A Rocketing Stock That Won’t Fall Back to Earth

It has been 50 years since humans first landed on the Moon, but the maker of the engines that took them there may have further to go.

U.S. rocket maker Aerojet Rocketdyne has already reached the stars in terms of investor performance. In July 2012, Aerojet, a manufacturer that dates back to World War II, announced it would buy Rocketdyne, the maker of the five F-1 engines that powered the Saturn V rocket that took people to the moon in 1969. Since then, its stock has returned almost 690%. That compares with 280% for the U.S. aerospace and defense industry overall and 150% for the broader S&P 500.

After a post-Cold War drought in demand for rockets, the U.S. seems to be ready to engage in a new space race—this time with China^[1]—to return to the moon. Aerojet is one of the key contractors involved in the development of Space Launch System, NASA’s new heavy-load space rocket.

This has sparked investor interest in space-related companies, giving Aerojet’s stock another bump this year. Analysts at UBS estimate that the space economy will be worth more than $800 billion in annual revenue by 2030. A new generation of mini-satellites is a particularly big profit opportunity for the rocket companies that will launch them into space.

True, competition is heating up. Aerojet’s products are expensive, and SLS has been saddled with delays and a cost overrun of almost $2 billion. Technology tycoons Elon Musk and Jeff Bezos are both trying to build cheaper rockets with their own space ventures—SpaceX and Blue Origin^[2], respectively.