationals for propulsion systems,  electronic operating systems and the launch and maintenance of satellites.  NASA recently awarded SpaceX a US $2.9 billion contract to build a lander that will return humans to the Moon this decade.   

This potential led two portfolio managers to launch space funds this year. One is actively managed by Cathie Wood’s ARK Investment Management in New York. The other is passively managed by Harvest Portfolios Group in Oakville, Ont.

The funds have some overlapping holdings, many of whom are NASA contractors. These contractors include:

Northrup Grumman Corp. has developed a system that enabled a satellite to grab hold of another satellite and move it back into place. As more satellites are launched, repairing them is becoming a priority.

Raytheon Technologies Corp. makes satellite command-and-control systems as well as spacecraft components. The Mars Rover uses Raytheon’s optical systems to view the landscape as it moves. A Raytheon assembly within the Rover serves up the drill bits it uses to mine the surface.

Jeff Bezos’ New Shepard crew capsule descends from an April space mission. (April 14, 2021) Credit: Blue Origin

Aerojet Rocketdyne Holdings was recently awarded a NASA contract to investigate designs for a spacecraft to shuttle between the Moon’s surface and an orbiting craft as part of the Space X contract.

Lockheed Martin Corp. worked with NASA on the Mars mission and is involved in building the reusable Orion space capsules. It is a partner with Jeff Bezos’ Blue Origin program.

 Honeywell Corp. engineers are working with NASA to develop  and test an advanced low-pressure turbine.

Boeing Inc. has been a NASA partner since the agency’s inception in 1958. The company or those it acquired built the capsules that took Apollo astronauts to the moon. It  built the space shuttle and helps operate the International Space Station.

It is a balanced group with deep pockets, a history of profitability in core businesses and the  resources to exploit the emerging opportunity. 

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