The Aerospace Industry’s Unexpected Growth
Typically, the aerospace sector isn’t seen as a booming market. However, in recent times, a couple of forward-thinking companies have attracted a lot of interest. They’re producing new rockets and aircraft that bring numerous benefits compared to older models.
Among these companies are Rocket Lab and Joby Aviation. It’s worth exploring why holding onto shares in these two firms might be a smart move for the next couple of decades.
Rocket Lab
Rocket Lab focuses on reusable orbital rockets. Their Electron rocket, capable of launching small payloads—up to 300 kilograms—has already completed 87 launches to date. Later this year, they’re set to introduce another rocket, Neutron, which is designed to handle even heavier loads.
Their clientele includes NASA, the U.S. Space Force, the Swedish National Space Agency, and others. While it’s considerably smaller than SpaceX, Rocket Lab has successfully carved out a niche, primarily launching smaller payloads than its larger competitors.
Projected revenue for Rocket Lab is expected to surge from $602 million to $1.53 billion between 2025 and 2028, as they ramp up rocket launches and secure more contracts. Although the stock is currently valued at 40 times its projected 2028 sales, considerable growth could be on the horizon as their satellite fleet expands and agencies initiate new missions.
Joby Aviation
Joby is creating electric vertical takeoff and landing (eVTOL) aircraft, offering a cleaner, safer, and more user-friendly alternative to traditional helicopters. Their S4 model can accommodate a pilot and four passengers, travel up to 150 miles on a single charge, and hit speeds up to 200 mph. A unique feature of the S4 is its use of one propeller for both takeoff and cruising, which reduces weight and drag, allowing greater speed and distance.
Currently, Joby hasn’t started commercial flights. However, they have garnered support from major companies like Toyota, Delta Airlines, and Uber. Delta plans to bundle short-range air taxi rides with premium tickets while Uber is looking to include Joby’s services in its new Uber Air platform.
Revenue projections for Joby suggest an increase from $53 million to $458 million from 2025 to 2028 as it develops its air taxi operations. The global eVTOL market is forecasted to grow at a CAGR of 36.8% from 2026 to 2034. So, although Joby’s stock may seem pricey at 23 times its 2028 sales, it likely holds a substantial upside over the next 20 years.
Final Thoughts
As you consider investments in Rocket Lab, it’s crucial to weigh a few factors. For instance, some analysts believe there are currently ten better stocks to invest in than Rocket Lab. Their historical performance has shown impressive returns, which might be worth considering against Rocket Lab’s potential.
Overall, the aerospace industry may not be conventionally viewed as a high-growth area, but with innovations from companies like Rocket Lab and Joby Aviation, a shift could be underway. It’s definitely worth keeping an eye on these developments.
