Goodbye, International Space Station. We hardly knew ye.
For nearly two decades, since the launch of its first "module" in 1998, the International Space Station has been a symbol of global cooperation, and the site of actual cooperation among scientists from many nations. Comprised of 15 separate modules, and inhabited continuously since 2000, the International Space Station has hosted upward of 200 astronauts and cosmonauts from 15 different nations over 17 years in service. But in just a few more years, all this will come to an end.
Like disassembling an old Lego set, Russia plans to break up ISS, detach its modules, and use them to build its own space station by 2023.
E unum pluribus
That's the upshot of an announcement from Russian President Vladimir Putin, who in April confirmed Russian plans "to create our own national space station in orbit" by 2023.
Russia has committed to continuing to operate ISS in cooperation with NASA (and the European Space Agency, Japan Aerospace Exploration Agency, and the Canadian Space Agency as well) into 2024. This expanded a prior commitment that extended out to only 2020, with rumblings about even earlier termination. Experts say the station's hardware is still in pretty good shape, and could remain functional through about 2028. But Russia's not exactly thrilled with the current arrangement.
As Putin explained, there are at least two reasons for parting ways with its ISS partners. For one thing, Russia has plans to land a man on the moon by 2030, and having its space station as a jumping-off point would help with that. For another, said the Russian president: "From the ISS only 5% of the area of Russia can be seen. From a national station, we should be able to see the whole of the area of our huge country."
This strategy is easier to pursue independently than in cooperation with four partners, each of which has its own preference for where the ISS should orbit. Hence, Russia plans to go it alone.
But it's not alone in this way of thinking.
China, too, has orbital aspirations in space. At the 64th International Astronautical Congress in 2013, China confirmed plans to build a "Heavenly Palace" national space station by 2023. The new structure will comprise three modules in all, with an 18.1-meter-long central module flanked by two laboratories. It should be able to support three astronauts on long-term missions.
And China's moving fast to accomplish its goal. The first lab module, Tiangong-1, was launched in 2011. A second laboratory will launch by 2017.
What it means for America -- and for American investors
From the perspective of mankind, we can only applaud Russia's and China's commitment to continued and expanded space exploration. From the perspective of America, however, we have to ask: Where does all this leave us?
And the answer would appear to be: "Homeless in space." As Russian Deputy Prime Minister Dmitry Rogozin pointed out last year, "The Russian segment [of the ISS] can exist independently from the American one, but the American segment cannot exist without the Russian." The implication being that once the Russians move out in 2023/2024, if we want a space station we're going to need to build it ourselves.
What's key for investors at this point is to begin working out who might win the contracts to build such a replacement, American space station. Fortunately, we've got more than enough data to make some educated guesses on that score:
"Since its inception, Boeing has helped build and integrate the space station's many complicated parts," Boeing (NYSE:BA) brags on its website. Boeing continues to play a vital role in keeping the ISS operational, and NASA will almost certainly tap that experience on any future project to build a replacement space station.
Lockheed Martin (NYSE:LMT), Boeing's partner in the United Launch Alliance, performs just as valuable a role at ISS, processing "about 25,000 pounds of NASA cargo" annually to keep the ISS supplied. And according to S&P Capital IQ data, Lockheed earns much fatter profit margins on its space work, to boot. "To be effective, the ISS crew needs the right tools and materials at the right time to complete its mission," says Jerry McDonald, the Lockheed Martin program manager for the Cargo Mission Contract. Lockheed Martin makes sure that work gets done, and done right.
At the same time, the actual getting of the cargo to ISS has lately been taken over by smaller space companies such as SpaceX and Orbital ATK (UNKNOWN:ATK.DL), twin winners of NASA's multibillion-dollar Commercial Resupply contracts.
When betting on a winner of a future NASA effort to build a new American Space Station, these four companies are probably your best bets. (Albeit you can't bet on SpaceX stock just yet.) More aggressive investors might also want to keep an eye on up-and-comers such as Bigelow Aerospace (expandable habitats), Moon Express (space robots), and even Virgin Galactic (space tourism) as potential players in orbital space.
Forty-six years after America first landed on the Moon, the space race is just getting started... again.
Rich Smith does not in fact own shares of, nor is he short, any company named above. You can find him on CAPS, publicly pontificating under the handle TMFDitty, where he's currently ranked No. 353 out of more than 75,000 rated members.
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