Shark Bites: The Space Race Has Put Another Stock in My Orbit
One of the best sectors in the market right now is space-related stocks.
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The space industry has undergone a transformation in recent years largely due to Elon Musk's SpaceX, but there are a number of other factors that have made this sector almost as transformational as artificial intelligence.
Over the last decade, the development of space-related technology has caused the cost of launching a satellite to decline by around 95%. As a result, the satellite industry is booming. There are currently less than 10,000 satellites in orbit, but it is expected that an additional 50,000 will be launched by 2030.
The satellite industry is supporting internet services, such as those provided by Starlink and AST SpaceMobile ASTS. There are also significant military uses. There will be several journeys to the moon soon, and Elon Musk is targeting a mission to Mars this decade.
Space exploration will lead to the building of infrastructure and manufacturing in low-gravity environments.
I've previously highlighted Rocket Lab RKLB and Intuitive Machines (LUNR) as space plays. Today, I am adding another name: Redwire Corp. RDW.
Redwire describes itself as:
"A global space infrastructure and innovation company enabling civil, commercial, and national security programs. Redwire's proven and reliable capabilities include avionics, sensors, power solutions, critical structures, mechanisms, radio frequency systems, platforms, missions, and microgravity payloads. Redwire combines decades of flight heritage and proven experience with an agile and innovative culture. Redwire's approximately 700 employees working from 14 facilities located throughout the United States and Europe are committed to building a bold future in space for humanity, pushing the envelope of discovery and science while creating a better world on Earth. For more information, please visit www.redwirespace.com."
The company has a large backorder of business, which increased 20% in the second quarter to $354 million. In its most recent quarter, sales increased 30% to $78 million. The company is moving toward EPS breakeven by the end of next year.
Redwire completed the acquisition of Hera Systems on September 3. Hera Systems expands Redwire's spacecraft portfolio to support specialized national security space missions in geostationary orbit (GEO).
The space industry is very hot right now, as reflected in RDW's chart, below. After a big run to the $8 level, it has pulled back and consolidated. The stock is now pushing back up to the $7.50 level and may gain some additional momentum if market conditions stay strong.
I'm aggressively trading all the stocks in this sector but am currently on the sideline with RKLB and ASTS as I look for entries.
At the time of publication, Rev Shark was long LUNR and RDW.
