It's amazing how a simple signature in Washington can cause an explosion in innovation. No, I'm not talking about new laws, but rather, the loosening of federal oversight that opens the door to the private sector.
Consider a seemingly arcane move in 2000, made by President Clinton, to change Global Positioning System data from "selective availability" to public record. His approval opened the floodgates to spawn an entire consumer technology industry for GPS systems we now take for granted.
Savvy investors who saw the big potential in privatization made a killing as a result. Consider that from 2001 to 2007, Garmin (GRMN) stock soared from less than $10 in 2000 to more than $120 in 2007, while the market added about 25% in the same period.
As the space shuttle Atlantis returns to earth this week and closes the curtains on two decades of NASA's shuttle program, privatized space flight may provide a similar opportunity for innovation - and investors.
So which corporations could be the biggest players in this new space race? Here are three publicly traded companies that could be big players:
Orbital Sciences
A great small-cap space stock with potential in the private space race is Orbital Sciences Corporation (NYSE:ORB). Orbital Sciences develops and rockets and space systems for commercial customers, the military and NASA. The space stock mostly places satellites into orbit, but manned space missions wouldn't be much of a stretch for this company.
Early indications are that Orbital Sciences is looking to the stars. In December 2010, Orbital submitted its plans for a space shuttle replacement to NASA. Orbital's vehicle would launch atop an expendable rocket and return to Earth with a conventional runway landing like that of the shuttle. A shuttle replacement vehicle is initially needed to ferry astronauts to and from the International Space Station, and Orbital Sciences designed a vehicle with four seats. What's more, alternative designs would allow room for commercial passengers in future years if private pleasure cruises to space become a reality.
Lockheed Martin:
Lockheed Martin is no stranger to working with the government on aerospace programs. Over 70% of its revenue from the Department of Defense thanks in large part to iconic flying machines. Warbirds from Lockheed and its famous "skunk works" include the iconic F-16 and the F-117 stealth fighter.
But if you think fighter jets are all Lockheed makes, think again. It has history with the space program that dates back to 1955 when Uncle Sam awarded the then-named Martin Company with a contract to build Titan rockets in the space race against Russia. And a long list of Lockheed components have been a part of the space shuttle program for years.
Lockheed also submitted shuttle replacement plans to NASA a few months ago - its design includes returning a capsule to earth with a parachute landing like vehicles from decades past to simplify the technological requirements and reduce costs for space flight.
And of course I have to mention the now-infamous X-33 space plane, an "sub-orbital" aircraft that aimed to eventually replace the space shuttle. NASA invested $922 million in the project before cancellation in 2001, while Lockheed Martin dumped a further $357 million of its own money into the X-33 development. Critics call this a boondoggle, but Lockheed claims to have continued the program and seen success from related technologies as recently as 2009. And you can bet that after all that money invested and all the potential revenue from privatized space flight, Lockheed has been scurrying to put its X-33 research to good use now that the shuttle will be retired permanently.
Boeing
Of course, you can't overlook one of the other major aerospace contractors as one of Lockheed's chief competitors in the race for private space travel: Boeing. After all, Boeing was a crucial part of the Apollo space programs that sent America to the moon -- including building the first stage of the Saturn V rocket that launched the spacecraft and providing NASA with the lunar rover that bounced astronauts around the moon.
Boeing's 2000 acquisition of Hughes Space and Communications Company has made it one of the primary providers of commercial satellite launches for companies that include Sirius XM and DirecTV, among others.
And Boeing was awarded $18 million from NASA in the past year as seed money to advance the concepts and technology necessary to build a commercial space transportation system. Boeing isn't alone, of course, and the contract was one of several efforts by the government to jump-start new spaceship development and fill the void left by NASA's retiring shuttles. But clearly such acknowledgement from Washington and such a considerable sum gives Boeing a leg up in the new private space race.
Jeff Reeves is editor of InvestorPlace.com. Write him at jreeves@investorplace.com.