In fewer than six months, we’ll find ourselves in a brand-new decade. No more struggling with cutesy monikers; we’ll be going back to the Twenties — a name everyone can get behind. And what a decade it could be for investors, with a new industry around the corner with potentially infinite growth.
I’m talking about space mining, and while it might sound like science fiction, there’s cold, hard currency to be made in this area. Morgan Stanley analysts have estimated that the space industry in general has the potential to grow to $1.1 trillion by 2040, albeit with the caveat that investment will be far from smooth considering the “significant execution risk” built into the reality of exploration.
Tesla and Amazon are obvious choices for space investment, since they are closely tied via their CEOs to SpaceX and Blue Origin, respectively. However, the following areas are a few places to start looking for a more direct play when it comes to off-world mining.
Look at the biggest miners for potential candidates
Expansion hungry, willing to speculate at the expense of its checkbook (and balance sheet), and with the means to pump both cash and technical experience into a space-faring venture, Barrick Gold (TSX:ABX)(NYSE:GOLD) — or a miner very much like it — could be in the right position to lend its expertise to the space race. While no major miner has yet committed to off-world mining, this is the kind of stock to start looking at.
Barrick Gold knows how to manage its overheads effectively and has done so while securing half of the world’s top-tier gold production sites, as well as pulling off an impressive joint venture with the newly merged Newmont Goldcorp. In short, Barrick Gold has whipped its balance sheet into shape and is working on its bottom line. It also just hit a 52-week high, driven up by investors seeking safety.
Then again, an investor trying to think outside the box may want to choose a miner that extracts a greater variety of metals and minerals, since different commodities and substrate types require different extraction techniques. Lundin Mining might fit the bill here, with its spread of copper, nickel and zinc, as might industry giant Rio Tinto, with its aluminum, iron, copper, and diamond mining expertise.
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Single out tech and aviation stocks working with NASA
The forward-looking tech company Maxar Technologies (TSX:MAXR)(NYSE:MAXR) recently buddied up with NASA to help build and test its Gateway platform, an ambitious lunar outpost for Moon-bound astronauts. Maxar Technologies saw its share price rocket on the news, and it’s a top choice for investors looking to take their investments off world.
While Maxar Technologies is in the habit of paying a dividend, it’s not notable for it – the current yield is less than 1%. However, this could change in the future. Investors looking for higher-yielding passive income should alternatively consider Boeing, another major company with ties to NASA. Boeing has been contracted to build the Space Launch System, the largest crew-carrying space-faring rocket in history.
The bottom line
With an infinitely rewarding industry about to explode, investors should look to the stars with stocks like Maxar Technologies, Barrick Gold, Lundin Mining, and Boeing. While there are certainly smaller companies hungry for space contracts, it’s my opinion that it’s the biggest players that are most likely to break the market early on.
This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.
John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Fool contributor Victoria Hetherington has no position in any of the stocks mentioned. David Gardner owns shares of Amazon and Tesla. Tom Gardner owns shares of Tesla. The Motley Fool owns shares of Amazon and Tesla. Maxar and Tesla are recommendations of Stock Advisor Canada.