With Jeff Bezos set to go to space in July, the aerospace industry is getting even more attention. The recent spark of interest is engineered not by States but by businesses. Companies like Jeff Bezos’ Blue Origin, Elon Musk’s SpaceX and Richard Branson’s Virgin Galactic have made massive strides in exploring space. The successes of these companies have drawn investors interest to space stocks that are publicly traded. 

Great opportunities lie in the space sector. For instance, Morgan Stanley Researchers has estimated the global space industry to be worth $1 trillion by 2040.

With that in mind, here are my top two space stocks I am watching for 2021 and beyond.

Virgin Galactic: A commercial space tourism stock

Virgin Galactic (NYSE:SPCE) is an aerospace company pioneering human spaceflight for private individuals and researchers. It is building a spaceflight system that promises to offer customers a unique, multi-day transformative experience. Customers will be granted a view of the Earth from above as well as being able to experience zero gravity.

In its bid to offer its customers space tourism, it has built a carrier aircraft, a spaceship, hybrid rocket motors and Spaceport America, where spaceflights will be launched on a routine basis. Virgin Galactic has yet to launch any of its customers to space yet. But 600 individuals have paid $250,000 per ticket to fly to space on virgin’s SpaceShipTwo.  The Space tourism business is seen as an untapped area. And Virgin Galactic is working to be the first big player in the space industry.

However, there remains a long road ahead. Virgin Galactic had initially planned to launch its first commercial spaceflight in early 2021. Unfortunately, this was delayed until early 2022, creating some concerns for investors. After all, this isn’t a profitable business yet. And so, it remains firmly dependent on external funding that may eventually dry up if there continue to be more delays.  Also, the company’s success is heavily reliant on its ability to effectively market and sell human spaceflights. Regardless, it remains an exciting space stock to watch, in my opinion.

Lockheed Martin: an aerospace powerhouse

Lockheed Martin (NYSE:LMT) is a global security and aerospace company. Its main areas of focus are space, defence, intelligence, homeland security and information technology such as cybersecurity. The company’s space division is focused on researching, designing, and producing satellites, space transportation systems, and defensive strike systems.

In December 2020, the company agreed to acquire Aerojet Rocketdyne Holdings, Inc. for $5 billion. This acquisition is expected to be completed in the second half of 2021. In its 2020 financial year, the space business generated net sales of $11.9 billion, representing 18% of the company’s consolidated net sales.

Aerojet has been a big player when it comes to rockets. It built the main rocket in the Space Shuttle and is working on other propulsion systems for the new NASA space launch system. If the acquisition is completed, Lockheed Martin will be one of the biggest players in the space industry. Needless to say, this will translate to more revenue and profit for the company and could make it a lucrative space stock to invest in.

In my view, the space industry has excellent prospects with few competitors. But the lack of competition is likely a result of the costs involved in the business. After all, designing and building space technology is extremely difficult. Suppose something goes wrong during a launch. Such a mistake could be exceptionally expensive and may even lead to legal proceedings. Therefore I believe any investment into this sector carries a lot of risks. Whether that risk is worthy of the reward, only time will tell. But for now, I’m keeping a close eye on this space stock.

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