Virgin Galactic Holdings (SPCE -5.19%) ushered in the era of space tourism when it launched founder Richard Branson into space. 

It was a huge moment for the young growth-focused company, but Virgin Galactic still faces an uphill battle in trying to kick-start a new industry and find ways to convert its expertise into profits.

The jury is still out on space tourism, but it is growing increasingly clear that as space opens up to commercial ventures there is money to be made. Here's why three Fools have identified Lockheed Martin (LMT 0.06%), General Motors (GM 0.87%), and Vector Acquisition (VACQ) (Rocket Lab) as attractive options for investors who are interested in buying into space.

Satellites orbiting the earth.

Image source: Getty Images.

Space is exciting, but it is best to hedge your bets

Lou Whiteman (Lockheed Martin): Without doubt there is a lot of potential for companies venturing beyond Earth's limits. And Virgin Galactic is just one of a large class of newly public companies trying to capitalize on that potential. The names and the business plans are exciting, but I fear profitability will prove to be much more difficult to achieve than orbit.

My bet is that for the foreseeable future most of the profits from space will be soaked up not by these new upstarts, but by the incumbents who have been ferrying U.S. astronauts and equipment into the outer atmosphere for generations. Of them, Lockheed Martin has an impressive portfolio of other businesses to help offset the uncertainty that is inherent with space operations.

Lockheed Martin is perhaps best known as the maker of the F-35 Joint Strike Fighter, but its space division accounted for nearly 20% of its $65 billion in 2020 revenue. Lockheed makes a range of satellites and systems for government and commercial clients, is heavily involved in NASA's planned mission to return to the moon, and along with Boeing owns United Launch Alliance, which has provided lift for space journeys for decades.

Those who are excited about investing in space need to be aware that for all the hype, the total addressable market, at least for now, remains relatively small. Tickets for space tourism flights are priced in the hundreds of thousands, limiting the number of potential customers. And the portion of NASA's annual budget that goes to contractors is not much more than the cost of a new aircraft carrier.

Space is important to Lockheed Martin, and it would be wrongly dismissive to call it a simple add-on to the core business. But that diversification of revenue can help get the space operation through lean times that could suffocate a smaller, space-only start-up. And with the Pentagon increasingly focused on new missile technologies including hypersonics, there are opportunities for Lockheed Martin to spread research and development spending over a number of different potential business pursuits.

By choosing a defense company like Lockheed Martin, you get exposure to all of the potential upside to space growth while also adding multiple billion-dollar defense franchises that support a 2.7% dividend yield. It's the best of space, without all of the risk.

Here's a lower-risk way to invest in the space boom

John Rosevear (General Motors): Why on Earth (or Mars, or Tatooine) would I recommend General Motors as a space stock?

Part of the answer involves something you may not know: As the world has begun transitioning to connected, electric, and (eventually) self-driving vehicles, GM has been looking beyond traditional cars and trucks for new businesses that can help it grow.

No, it's not building rockets (at least, not yet), much less landing them on barges. But GM is making big investments in technologies that could play important roles as the commercialization of space gets underway. 

For starters, GM has partnered with Honda Motor on a major effort to mass-produce hydrogen fuel cells at scale. Fuel cells, devices that chemically extract the energy from hydrogen to generate electricity, have been key to space efforts for decades, not least because their only emission is (drinkable!) water. 

Low-cost fuel cells of the type that GM and Honda are building seem likely to be valuable to any future commercial space effort -- especially those that have to run on business budgets, not government budgets.

A prototype of the lunar rover is shown undergoing testing at a GM facility in 1971.

GM led development of the original lunar rover in the early 1970s. It's now teaming up with Lockheed Martin to develop a much more advanced model. Image source: General Motors.

GM has also teamed up with Lockheed Martin to develop a new moon rover with autonomous-driving capabilities. That project will leverage GM's fast-growing expertise in electric-vehicle batteries and in autonomous driving -- just as the original 1970s moon rover leveraged GM's best technologies of that era. 

GM won't ever (at least in our lifetimes) be a pure-play space stock, of course. But given the huge investments and extreme risks involved in commercial space efforts today and for the foreseeable future, and GM CEO Mary Barra's focus on technologies that could support those commercial space efforts, GM stock might be a nice complement to the "moonshot" space stocks in your portfolio -- especially once the company reinstates its generous dividend, likely later this year. 

The best space stock in an uncertain space fleet

Rich Smith (Vector Acquisition): I'll preface my pick today with a caveat: I'm eager to invest in space stocks -- in theory. But when it comes to the specific space stocks that are available for investment today, I'm not just "cautiously optimistic." I'm downright speculative.

By which I mean, pretty much anywhere you look in the "new space" space, opportunities and potential abound -- but the fact that so many of these new space SPACs are pre-revenue means there's a very high percentage chance that a lot of them will ultimately fail. My policy when investing in space companies therefore comes in two parts:

First, minimize my risk by not putting too much cash in any one stock basket.

And second, minimize my risk further by investing mainly in the companies that are leading the space race. My first pick in both regards, therefore, is Vector Acquisition, the company that plans to bring Rocket Lab public in an IPO later this year.

Next to SpaceX, I consider Rocket Lab the best-performing space company available for investment today (assuming, you know, it does complete its IPO). While other space stocks are still working to get their first rocket in orbit, Rocket Lab has completed not one, not two, but 20 successful space launches over the last four years. It's got a steady and growing revenue stream, having increased sales from $13.5 million in 2018 to an estimated $33 million in 2020, en route to perhaps $122 million this year -- and with plans to grow to $656 million by 2027.      

When, precisely, Rocket Lab will turn profitable remains an open question, and I'll consider my investment speculative until it does. But with a strong record of launch success already, and revenue rising rapidly, I'm closer to cautiously optimistic about this space stock than about any other.