According to a group of UBS analysts led by Jarrod Castle, space tourism could be a $4 billion market by 2030. They estimate that the larger space economy will be worth more than $900 billion by the same year.
Blue Origin founder Jeff Bezos launched into space on Tuesday aboard the company’s first passenger spaceflight. He stated that the company’s sales of future space tourist flights are approaching $100 million. Sir Richard Branson, the founder of Virgin Galactic and a fellow billionaire, had flown into space nine days before on a test flight with his company.
“Space tourism continues to be a small but visible subset of the larger space ecosystem. However, the expansion of space tourism and the revenues generated by it are assisting in the development of the space ecosystem and the democratization of space, according to the UBS note.
Virgin Galactic, which UBS describes as the “poster child of space tourism,” is currently the only publicly traded pure play on the trend. Elon Musk’s SpaceX, Blue Origin, Axiom Space, and Space Adventures are among the private space tourism companies.
However, these private space tourism ventures may go public in the future, and other companies are entering the space market.
According to the UBS note, “there is a greater amount of private capital and investor interest in the space ecosystem, with a number of space-related businesses and new forms of aviation companies coming or planning to come to market, as well as private investment vehicles and private funding rounds.”
“In our opinion, there will be more investable opportunities in the broader space ecosystem over time,” the note stated.
Meanwhile, UBS recommends several single-stock plays on the broad space theme, including aerospace companies Boeing and Lockheed Martin.
According to CapGemini’s most recent World Wealth Report, the client base for space tourism has continued to grow as the number of millionaires and multimillionaires increased during the pandemic.
In July, Virgin Galactic CEO Richard Branson said: “There’s room for 20 space companies to take people up there.” “The more spaceships we can build, the lower the price will be and the more we will be able to satisfy demand, which will happen in the coming years.”
Best stocks according to Bank of America
Jill Carey Hall led a team of analysts in identifying small- and mid-cap stocks that could outperform second-quarter earnings expectations.
They combed the S&P Small Cap 600 and S&P Mid Cap 400 indexes for stocks with earnings-per-share and sales estimates at BofA that are higher than the consensus of other Wall Street firms.
The bank also identified the companies that outperformed both earnings per share and sales expectations in the most recent quarter.
The stocks in BofA’s screen have a buy rating at the firm as well.
According to BofA analysts, small-cap earnings growth will triple in the second quarter compared to the previous year. The question will be whether small caps can expect that momentum to continue.
“The key factor to watch will be inflation impacts – particularly wages, given that small caps are more labor-intensive than large caps,” said the note, which was released on Tuesday.
Examine ten of the names on the bank’s screen.
First Solar, a solar panel manufacturer, created BofA’s screen. In 2021, the stock is down more than 14 percent, and it closed Tuesday more than 26 percent below its January 52-week high. The company is scheduled to release earnings on July 29.
“We perceive [First Solar] shares as a key thematic solar stock into 2H, with numerous fundamental catalysts enabling shares to achieve and sustain [earnings-per-share] growth from a previously flattish overall outlook,” said Julien Dumoulin-Smith of BofA earlier this month in a note.
Kohl’s is another smaller company that BofA believes will outperform in terms of earnings. The retailer is scheduled to report second-quarter earnings on August 18. Shares of Kohl’s are down about 6% in July, but the stock is up 27 percent this year.
In a note following the retailer’s first-quarter earnings, BofA’s Lorraine Hutchinson stated that the company’s “superior balance sheet and value proposition position it better than peers.”
RH, formerly Restoration Hardware, appeared on BofA’s screen as well. The stock of the high-end furniture retailer has increased by 50% in 2021, owing to a strong housing and renovation market. On September 9, the company will report earnings.
In a June note, BofA’s Curtis Nagle said, “High end home turnover is very elevated, which should provide a long tail of growth well into 2022 for RH’s luxury furniture offerings.”
Five Below, Columbia Sportswear, and XPO Logistics are among the other companies on BofA’s list.
Morgan Stanley top 5 stocks
The bank identified three demographic trends that are moving at a “startling pace” to create an ageing population in a July 13 note, and said the trends provide a “myriad” of opportunities for investors.
“Societies, governments, corporations, and investors are facing faster demographic changes than ever before and must adapt – quickly,” the analysts wrote. “The rate of change is unprecedented and exceeds UN projections,” they added. Morgan Stanley prefers to play the theme through real estate, health care, and medical technology stocks.
Fertility rates are declining
Morgan Stanley suggested that society is now entering a “third epoch of fertility,” in which education and better opportunities for women have reduced the birth rate, while poorer health, such as obesity and poor diet, has also contributed to reduced fertility.
“The US census just recorded America’s second slowest population growth since it began counting in 1790,” the analysts said, adding that millennials in China are hesitant to have more than two children, despite the country’s new three-child limit.
Climate change is also a factor, with data from Google and other sources indicating that younger people are less willing to have children due to concerns about their contribution to emissions.
The role of the coronavirus
According to the bank, a “Covid Curveball” has resulted in a baby bust rather than a boom, as some commentators predicted. “Previous financial crises indicate that the suppressant effect on birth rates can last 3-4 years. Furthermore, using the 1917-20 Spanish Flu as a loose proxy, the birth rate recovery in 2021 is unlikely to be linear. In 1917-20, each new wave of virus brought a new drop in subsequent births,” the analysts wrote.
Morgan Stanley reported that Google searches for “Egg Freezing” have reached new highs. “Covid has had far-reaching and unintended consequences that may last a generation. Investors, in our opinion, should be aware of the ramifications for long-term supply, demand, and growth across the economy.”
The population is getting older
“While we believe Europe is entering a comparatively more appealing demographic era ahead, investors must still confront the realities of an aging population in absolute terms,” Morgan Stanley said. In the United Kingdom, for example, the number of people over the age of 100 is expected to increase at a compound annual rate of 6%, reaching 600,000 by 2080. “To put this in context, there are currently 730,000 retirement home beds in the UK (according to the Elderly Accommodation Council) – enough to accommodate people of all ages,” the analysts wrote.
Picks for stocks
Cofinimmo, a Belgian real estate firm with a portfolio worth around 5 billion euros ($5.91 billion), is an opportunity for investors because it has been “rotating away from offices to healthcare over the last 15 years,” according to the bank, which also chose real estate investment trust Aedificia, which has care homes across Northern Europe.
Morgan Stanley likes Nestle in health care, with the company’s health science arm identifying “an increasing burden on society from obesity and chronic diseases” and then producing food supplements to help with issues like fatigue and muscle mass loss.
Hearing aid manufacturer GN Store Nord and Spanish blood plasma firm Grifols, which has “invested in Alzheimer’s treatments and trials for nearly two decades,” are among the bank’s medical technology picks.