This Stock Could Really Take Off

Written by Jason Simpkins
Posted September 3, 2021

If you've been following my work at all lately, you know how excited I am about the burgeoning space industry.

And I'm not talking about Elon Musk and Jeff Bezos riding their own rockets.

I'm focused on the satellite industry, which is poised to shoot stratospherically higher in the years ahead.

You see, according to UBS, the space industry as a whole (currently valued at roughly $366 billion) is projected to more than double in the next 10 years to $805 billion and triple in the next two decades to more than $1 trillion.

Morgan Stanley has a similar projection based on an expected surge in internet and broadband development.

No doubt, things like high-speed commercial travel, space tourism, asteroid mining, and even colonization will factor in eventually.

But those things are all a long way off (if they ever come to be at all). 

So in the more immediate future, the main driver of growth in the space sector is something far more fundamental: satellites.

Increasingly, companies that provide things like broadband internet, digital cable, and streaming services are coming to rely on low-earth orbit satellites blanking the earth.

As a result, there will be more than 12,000 satellites in orbit by 2028 — up from roughly 3,000 now.

To put that in perspective, 1,470 satellites were launched from 2009 to 2019, according to Euroconsult. But 8,500 satellites will be launched from 2020 to 2030...

Euroconsult Satellites

Zooming in, we see that the small satellite market by itself totalled a little more than $3 billion in 2019, according to Fortune Business Insights. And the firm further estimates that the market will more than triple, growing to $9.75 billion by 2027.

This is where I've been focusing my efforts lately as an investor.

In fact, I recently clued in my Wall Street's Proving Ground subscribers on a small, off-the-radar rocket-maker that I expect to reap massive gains from this nascent market.

But that alone isn't enough.

I wouldn't be doing my job if I just stopped there.

I want to help all of you out, too.

And that's why I want to tell you about a separate stock today...

It's called Rocket Lab and it just launched on the Nasdaq last week under the ticker symbol RKLB.

It went public via SPAC, which means a shell company (Vector Acquisition Corp.) raised money from investors through an IPO and then used the cash to acquire a private company (Rocket Lab).

The transfer became official last week on August 25 and added $777 million in gross cash proceeds to Rocket Lab's balance sheet.

So this company is fresh out of the gate.

What does it do?

Rocket Lab makes small rockets capable of delivering satellites into orbit.

In fact, it's been a big part of the recent satellite boom, as its Electron rocket has carried 105 satellites into space since the company's first orbital launch three years ago.

This launch business booked revenues of $13.5 million in 2018, $48 million in 2019 and an estimated $33 million in 2020 (hobbled slightly by the pandemic). 

From here on out, Rocket Lab expects that revenue to steadily climb, reaching $915 million by 2027.

The company launches from a private complex on New Zealand’s Mahia Peninsula and has built a launchpad at NASA’s Wallops flight facility in Virginia for Electron launches. And it recently began testing a method of recovering its Electron boosters to reuse them. That's key because boosters are the largest, most expensive part of the rocket.

As it currently stands, Electron's onboard computer guides the booster through reentry, and a parachute deploys from the top of the booster to slow it down so it can be salvaged from the ocean. The ultimate plan, though, eventually, is to start intercepting them on the way down with a helicopter.

And that's not all.

The company will also use a big chunk of its listing proceeds ($200 million) to fund the development of another rocket called Neutron.

Neutron will be twice as tall as Electron and capable of carrying as much as 8,000 kilograms to low-earth orbit. The hope is that it will one day be capable of ferrying astronauts to the International Space Station.

Rocket Lab aims to launch Neutron for the first time by 2024.

This is exactly the type of company investors should target. A new and rapidly evolving sector, growing revenue, and a strong plan.

But like I said, I've found an even better company for my Wall Street's Proving Ground subscribers. You can find out more about that here.

After all, why take just one shot into space when you can take two?

Fight on,

Jason Simpkins Signature

Jason Simpkins

follow basic@OCSimpkins on Twitter

Jason Simpkins is Assistant Managing Editor of the Outsider Club and Investment Director of Wall Street's Proving Ground, a financial advisory focused on security companies and defense contractors. For more on Jason, check out his editor's page. 

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