Looking for new growth opportunities in an overbought market? Look to the stars.
When seeking aerospace plays, investors tend to focus on the commercial or military aircraft segments and ignore the satellite industry. However, the accelerating commercialization of outer space for navigation and telecommunications should afford continued growth for the companies that develop, build and operate satellites.
This 21st century space race makes satellite leader DigitalGlobe (NYSE: DGI) a compelling long-term play on both technology and aerospace. Colorado-based DigitalGlobe owns and operates a constellation of satellites that provide high-resolution space imagery and geospatial content to commercial and military customers.
DigitalGlobe’s sophisticated capabilities are increasingly vital to commercial aviation. Case in point: During the global search for missing Malaysian flight 370, DigitalGlobe launched a “crowdsourcing†campaign that enabled anyone to help look for the aircraft by poring over satellite images for clues of its whereabouts.
The company reported last week that two of its commercial satellites had collected images encompassing nearly 2,000 square miles around the South China Sea, where the Beijing-bound aircraft went missing.
Through acquisitions, DigitalGlobe has emerged as a near monopoly that leaves its peers on the ground in terms of size and capability. The US government is the company’s biggest customer of satellite imagery, a huge advantage because of Uncle Sam’s deep pockets and constant need for weather, intelligence and navigational data.
The boom in satellite demand is borne out by new statistics from Virginia-based Teal Group, a market research firm that serves the commercial and military aerospace sectors.
Teal Group’s latest satellite survey, released in late 2013, identified 3,164 space payloads proposed for development and launch to earth or deep space orbits between 2013 and 2032. Teal estimates the value of these satellites and other space payloads at more than $235 billion.
