Affected Sector: Aerospace and Defense
Space is getting crowded.
"Congestion in space is the result of more than 50 years of launches, operations, and accidents," Goldman analyst Noah Poponak wrote. "When satellites are destroyed, they litter certain orbital pathways with shrapnel that can spread and destroy other satellites, creating an exponential risk effect. Major space powers like Russia, China, and the United States have conducted antisatellite weapons tests that have created large fields of debris."
The more crowded space becomes, the more that current operational satellites will have to maneuver around this debris, "shortening their life expectations and possibly shutting the door to breakthrough new space applications," he wrote.
This leads to opportunity for aerospace and defense companies to build technologies to identify more (likely smaller) space objects as well as developing safe operational practices.
Companies to benefit: Boeing
, Lockheed Martin
, Orbital ATK
, Northrop Grumman
Lockheed Martin is a holding in Jim Cramer's Action Alerts PLUS Charitable Trust Portfolio. Cramer and Action Alerts Plus Research Director Jack Mohr wrote in a recent weekly roundup:
Although the company is well-positioned to experience an earnings inflection in 2017, we can't help but recognize that the back half of this year should prove messy as LMT finalizes the integration of the Sikorsky helicopter business it bought from United Technologies UTX. From a macro view, however, we trust management will find ways to create value amid a low-rate, low-growth and unpredictable backdrop. It has a remarkable history of returning capital via consistent dividend increases (the stock yields 2.7%) and large share repurchases.