The ‘Fave Five’ Space Stocks to Buy on the Dip
[Editor’s note: “The ‘Fave Five’ Space Stocks to Buy on the Dip” was previously published in March 2021. It has since been updated to include the most relevant information available.]
This year, until recently, Treasury yields were rising. Stocks were falling, and hypergrowth stocks with rich valuations were getting the worst of it.
We’ve talked about why this is happening. We explained why the selloff is overdone and why this is a buying opportunity for long-term investors. Rates are falling. The economy is slowing. And corporate earnings are still following a healthy trajectory.
But here’s another simpler and even more important reason:
Technology hasn’t stopped.
That is, visionary entrepreneurs around the world are still formulating and pushing forward on groundbreaking technological ideas.
The genius engineers creating these technologies are still hard at work in offices and research labs across the globe. They’re continuing to turn these disruptive ideas into widespread realities.
And the innovative businesses built on these breakthrough technologies are still changing the world.
Whether it’s a 1% or 10% 10-year Treasury yield, a 20% increase or a 30% decrease in equities, it doesn’t matter…
Innovation doesn’t stop.
So when I see companies in a truly disruptive sector down drastically year-over-year, I see a huge buying opportunity.
One such sector is space stocks.
The Space Race 2.0
Some of the smartest engineers in the world are working tirelessly to advance in-space propulsion to a place where flying to and from space will be as easy flying in between cities.
Space Race 2.0 is here.
Over the past year, companies like Blue Origin and SpaceX have launched multiple successful “test flights.” Their progress has put us mere months away from safely and sustainably flying people and objects into space on a regular basis.
Over the subsequent few years, the technology will only get better, and the costs will only come down. That means the cost-effective, rapid transit to and from space will be a widespread reality within the next five years.
This will lay the foundation for the multi-trillion-dollar Space Economy to come to life.
Space tourism will rocket to life. People will fly into space as a sort of uber-expensive “Disneyland” ride…
We’ll start mining asteroids for more usable water and precious metals…
Companies will build space-based solar farms that can produce significantly more power per square foot than those based on Earth…
We’ll create space-based cellular networks and data centers for 24/7 global connectivity…
Indeed, in the Space Economy – as is true in space itself – the opportunities are endless.
Yet many space stocks have been crushed. That’s because they are pre-revenue companies that derive almost all their value from future cash flows.
Therefore, as rates moved higher and the present value of those future cash flows decreased, space stocks plunged.
And this has created a golden buying opportunity into one of the most disruptive megatrends of our lifetimes.
The Titans of Space Stocks
Many of these space companies are $50-plus billion titans of space in the making. And yet, they feature $1 billion, $2 billion, maybe $3 billion market caps today.
Higher rates don’t matter when you’re talking about companies that can increased 50-fold.
These are generational investment opportunities. Take advantage of recent weakness.
But which do I like best? Well, when it comes to the Space Economy, I have my “Fave Five.”
- Virgin Galactic (SPCE) — the “space tourism” category-creator. By 2030, it will have dozens of spaceships flying thousands of people to and from space — a business that will generate billions of dollars in revenue at scale.
- Momentus (MNTS) — the space tech company partnered with SpaceX, which I like to call the “space mobility” company. Its proprietary water-propulsion technology platform will one day be the foundation upon which everything moves in space.
- AST SpaceMobile (ASTS) is building the world’s first space-based cellular broadband network and is miles ahead of its competitors. It holds the potential to one day change how we all access the internet. And in just a few days, during the week of August 15, 2022, SpaceX will launch the company’s BlueWalker 3 test satellite from Cape Canaveral. Things are really taking off for ASTS!
- Astra (ASTR) could become the “FedEx (FDX) of Space.” Its low-cost, highly-scalable small rockets can be launched much more frequently than the big rockets SpaceX is building.
- Maxar (MAXR) — a more-mature satellite company with the incumbent infrastructure, expertise, and technology to be a trusted satellite provider for all the companies looking to establish a presence in space.
Those are my “Fave Five” in the Space Economy. And I think all have 10X to 50X upside potential.
The Final Word
Sure, it’s unlikely that all in my “Fave Five” succeed to their fullest potential. In fact, some may even go bust.
But in a portfolio of these five stocks, the winners will more than offset the losers. And the long-term gains could be enormous…
These are some of my top picks in the space economy. But there’s one stock that will score investors big returns — the biggest of any stock in any industry.
It’s a company that reminds me of a young Amazon (AMZN). Indeed, I think buying this stock today could be like buying AMZN stock back in 1997 — before it soared thousands of percent.
Which stock am I talking about?
Find out the name, ticker symbol, and key business details of this potential 10X pick.
On the date of publication, Luke Lango did not have (either directly or indirectly) any positions in the securities mentioned in this article.