Dear Reader,
Everybody talks about Elon Musk’s SpaceX, and SpaceX is a terrific company.
Everyone wants to know how to get a piece.
But you know, there are other companies doing just as fine a job sending materials into space. And one of them is a stock we recommended a few months back called Rocket Lab (SYM: RKLB). Here’s my take:
Rocket Lab is now trading around $7 a share – up almost 100% from our recommended price of $3.80.
So a lot of folks have written in about it.
What I love about Rocket Lab is, like SpaceX, it’s part of this new generation of companies working with the military and commercially to send rockets to space.
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The wider story here is this:
Boeing has astronauts still stuck in space; this speaks to the issues that our old-fashioned defense contractors are facing.
They may no longer be equipped to help us fight wars at the speeds that we need to move.
They’re not innovating fast enough. They’re just too big.
So we have companies like SpaceX and Rocket Labs coming in to compete.
I read Elon Musk’s biography by Walter Isaacson earlier this year, and a couple things stuck out to me immediately:
First, gosh, I’d never want to be Elon Musk. No matter how much money that man has, he doesn’t seem happy. He seems like a man at war with himself, which I can tell you from personal experience is not a fun place to be.
But the second thing that struck me wasn’t what he did with Tesla – it’s really what he’s doing with SpaceX…
He basically went in and revolutionized the contracting process that happens when the U.S. government wants to send, let’s say satellites, to space.
The way it used to work was on a “cost-plus model.”
The Pentagon would go to Boeing and say, “we need to send 15 satellites to space.”
Boeing would say, “okay, that’s going to cost us a billion dollars and we need to make 10%, $100 million, so the price will be $1.1 billion.”
And those satellites would get launched whenever it’s convenient for Boeing, on their timeline.
What Elon Musk’s SpaceX did that completely revolutionized things, was he basically told the Pentagon:
That cost-plus model does not make sense. Just pay me when I successfully get something into space. I’ll get it done faster, I’ll move it there quicker, and I’ll do it cheaper than any of the companies out there like Boeing.
And Rocket Lab is doing the same kinds of things SpaceX is doing – sending things to space for the U.S. government and for commercial enterprises.
These guys are pretty smart…
I was looking for ways to buy SpaceX last year and I stumbled on Rocket Lab and I’ve been studying them ever since.
This is a very, very solid team and it’s part of this new generation of companies pushing our defense infrastructure into the 21st century.
I do not believe that the companies that helped us win WWII and dominate in the 20th century will be the same companies that help us push into the 21st century.
And thankfully, our system of capitalism is rewarding this new generation of defense contractors and rocket companies.
I am very bullish on Rocket Lab in the long term.
It’s certainly had a runup here and it’s terrific and I’m always happy when things run up.
Frankly, personally, I wish it had stayed a little lower longer so more people could’ve bought it, but we have to play the ball where it is not where we want it to be.
So I’m optimistic with Rocket Lab.
I recommend holding shares here, for all those folks who’ve written in to ask. I think this thing has a lot more potential.
Their earnings report was fabulous. I mean, 71% top line growth!
The government, the Pentagon, commercial enterprises – all want what this company has because they can move faster than the big guys up there right now, like Boeing, which again sadly has left astronauts stuck in space.
We put together a really deep dive on exactly what DARPA and the Pentagon have been doing to siphon government money away from the big players like Boeing and into tiny innovators.
And we took the top 3 stocks we found and put them into this report: The New Space Race: 3 AI Stocks for Windfall Gains
“The Buck Stops Here”
