The New Space Race: 5 Stocks to Buy Now

Hey folks, Luke Lango here. This is the weekly being exponential podcast. As you can see, Brooke is not here this week. He is feeling sick under the weather, so wasn't able to record the podcast, but it is a massive week in the stock market. A lot is going on and we needed to get you some information. So, I'm recording solo this week. Hopefully, that's okay. Brooke will be back next week. Do not worry. I know he's got a lot of fans out there. Brooke will be back next week. But let's dive into this week's happenings. This is going to be our stock picks episode. And I actually want to focus, you know, I've kind of been focusing on sectors with with each of these stock picks. You know, five picks in this sector, five picks in that sector. I want to continue that trend. And the sector, the theme I want to focus on this week is space stocks because I think that there is a really compelling buying opportunity in a lot of space stocks out there right now. I mean, we've kind of been circling this idea for months, right? We've talked about space stocks a lot in this very podcast, but just to recap, the long-term bull thesis on space stocks is very, very attractive. Um, the space economy is in the early innings of becoming one of the largest new addressable markets of our lifetime. Uh, you have orbital compute, you have inspace manufacturing, you have connectivity, the Starlink stuff. There's a lot of economic opportunities up there and we're just scratching the surface in the first few innings of realizing all the economic potential up in the final frontier. Over the last few weeks, I want to say about six weeks, ever since the SpaceX IPO, this sector has been in a major major draw down. But the group is now showing real signs of a turnaround. And so what I think you have here is a classic case which is a setup we love to buy into. Uh long-term winner, shortterm correction with that short-term correction turning into a short-term rebound. So the long-term uptrend is resuming. We like longterm uptrend resumption trades. That's one of our favorite trades in the market. And I think space stocks are the quintessence of that trade right now, here and now. Why do we think that? Well, this was a sector that ran up big into the SpaceX IPO and then got crushed after the SpaceX IPO. What has changed to change the direction of the stock since the SpaceX IPO? One, SpaceX reported earnings and it was a pretty good report. The rest of the basket also reported earnings. So, we kind of got all these the first earnings reports from the space sector post IPO and they were all pretty good. So, we kind of got some earnings out of the way. The second big thing is we did get past that first big trunch unlock big the first big trunch of shares got unlocked for SpaceX after the IPO and we didn't get incremental selling pressure. So, I think that kind of eased a lot of fears. There are a lot of people out there like me who were concerned that okay SpaceX IPO great company but a bunch of shares are going to come unlocked. Once they come unlocked the insiders are going to sell. But the shares came unlocked and we didn't get insider selling pressure. And so I think that really eased a lot of fears from people like me who were like this is going to create incremental sale sales pressure and it did not. So those two big things I think were kind of clearing events if you will for the sector. And I do think that space stocks are now ready to rocket higher. So let's go one by one and talk about the stocks that we like on this rebound. Five stocks. The first one is Redwire. We've talked about Redwire a lot on this podcast. They're a space infrastructure company built through a mix of internal engineering and aggressive M&A strategy. They have 11 acquisitions to date. most recently um Edge Autonomy. Now the company that the part of the company that we really like is the outer space solar panel manufacturing uh segment. They have a uh essentially the number one player in in solar arrays, outer space solar arrays and power uh power systems. Uh microgravity manufacturing as well. Uh they power the international space station. This is a company that I think is is really really well positioned. Now they just reported earnings and the earnings were really really good. Redwire delivered record revenue in Q2 of $ 117.1 million. That was up about 90% year-over-year. Gross margins 28% also a record high. The backlog hit $542 million. That was up 65% year-over-year, which is the fifth consecutive quarter of backlog growth. Bookto bill ratio in that backlog about 1.42. All of those are fantastic growth numbers. management reaffirmed the fullear revenue guide 450 million to 500 million. That's about 42% growth at the midpoint. And the company ended the quarter with five nearly 560 million in cash uh after $490 million or so um capital injection capital raise uh from from outside markets. So this company is firing on all cylinders. The backlog is massive. They just got a bunch of cash to execute on the growth. And that's the big risk is is the cash risk. the uh the financing risk, if you will. So, I think this is a company that is really ready to kind of get into major major growth mode. And when you look at the stock chart, I mean, it's super attractive in my opinion. You got a stock that it's kind of been bumbling around, but it came to the bottom side of, you know, a really strong support level right here around, you know, $5,67. Bounced higher, retook the 200, retook the 100, retook the 50, bullish MACD crossover, over uh sold RSI recovery. This is a stock that, I mean, when this thing does that, it tends to really go. This time it went from five to 14 in early 26. um right around April 26 went in the IPO. We went from 8 to what was this? The top was 26. So now I think we're in one of those type of moments back here in April 25 went from 750 to $20. Right now I think we're in one of those moments. So we're jumping from 7, call it 8 to around 13 right now. I think we get to 20 25 30 over the next few weeks to months. I think this is a really good buy the dip or buy the rebound candidate if you will right now. Second stock that I'm looking at this week for space is going to be Black Sky. Now Black Sky just kind of quick recap of what they do. They operate a constellation of small high performance imaging satellites kind of an intelligence play uh that capture very high resolution 35cm imagery and combine it with real-time AI analytics through its spectra software platform in-house software platform. So really a data a spatial intelligence play. Um they have three pillars to their business if you will. They have spacebased intelligence and AI subscription services. Um they have the uh that's the core of the business. Um they have their own mission solutions business is what they call it which is building and delivering sovereign satellite systems for you know other uh governments. Um and then they have an advanced technology programs business which is a customer-funded R&D uh business that includes its um nextgen mapping satellite program. So the second two business segments cool potentially home run hits in the long term but that first one kind of that AI intelligence spatial intelligence that's the business that's really kind of the core heartbeat of this company. Uh they just reported earnings too really really good. uh the space-based intelligence and AI subscription business that that core business it hit $und00 million annualized uh revenue run rate in the second quarter of 50% sequentially. So massive growth that's sequential growth quarter over quarter 50% that is huge. Now management says that that revenue level is what unlocks real operating leverage and that's the key here which means that every incremental subscription dollar in that business now drops through to the bottom line at a much higher rate. It's not like spend big grow big. They did spend big to grow big and now incremental growth from here on is pretty much profitable growth. Um adjusted did turn solidly positive in the quarter at around $5 million a 14.2% margin and a $7.5 million improvement from a loss in the prior year quarter. Total revenue up 50% year-over-year and 60% sequentially. Management reaffirmed the fullear guide. Uh and the balance sheet looks really really fresh. They also just raised $150 million in fresh capital during the quarter. So they have liquidity north of $300 million. Now, this is again much like Red Wire, a company that is firing on all cylinders, getting to profitability, and just had just did a bunch of um got a bunch of new new money to fund more expansion. I I really like that setup. And then you look at the chart. I mean, this is classic buy the dip territory. And this is a stock that's been on a solid uptrend, I would say, ever since, actually, really ever since September of 2024. spikes above the 200, drops below the 200, spikes above the 200, drops below the 200, spikes above the 200, drops below the 200, and now we're rebounding back, right? We retook the 200 day moving average, retook the 50, we're about to retake the 100, bullish MACI crossover, oversold RSI recovery. This is a stock that has a pattern. And the pattern right now is we are bouncing back. So, I think this is a stock that does put in a higher high. The most recent high was $5163. We're at 30 bucks and change right now. $3146. I think we go put in a new high of $60 or $70 in the next few weeks to month. So again, another great buy the rebound category, buy the rebound pick uh in space. Number three, a name that all of you are probably familiar with is Rocket Lab, the mini SpaceX. And the thing I really like about Rocket Lab is we all know they're a launch company. We all know that they are SpaceX's biggest rival in launch. SpaceX is the bigger rockets. These are the smaller rockets. Cool story, but the really really value additive part of the story is that they are shifting from just being the same shift that SpaceX made. Shifting from just being a rocket launch company to being a vertically integrated space AI company. They want an acquired Aridium. They're trying to get into Spectrum. They're talking about orbital data centers. U maybe they start partnering with some other companies, you know, maybe some Frontier AI labs to get a model in the mix. like this is a company that has a lot of potential to kind of follow in SpaceX footsteps and indeed is following in Space X's footsteps. And I really like what the company just reported. It sort of gave some some proof points, [clears throat] excuse me, behind that thesis. Rocket Lab, so second quarter numbers, um, let me pull them up here. $234 million in the second quarter, up 62% year-over-year. That beat estimates 2.4 4 billion backlog, $2.36 billion to be exact. They signed more than $1 billion in new launch and space systems contracts across the quarter and in the week since uh gross margins beat guidance meaningfully adjusted with the loss $8.8 million far better than the 20 million to 26 million loss that management had guiding to. Now, the Aridium acquisition we talked about, uh, like we said, it kind of gives them that direct to device, uh, IoT, uh, sell to, um, sorry, space to sell, um, connectivity game. They talked a lot about that on the conference call. Really, really bullish, really talking about how we can kind of get that going pretty soon. So, I think again, this growth story is is I mean, it never lost luster. It just kind of got caught up in the SpaceX IPO mechanics and now it's rebounding from that. As you can see in the chart, you can see here this is also a stock that much like Black Sky kind of has big drawd downs and big rebounds and big draw downs and big rebounds and big draw downs and big rebounds. Now the one difference this time around is that we finally did lose the 200 day moving average. I wasn't so excited about that in mid July when we lost that 200 day. That's the first time we lost 200 day since I mean back in 2024 since this uptrend really got started. But we've now retaken the 200 day and it looks like we're trying to turn the 200 day which is right around $78 into support. And if we do we bounce off that then I think we have the biggest rebound yet in this stock. And much like black sky kind of a series of higher highs I think we're going to put in a higher high too. So 160 was the high here or just about 160 150 I think we get to 200 on this one. So I think this is one bullish maxi crossover oversold RSI recovery. So a lot of good things going on there too. This is a stock that I think you know we had that big draw down. Now we're on the rebound side of things. I like the fundamental story. The technicals are shaping up. This is one I would continue to be a buyer of on the rebound. Now number four we have is Space Mobile. Another one of my long-term favorites here. Now AS Space Mobile, we all know they're building this satellitebased cellular broadband network designed to connect directly to ordinary unmodified smartphones. And that's the big difference between them and kind of what Starlink is doing and what SpaceX is doing is they're going from satellite to your current phone. No new hardware needed in this phone. So that's kind of the big technological advantage there. They got a lot of partnerships. Um Verizon and AT&T and Vodafone and Racketin. 21 of Europe's top 25 carriers have indicated interest uh in this technology. So it's it's a really interesting company with a lot of momentum. Uh second quarter results were were pretty good. Um the backlog grew to I think $1.3 billion. The company landed more than $und00 million in new US government contract rewards during the quarter, mostly tied to national security priorities like the Golden Dome missile defense initiative that Trump's is uh really positive on. Um they also got that new $ 1.15 billion convertible note price of the company's lowest ever coupon of I think about 1.6%. And that gives the company a lot of cash. Pro for cash is up to nearly $4 billion. It was like 3.7 to 3.8 in the quarter. So again, kind of that red wire story, kind of that black sky story. Company that is firing all cylinders. Backlog is growing. They have a lot of future potential. The big risk is the financing risk to execute. Now they've kind of solved that risk of raising a bunch of capital. They got 4 billion basically on the balance sheet now. So they're they're ready to go. They're ready to lock and load. Now, the chart is a little less convincing than some of the others because we haven't retaken the 200 day moving average. But the bounce to me looks really legitimate. We kind of had this big wash out, put in a pretty major low right around 53, which is kind of around uh this high back here in June of 25. Major low MACD bullish crossover RSI recovery. The MACD is pushing above the zero line. That's good to see. We're about to retake the 50. And you know, look, this is a stock that we're at what 73 right now. If we just get another couple dollars here, we push up to 80, 81, 82. We've retaken all the MAS and the uptrends back. So, I think that's what's going to happen. I'm bullish on the space theme as you, as you can tell. And so, I think as even though there's not technical confirmation here, I do think that this is a stock that you want to be buying on the rebound after the earnings confirmation. Now, last but not least, we have our good friend. the reason we're kind of making this big call and that's SpaceX. There's not really much to see on the chart here besides the fact that this is pretty much the biggest rally the stock has had since that first IPO pump. We got the earnings report. That's the big story here. Okay, the earnings report was I mean it was a genuine blowout. Revenue was 7 p the numbers revenue was 7.8 billion that was up 92% year-over-year. Jesse Evad 3 and a half billion up 191% year-over-year. All three of their segments grew. Space up 29%. Um the connectivity segment was up 66% and the AI segment was up 247% on the top line [clears throat] and importantly there IBIT positive for the first time $1.1 billion in IBA in the AI segment. management guided to more than a hundred billion dollars in annualized revenue rate by December of this year, backed by its enormous balance sheet. There's roughly a hundred billion dollars in cash on the SpaceX balance sheet following its IPO and a $25 billion bond offering. So again, you see the Red Wire story, you see the Black Sky story, you see the Rocket Lab story, you see the AS story. It's the same story here. Company firing all cylinders. growth is enormous, huge backlog, lots of opportunity, going to require a lot of capital to realize all that opportunity, but now has acquired that capital. So, the financing risk is being reduced and the stock is bouncing back. This is the the head of the snake of the space trade, if you will. When everyone was excited by the SpaceX IPO, going into the IPO, the stocks all soared. When that frenzy cooled, the stocks all tanked. as this stock has started to rebound, all of these stocks has started to rebound, too. So, if we're going to make a bullish thematic call on space, we have to make a bullish single stock call on SpaceX. I don't think you can separate the two. So, yes, I do think punching long SpaceX is something that makes sense here. So, those are the five stocks that I'm focusing on this week. You'll notice that maybe the one that is not in the mix is Planet Labs, ticker is PL. I do love that stock. I do love that company, but the reason I'm not throwing it in these five is because we have not had earnings confirmation and we have not had technical confirmation. The stock remains stuck below 200 day moving average and its earning report at earn earnings report I believe is still about a month out. These other five, we have earnings confirmation on four of them and we have technical confirmation on all five of them. We have technical confirmation on four of them. So PL is the only one where there's no earnings or technical confirmation. So that's why it's not included in this batch. But nonetheless, I'm making a bullish call this week on space. I think space is ready to rebound and no pun intended. Rocket higher over the next few weeks. Well folks, that's all we have for this episode of Being Exponential. Appreciate you guys for tuning in. We'll be in touch with the macro call in just a few days. Take care. >> [music]