Technological advances have democratized outer space, transforming the cosmos from a domain once dominated by government entities and creating new opportunities for the private sector. The private sector has responded enthusiastically, giving investors a lot of choices when thinking about investing in space.
Space investors can pick among established defense titans, narrowly focused start-ups, companies building things in the heavens, and those transporting those products into orbit. The potential is vast. Morgan Stanley believes space could be a $1 trillion industry by 2040.
There's a lot of risk here since this is literally rocket science. And even the best in this business experience trial and error as they bring new innovative products online. Some companies will almost inevitably fail to reach their lofty goals.
The market is rapidly growing, but the number of potential customers for these businesses is still relatively small, and the government still has a major role in determining what gains altitude.
But for those who believe they have the right stuff and are willing to tolerate the risk in hopes of reaping big rewards, here are some of the more intriguing options for space investors.
Our list
Top space stocks to watch in 2024
| Company | Ticker | Description |
|---|---|---|
| Lockheed Martin | (NYSE:LMT) | The world’s largest defense company has a substantial space business, including launch and satellite manufacturing capabilities. |
| Virgin Galactic Holdings | (NYSE:SPCE) | Space tourism stock backed by Richard Branson. Hopes to be shuttling people to the outer reaches of Earth’s orbit by year’s end. |
| Rocket Lab USA | (NASDAQ:RKLB) | Launch specialist that is attempting to vertically integrate the space supply chain. |
| L3Harris | (NYSE:LHX) | A space and defense electronics company that got a big boost when it acquired rocket engine manufacturer Aerojet Rocketdyne. |
| Leidos Holdings | (NYSE:LDOS) | Large government services provider that is rapidly expanding its space business. |
Lockheed Martin
Lockheed Martin is best known as the maker of the F-35 Joint Strike Fighter, but the company also has an extensive space business focused on the manufacture of satellites and missiles, as well as a massive launch business via a joint venture with Boeing (BA 0.17%).
Lockheed historically has focused on business for the Pentagon and NASA, although it does have some commercial customers. Its space unit gives it exposure to some of the fastest-growing development areas in defense, including hypersonic missiles able to travel at more than five times the speed of sound.
Lockheed Martin had hoped to expand its space presence via an acquisition of Aerojet Rocketdyne, but the company walked away after hearing regulators object to the power the combination would have. Even without Aerojet, space accounts for more than 15% of company revenue.
Virgin Galactic
Virgin Galactic is focused on space tourism. Founded by serial entrepreneur Richard Branson, the company has been public since a 2019 deal to merge with a special purpose acquisition company (SPAC) run by another famous investor, Chamath Palihapitiya.
However, Virgin Galactic has run into some turbulence as it attempts to ready its spaceship for commercial service. The company missed its target to begin flights in time for Branson’s 70th birthday in July 2020.
Branson, as well as other space tourists, finally got airborne. But Virgin Galactic has suspended operations while it works on its new and improved spaceship. There are a lot of risks here. It is uncertain if and when Virgin Galactic will get airborne again, and we aren't sure if there are enough people willing to buy a ticket at the sky-high price Virgin Galactic needs to break even. But for dreamers, Virgin Galactic could be a fascinating piece of a well-diversified portfolio.
Rocket Lab USA
Rocket Lab is another relative newcomer to public markets that began trading via a SPAC. The company is focused on launching small satellites into space, but it is investing to expand its offering to include larger launches, and it is also adding related services such as satellite manufacturing and components. The goal is to be a one-stop-shop for customers looking to design a satellite, get it into space, and then monitor and maintain it while it is in orbit.
This is a competitive market, but Rocket Lab is a low-cost provider and is currently conducting commercial launches, putting it out in front of some of its would-be competitors. Space is full of risk for young companies, but Rocket Lab looks like a potential winner for investors who are looking to add a little space speculation to a diversified portfolio.
L3Harris
L3Harris (LHX 1.38%) dramatically expanded its space-based business via its 2023 acquisition of Aerojet Rocketdyne. Aerojet was one of only two U.S.-based companies that manufactured the engines needed to propel big objects into space. The other, Orbital ATK, was acquired by Northrop Grumman (NOC 0.52%) in 2018. Northrop's defense rivals are eager to have another stable option for propulsion.
L3Harris had a lot of space credentials even before the acquisition. The legacy Harris business historically has been one of the top suppliers of communications equipment to the Pentagon, from radios to satellites. The company today offers not only access to space, but also a range of electronics, missile warning, and space intelligence products as well.
This company is the product of a recent merger, and they have done deals including Aerojet while still integrating what they own. The finished product, as it emerges, looks like an attractive option for investors seeking the stability of a defense company but with a focus on defense tech and electronics.
Leidos Holdings
Leidos is the largest of the so-called "Beltway Bandits," defense companies that specialize in providing IT and consulting services rather than weapons to government customers. For Leidos, this means a strong and growing business serving NASA, the Pentagon, and other agencies interested in space.
Leidos bulked up its space capabilities with its 2020 purchase of Dynetics, an engineering and consulting firm that dates back to the original U.S. space race of the 1960s and is a close partner with NASA.
Today, Leidos provides a range of space-based services, including managing space missions, designing and manufacturing rocket payloads, and providing the electronics and know-how to communicate with those payloads.
The biggest name in space-tech you can't invest in
Unfortunately for investors, one of the biggest names in space is not on this investment list. Elon Musk's SpaceX is perhaps the most successful of the next-generation space start-ups and has numerous government contracts. SpaceX -- and not one of the established defense contractors -- is currently ferrying astronauts from U.S. soil to the International Space Station, and the company has a large satellite business as well.
Musk has said he has no intention of taking SpaceX public, although he could one day float the company's space-based Internet service, Starlink. For now, however, there is no direct way for retail investors to buy into SpaceX.
ETF options
Buy the whole universe
Given the risks that come with space -- and the fact that so many of these companies are young and not fully proven -- investors might want to consider buying into space via an exchange-traded fund (ETF), gaining exposure to the sector without having to pick a single winner. Space-focused ETFs include Procure Space (UFO 2.61%), ARK Space Exploration and Innovation (BATS:ARKX), and SPDR S&P Kensho Final Frontiers (NYSEARCA:ROKT).
Related investing topics
Should you invest?
Are space stocks right for you?
Space is exciting, but it's dangerous. That's also true about most of these stocks. There is amazing, world-changing potential in a lot of these businesses, but there's also a significant risk that one or more of them will fail to get the tech exactly right and never live up to their potential.
For investors looking for moonshots, space stocks might be a good choice. Just understand the risks that come with charting new horizons, and keep space stocks to a small, speculative part of a broad portfolio.
