Space Stocks: The Next Frontier

Before we get into today’s topic, I would be remiss if I didn’t mention Bitcoin’s surge over the weekend. With Trump’s inauguration less than 24 hours away the crypto space has gone into overdrive.

Bitcoin is around US$100,000, but many feel it has a long way to go. For the first time, we have an openly pro-crypto president entering the White House.

Our crypto-specialist Ryan Dinse expects this should be the beginning of the next major run.

For those of you who want to learn more about investing in Bitcoin, click here to read more on Ryan’s thoughts on where this asset is headed.

Ok, on to today’s topic. Last week highlighted something fascinating happening in the space sector right now.

On Friday, we witnessed two epic moments in the space race within hours of each other: SpaceX’s second successful Starship catch, and a Blue Origin triumph.

Why do I bring these up?

Because the space sector is rocketing towards a decades-long crescendo.

Space has always been one of those interesting fringes for the public and investors. The events are often exciting to watch but feel like it has little bearing on your everyday life.

Well, I believe that is about to change for one good reason. But before we get to that, let’s see Friday’s launch.

SpaceX launched its huge Starship rocket on another test flight last week, successfully catching another booster in an amazing feat of engineering.

Despite the success with the booster, its payload spacecraft broke apart just eight minutes into flight in an ‘unplanned disassembly over the Caribbean’ as their x.com account cheekily recounted.

Check out that debris! (click to play video)

Thank you for putting on a show starship pic.twitter.com/xSStaYN4yf

— Rocket Ranch StarBase (@RocketRanchTX) January 16, 2025

Source: x.com

Then, just hours later, Jeff Bezos’s Blue Origin finally got their massive New Glenn rocket off the ground after years of delays. Things are heating up in the space race.

Of course, the media only reports on the big wins and failures. Nothing garners attention more than an epic rocket explosion. But even a huge failure can be a valuable lesson for engineers.

Why do I bring that up?

Because it perfectly illustrates the state of the space race right now. Even the biggest players are still figuring things out. Looking around, we can see new companies and contracts popping up feverishly.

And there’s a good reason for that: things are getting dramatically cheaper to launch. This has opened the field to many new plays.

So, while things remain in flux, there is plenty of room for disruptors to enter the fray. Point being: we’re at a crucial moment in the commercialisation of space. The global space sector is projected to hit US$1 trillion by the 2030s.

As investors, it’s always important to see where the money’s flowing.

For example, look at what’s happening with small satellites. A whopping 90% of upcoming satellite launches will be these smaller packages, weighing less than 500 kilograms.

Why? Because they’re cheaper and faster to produce than traditional satellites. It’s like the shift from mainframe computers to PCs — a game-changer that opens up entirely new markets.

Many developing countries have seen these opportunities and are creating a new generation of small satellites to support their nations.

The numbers tell the story. Private equity space related deals have multiplied 4.8x since 2015. That’s not counting venture capital, which makes up 80% of private investment in the sector.

Here’s where it gets interesting…

While public traded stocks can be slim pickings in this sector, it doesn’t mean there aren’t opportunities for investors right now.

So, what’s the most important factors for a space bull market?

Government Backing and Falling Costs

With the US, India and others pouring billions into space development, new companies are being formed by sector veterans to pick the low-hanging fruit.

NASA’s Artemis program alone is pumping serious cash into companies like SpaceX and Blue Origin for lunar missions.

This has trickled down to smaller public companies making everything from specialist titanium parts, to advanced solar arrays and cameras.

This sector is now just about ripe for investors as it enters its next phase — the low-cost boom.

Advancements by companies like SpaceX have continued to push launch costs down to incredibly low levels.

The chart below is the most important thing to grasp for the next phase — look how quickly those launch costs are falling.

Within a decade, we have gone from tens of thousands for each kg to the low hundreds. Soon, it could be in the tens of dollars per kg.

With that, a new space boom will be born.

Expect tourism, manufacturing, and mining to inhabit the night sky in your lifetime.

But here’s the kicker — unlike prior booms like lithium, space stocks haven’t gone into a frenzy yet. Companies within this sector are still cheaply priced, especially in the small-cap sector.

On top of that, many of these stocks took a severe beating at the start of December. Some are trading near their 52-week lows but are quickly heading back up.

Here’s the chart for three of the majors: Leidos Holdings, L3Harris Technologies, and Lockheed Martin. All fell sharply through December but are starting to climb again.

Who knows how long this one runs. One thing I’ve learned about emerging sectors is they can run longer and higher than anyone expects.

So, for now, the cycle is moving up. If you want to catch this rocket ship, I suggest you start looking at space stocks before they potentially blast off into the stratosphere.

What are some examples of stocks climbing right now?

Redwire [NYSE:RDW] is one I like that holds valuable IP in solar power generation and in-space 3D printing. While it’s still a minnow, many are excited to see what it does next.

On the Toronto exchange, MDA Space [MDA:TSX] has a US$5 billion contract backlog thanks to huge deals with both Apple and Globalstar to launch satellite networks.

Over the next few years, they will be building 17 satellites for Apple’s emergency SOS satellite network that could save your life one day. At a market cap of US$3.3 billion, it’s a bit bigger than Redwire but holds fantastic promise.

These are just a couple of examples that require more due diligence from readers. Just remember – like gold miners, space companies can disappoint.

Technical challenges are real (just ask SpaceX about Friday’s test). They are also high risk and volatile. But when your industry has government backing and trillion-dollar projections, the market can be more forgiving of occasional setbacks.

If you’re hunting for alpha in 2025, the final frontier might be a hidden gem.

Regards,

Charlie Ormond,
Tech Analyst, For Alpha Tech Trader