These Companies are Nervous about the Asteroid Heading for Earth Friday
On Friday, an asteroid about half of the size of a football field will be as close as 17,000 miles from Earth, according to Space.com. Asteroid 2012 DA14 is barreling toward the Earth at about 50,000-60,000 miles per hour as it arrives at approximately 2:24 pm EST.
Before you conjure up images of the movie Armageddon where only Bruce Willis and Liv Tyler can save the planet from certain destruction, NASA says that there is zero chance that the big rock will strike the Earth.
If it did strike the Earth, it would likely leave a trail of destruction 100 square miles wide, but the average citizen isn't the one who is nervous. It’s any company with money tied up in satellites.
DA14 will weave a path that puts it between the Earth and multimillion-dollar weather and communications satellites. Which companies will watch the path of DA14 with a bit of nervousness?
Boeing (NYSE: BA) has its hands full trying to fix the Dreamliner but the company has numerous communications satellites in orbit including its newest, the 702SP. The satellite business is a multi billion-dollar revenue driver for the company, according to Reuters.
Then there’s Lockheed Martin. (NYSE: LMT) The company is currently designing the next generation of GPS satellites, according to a company press release, but it isn’t new to the satellite party. Just like Boeing, the company has an extensive number of satellites already in orbit.
A satellite is only as good as its ability to communicate with computer systems on Earth. Comtech Telecommunication Corp (NASDAQ: CMTL) manufacturers the antennas and related systems that allow for communication with satellites. This thinly traded stock is down 16 percent over the past year.
Finally, there are all the companies that rely on satellites for communications. Disney, (NYSE: DIS) the company that owns ESPN, relies on satellites for live feeds of sporting events around the world along with DIRECTV (NASDAQ: DTV) and major broadcasters like CBS (NYSE: CBS). Then there are all the government agencies like the Department of Defense, the FAA, and many more.
Assuming all of the satellites survive the asteroid visit, should investors put money to work in aerospace? The aerospace industry is said to have a spending cycle. When the country is under budgetary pressure, spending declines and during wartimes or after long droughts in defense spending, the cycle picks up.
With Washington lawmakers struggling to keep spending under control, now may not be the best time to commit new money but one ETF to watch is the iShares Dow Jones US Aerospace & Defense ETF. (NYSE: ITA) The ETF has underperformed the S&P by about 50 percent over the past year but has followed the upward trending market as of late.
You won’t be able to see DA14 on Friday but the companies that manufacture and rely on satellites for business as usual will watch its path closely. NASA is confident that they know the exact track the asteroid will follow and that it won’t hit anything during its visit to Earth. On the other hand, how many times have you heard “The skies will be sunny today,” followed by a downpour?
On Friday a meteorite sent fireballs falling over Russia damaging cars and buildings and injuring 500 people. Although not DA14, it was related to the coming asteroid, according to scientists. The "unexpected event" may not speak well for NASA's forecast. Somebody call Bruce Willis.
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