Tuesday, November 22, 2022
After a brief delay, America is headed back to the moon.
Next stop? Mars!
You see, NASA’s Artemis 1 mission launched last week. This is a key step in NASA’s plan to set up a lunar base by the end of this decade… and to set foot on Mars by the late 2030s.
The Artemis 1 mission is historic. It's the first new lunar program from NASA in fifty years, and will serve as a key catalyst for the space economy, which Statista values at nearly half a trillion dollars.
So today, I’ll reveal a company that stands to profit handsomely from all this activity.
It’s a space leader that’s been crushing the market by nearly 150%.
To set the stage, let me briefly explain NASA’s latest mission.
The original Apollo missions succeeded in preparing, and eventually landing, Americans on the moon in the 1960s and 70s. The Artemis program is just as ambitious, and it’s been upgraded for the 21st century.
You see, Artemis isn’t simply about landing on the moon. It’s about sending missions deep into space and building a base camp on the lunar surface that, among other things, will serve as a launching point for trips to Mars.
The program also includes putting a space station in orbit around the moon to shuttle supplies and explorers.
Artemis involves the use of NASA’s Space Launch System (SLS), a spacecraft as big as the Statue of Liberty, and the most powerful rocket ever created. Notably, this craft is years ahead of its private-space competitors in terms of development.
Artemis is expected to cost between twenty- and thirty-billion dollars over the next five years. And that’s on top of NASA’s six-billion-dollar annual budget.
Artemis 1 was unmanned. It’s designed to work out its telemetry in flight. But it brought with it the Orion capsule, which will one day carry astronauts. The spacecraft is supposed to orbit the moon before sling-shotting back to Earth and landing in the Pacific Ocean on December 11.
Keep in mind, this is just the first version of NASA’s SLS. There will eventually be three, and each one will have crew/cargo capsule options.
This doesn’t include the systems that will be built simply for testing, either. And every system will require four powerful rocket engines that cost $100 million apiece. There’s already a $1.8 billion contract in place for eighteen engines to be used over the course of the program.
And here’s the thing:
I recently identified a company that has deals to produce NASA engines for various space programs. In fact, it’s already built engines used on all the space shuttles. In other words, it’s not a newcomer to the space race.
Furthermore, it’s working with the Pentagon on hypersonic engines, and building the engines used on critical defense systems like Terminal High Altitude Area Defense (THAAD) and Patriot missiles.
The company I’m talking about is Aerojet Rocketdyne (AJRD).
Aerojet may have a relatively small market-cap of just three-and-a-half billion dollars. But with roots that date back to 1915, it has a huge history.
It’s played a key role in NASA’s growth since the space organization’s founding. And it’s been a valued strategic partner in military endeavors since the advent of rocket-powered engines.
With that kind of pedigree, you may wonder why it isn’t one of the big defense contractors. (It was nearly scooped up earlier this year by Lockheed Martin. But the FTC stepped in to squash the deal. If Aerojet wasn’t independent, it would’ve turned the entire aerospace industry upside down, because Lockheed would’ve controlled a significant portion of all aerospace activity in the U.S.)
On the SLS, Aerojet works with Boeing Co. and Northrop Grumman Corp. But as an independent company, it has only one mission: build the best rocket engines in the world.
For Project Artemis, Aerojet uses its RS-25 engines, which have powered space shuttles for more than three decades and 135 missions.
The engines used for the SLS have been undergoing testing since 2015 and routinely operate beyond 100% of their rated thrust level. And we’re talking about significant thrust. For reference, the configuration for the current SLS produces nearly nine-million pounds of thrust, fifteen percent more than the massive Saturn V rockets used during Apollo missions.
Aerojet is also using one of the most promising new production technologies, known as selective laser melting (SLM). It involves a high-energy laser and metal powder to produce parts quicker and at lower cost than conventional manufacturing methods…
That means faster, more efficient production, with more consistent builds. And that means safer vehicles.
This is part of the reason Aerojet is such a compelling “buy” right now.
As the new Space Race heats up with global competitors in China, Russia, and India, Aerojet is a gold mine for expanding U.S. space and defense efforts.
Wall Street is waking up to the great story here.
Since the market rebounded on October 12, the bellwether S&P 500 has gained a respectable 10.6%. Aerojet, meanwhile, has gained more than twenty-six percent — nearly 150% more.
I expect this company to remain a crown jewel for space and defense work. And as the space economy continues to grow, so will the stock’s long-term upside.
Of course, this company isn’t the only one that will benefit from the push towards outer space. For one of my favorite ways to play this trend, check out my “Trade of the Week” below.
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