Most investors are looking right past the first and most important piece of the satellite-launch and space exploration puzzle.
If you happened to own a stake in moon-exploration technology company Intuitive Machines (LUNR -1.40%) before last Wednesday, then congratulations! Your position’s 77% more valuable now than it was then.
The outfit won a contract with NASA (not its first) that could be worth as much as $4.8 billion, catapulting the stock. For perspective, Intuitive Machines has only done $158 million worth of business during the past four reported quarters. With last week’s surge, its shares are now up 350% from its January low.
There’s the rub, of course. Such a big, rapid gain doesn’t leave much room for more upside. That was certainly the case in February when Intuitive Machines’ shares soared even more, only to end up giving most of the rally back. Even if a similar pullback isn’t in the cards this time around, it certainly feels like most of any gains are in the rearview mirror.
That doesn’t mean there aren’t other ways to plug into the world’s rekindled interest in space exploration and its willingness to let for-profit companies do this work. You just need to find another, less frothy investment opportunity.
If you feel Intuitive Machines stock is just too out of reach now, consider a stake in Rocket Lab USA (RKLB 4.18%) instead. Here’s why.
Intuitive Machines’ stock is already in orbit
You’re not reading any of this wrong. People are going back to the moon, and eventually, beyond. In fact, an uncrewed craft manufactured by Boeing actually entered a lunar orbit in 2022, laying the groundwork for a crewed mission expected sometime in 2025, with another slated for the following year.
These missions will be quite different than the Apollo program that ended in the early 1970s, though. The Apollo launches were largely a test of whether or not it was even possible to walk on the moon. This time, NASA’s going big. While there, the government agency intends to lay the groundwork for more involved experiments, resource mining, and even eventual colonization.
This means NASA will not only need more detailed mapping of the moon, but will also need to send equipment and supplies there before astronauts set foot on the lunar surface. Intuitive Machines’ contract makes it responsible for setting up the communications and navigation services these exploratory voyages will require.
As was noted, though, this stock’s arguably too far gone to plug into now.
Rocket Lab USA is on the launchpad
Communications are only one small part of the ever-growing space exploration and orbital launch industry, however. Simply getting equipment and personnel off the planet in the first place is a major (and revenue-bearing) job as well.
Enter Rocket Lab USA. Just as the name suggests, this company makes rockets used to offer launch services for companies looking to put small satellites into orbit. To date, the 52 launches of its reusable Electron rocket have ferried 192 satellites into outer space. More are certainly on the way, as the need for communication and data transmission options soars.
It’s this company’s next rocket, however, that will be game-changing… for it, and its investors. Rocket Lab’s Neutron rocket is expected to make its first-ever flight in the middle of the coming year, putting the company in the so-called medium-lift launch business, where it will compete directly with Elon Musk’s SpaceX.
Notably, not only will the Neutron rocket be suitable for supporting crewed missions to the moon in addition to launching bigger satellites, it will even be capable of carrying people into space.
This is no small matter. Industry consulting outfit EuroConsult believes the world will put an average of 1,700 satellites into Earth’s orbit every year through 2030. Research and consulting firm Quilty Space puts the figure above 2,000. Expressed in financial terms, Mordor Intelligence predicts that the global satellite-launch service market is set to grow at an annualized pace of more than 21% through 2029, when it will be more than twice its current size.
These outlooks come with a major footnote, of course. That is, they’re just best guesses about what awaits an undeveloped market. They could be off.
They’re not likely wrong in scope, though. Almost every analytical outfit’s guesses are in the same basic ballpark. That’s why the revenue growth of more than 70% expected of Rocket Lab this year, followed by next year’s top-line growth projection of around 40%, are both credible estimates. Better still, this growth puts the company on track to swing to a profit sometime in 2027. Progress toward that end could be enough to light a fire under the stock in the meantime.
The better option for the space speculation sliver of your portfolio
Rocket Lab is still more on the speculative side of the continuum, to be sure. If you can’t stomach the risk and likely volatility, look for something more comfortable to own. Even if you are highly risk-tolerant, this stock still shouldn’t serve as a foundational pick for your portfolio.
If you believe rocket launches and space exploration are an inevitable part of our future — and you can handle the anxiety this ticker’s sure to induce from time to time — Rocket Lab USA stock is definitely a more palatable pick right now than Intuitive Machines is following its recent red-hot run-up.
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Publish date : 2024-09-23 00:53:00
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