If You Missed Palantir, This Is Even Bigger
Summary
Brian identifies the space race as the next major technology frontier, following the AI boom. He anticipates that the upcoming public offering of SpaceX will be a significant market catalyst, influencing the entire space sector. Brian distinguishes between two categories of companies: 'picks and shovels' businesses, which provide essential components and services regardless of specific rocket launches or satellite operators, and 'crowded favorites,' which are often direct competitors to or highly dependent on SpaceX.
He posits that the 'picks and shovels' companies, being less driven by hype and more by fundamental demand, are likely to perform well or maintain stability. Conversely, 'crowded favorites' that are cash-burning and directly compete with SpaceX's offerings, or rely on its launch services, might experience a significant pullback as investor money potentially rotates into the newly public SpaceX.
Brian recommends focusing on companies with solid profitability and strong backlogs, which he views as resilient to market fluctuations caused by the SpaceX IPO. For companies that are currently speculative or unprofitable but have high growth potential, he advises patience, suggesting specific lower entry points for potential investment after an anticipated post-SpaceX IPO market correction.
Mentioned Stocks
Reasoning: Brian identifies Rocket Lab as a 'crowded favorite' directly competing with SpaceX. While the company shows impressive revenue growth (10x in 6 years), it remains unprofitable, with losses increasing due to investments in its Neutron rocket. Crucially, Rocket Lab plans to sell up to $3 billion of its own stock, which Brian warns will add significant selling pressure upon the SpaceX listing. He advises avoiding the stock at its current price and instead watching for a much lower entry point around the low $90s, which is approximately one-third of its present value.
Reasoning: Brian notes Redwire's substantial revenue growth (15x in 6 years) in building infrastructure for satellites and space stations, including a recent venture into defense drones. However, he expresses concern over its financial health, as the company's losses have ballooned, and it funds much of its growth by issuing new shares, leading to dilution. Brian advises caution, considering it a 'crowded name' susceptible to a pullback from the SpaceX listing. He would consider an entry point closer to $13 or $14, waiting for market reactions to provide a better price.
Reasoning: Brian views CACI as a resilient 'picks and shovels' play in the space sector. The company, a government technology contractor, has expanded into space infrastructure by building electro-optical sensors and laser terminals for satellites, profiting from every satellite launch. CACI is consistently profitable, generating around $500 million annually, and has a strong revenue backlog exceeding three years. Brian is comfortable with an entry point around the low $500s, believing it trades below its intrinsic value and will not be significantly impacted by the SpaceX listing due to its fundamental business drivers.
Reasoning: Brian highlights Kootenay Silver as a compelling investment due to silver's crucial role in both the burgeoning space race (satellites, solar cells) and AI data centers. The company holds significant silver deposits in Mexico. He notes that billionaire Eric Sprott has invested heavily in Kootenay, acquiring shares at prices up to C$4, which is double the current trading price. The stock also trades 35% below its recent C$1.60 financing and 50% below analyst targets from June 2025 (C$2.70-C$2.80), indicating a significant 'dislocation' and undervaluation despite rising silver prices.
Reasoning: Brian considers AST SpaceMobile a high-risk, 'bold swing' investment. While the company is developing satellites to provide direct-to-phone cell service and has working hardware, it generates minimal revenue and burns hundreds of millions of dollars annually. Brian emphasizes that investors are currently buying a 'vision' rather than a complete business. Its direct competition with Starlink and dependence on SpaceX for launches make it highly vulnerable to a pullback when SpaceX goes public. He suggests a potential entry point around the low $80s, anticipating a significant price correction.
Reasoning: Brian identifies Kaman Holdings as the 'most mispriced name' and a strong 'picks and shovels' play. The company manufactures critical components for missiles and rockets, with its parts used in major defense systems. Kaman has demonstrated robust financial performance, more than doubling its revenue and quadrupling its profits in three years, having successfully transitioned from a loss-making to a profitable entity. Trading in the upper $50s, Brian believes its intrinsic value is double its current price. He is comfortable owning Kaman at its present price, as its growth is driven by fundamental Pentagon missile spending, not market hype or the SpaceX IPO.