This Stock Could Double Earnings in About 3 Years

On November 6, I noted how a new set of satellites is about to make an important lift off.

I was speaking about SpaceX’s Starlink global constellation of 1,440 satellites to beam Web access down to Earth.

There’s just one problem with this ambitious plan. Outer space is filling up with dangerous junk.

We already have at least 3,100 dead satellites posing a risk of collision, according to the U.N.

With 10,000 new satellites slated to be launched in the next three years, the potential for danger is soaring.

It comes as forecasts suggest civilian space travel will boost the sector to at least $1 trillion. And just last week, Virgin Galactic Holdings Inc. (SPCE) scored a key NASA contract.

As long as the threat of collisions of up there, though, this new sector and its incredible growth potential are at risk.

Luckily, I’ve identified a company focused on keeping the crowded skies safe. It just made a key merger to become a true space traffic controller.

Let me show you why it’s set to double earnings in just a little over three years…

More Stuff, Less Space

Since the Russians launched Sputnik 1 in 1957, humans have put 9,456 satellites in space.

Today, the top five countries with operational satellites are the US, China, Russia, the UK, and Japan.

Yet even these numbers understate the true scale of what’s going on.

The militarization of space is heating up. The US and Russia are developing hypersonic missiles and potentially hypersonic manned craft and well as a new generation of communications, intelligence, lasers, and weapons.

China and India, as well as Europe and Japan, aren’t far behind.

And remember, launching satellites is only a part of SpaceX’s mission. It has carried NASA astronauts into space for several years.

SpaceX also plans to ferry civilians into space as well. Ditto Virgin Galactic, which plans suborbital manned flights starting next year. At deadline, Virgin was saying it hoped to launch a test flight on Friday, weather permitting.

In the interim, NASA said it is partnering with Virgin to deliver payloads needed for research and development and future missions.

Make no mistake. The space economy is on the move. It’s now pegged at $350 billion.

But analysts say that with civilian travel, the value will conservatively hit $1 trillion by the 2040s. Bank of America says it could go as high as $2.7 trillion.

And in today’s tech-driven economy, a growing breakthrough sector is exactly where you want to have your money.

Once you find that sector, you want to have a rock-solid firm with excellent financials and business prospects to make sure that your portfolio gets its share of the sector growth.

I’ve got one standout choice that ticks all of those boxes just below.

An Original Simulation Firm

Enter ANSYS Inc. (ANSS), an engineering simulation and software company.

What does Ansys have to do with space?

Recently, the firm announced it’s buying 30-year-old Analytical Graphics for $700 million. I believe this is a great move.

Analytical Graphics models and tracks satellites to provide key data on their orbits to make sure none of them run into other satellites.

The merger means Ansys is now in line to be the space traffic cop for the 21st Century.

And given the fact that the U.S. puts up more satellites -private, institutional, and governmental – than any other country, this is a big job.

And the fact is, Analytical Graphics has partners all around the world that use its services. Up to now it has been privately held but has a global reputation for managing some of the most sensitive information that its clients have.

That is important within the defense, intelligence, communications, and aerospace industries.

More Than a Space Cop

While this new acquisition is exciting, given the huge growth in space activity that is happening, it’s hardly the only thing Ansys has going for it.

It’s a simulation company. That may not sound too sexy or important at first.

But it helps explain why the firm boasts a roster of elite clients.

In aerospace, it’s top companies like Lockheed Martin Corp. (LMT). In construction, it’s the likes of Caterpillar Inc. (CAT), ABB Ltd. (ABB), and Rockwell Automation Inc. (ROK). In chips, it’s NVIDIA Corp. (NVDA) and Samsung.

The list goes on, as do the industries it influences. Here’s how the company explains it all:

“If you’ve ever seen a rocket launch, flown on an airplane, driven a car, used a computer, touched a mobile device, crossed a bridge, or put-on wearable technology, chances are you’ve used a product where ANSYS software played a critical role in its creation.”

Growing at 17% a year, the simulation engineering market is expected to hit $28 billion by 2026.

Basically, simulation software allows manufacturers to “build” products virtually and test them before actually building them.

With the processing power of computers now, this allows companies to simulate even the most complex products and test various metals and alloys for parts using software rather than building physical models.

This makes for better, faster, and cheaper prototyping. Whether it’s a turbine engine, a semiconductor, a bulldozer, or a 5G base station, simulation engineering is a huge step forward for scores of industries.

And Ansys is the top of the pack.

And when it comes to aerospace, the ability to simulate how well a structure can survive in the grueling environment of the moon or Mars is a significant advantage.

So, it’s no surprise then that SpaceX is a top customer of Ansys products.

But on a more earthly level, Ansys is a leading technology provider for every industry that is moving the world forward.

We’re talking 5G telecom, autonomous vehicles, drive trains for electric vehicles, and of course defense, intelligence, and aerospace work.

A Double in Three Years

Ansys has been around since 1970, so it isn’t a Silicon Valley upstart that moves fast and breaks things. It moves efficiently and builds things. It’s headquartered in Pittsburgh, Pennsylvania.

But its business is globally diversified. About 50% comes from the Americas, 25% from Europe and the other 25% from Asia.

High tech makes up 32% of its revenue, automotive 19%, aerospace 17%, and industrial equipment 10%.

The firm announced third-quarter financials on Election Day and it beat earnings and hit record revenue numbers.

And Ansys is growing earnings by 22% a year, which means earnings are set to double in 3.25 years.

So, as our satellite use grows in the years ahead, so will a portfolio that holds this great stock.

Cheers and good investing,

— Michael A. Robinson

23 Best Stocks In America [sponsor]
A former hedge fund manager just revealed his 23 must-have stocks. Click here to see the free video where he goes over every stock and explains why every American should consider buying them ASAP.

Source: Strategic Tech Investor