If You Missed SpaceX or Palantir. This is Even Bigger.
Summary
Felix identifies the space economy as the most significant investment theme for the coming decade, noting its rapid growth from $600 billion towards a trillion within the decade. This growth is driven by substantial government spending, including the US Space Force budget of over $40 billion, $60 billion from the Department of Defense, and a $13.4 billion allocation for America's new missile defense shield. He emphasizes that institutional investors are now recognizing space as a business, not just science fiction, following SpaceX's public debut. Felix critiques the common investor's focus solely on high-profile names like SpaceX, arguing that the real opportunities lie in less-known, profitable companies building the critical infrastructure. He presents a three-step framework for identifying such stocks: "follow the money" by looking at government contracts, backlogs, and book-to-bill ratios; "look at the moat" provided by security clearances, supply chain lock-ins, and proprietary technology; and "look at risk" by assessing profitability, debt, and dilution. He also highlights an upcoming "IPO summer" as a rare wealth-building window.
Mentioned Stocks
Reasoning: Redwire Corporation builds the "actual structures that go into orbit," including solar arrays, sensors, and satellite hardware, positioning it as a pure-play space infrastructure company. It has significant contracts with NASA, NATO (drone technology), DARPA, and a substantial $1.8 billion Andromeda contract with the Department of War. Revenue was up 58% last year, with a massive backlog. Its strong moat stems from high barriers to entry in space manufacturing requiring specialized facilities and government trust. Felix identifies RDW as a high-risk growth stock due to a loss last quarter and share dilution. He suggests waiting for the stock to bottom out and exceed recent highs, specifically around $17.30, before considering an investment, warning against buying simply because a stock appears "cheap."
Reasoning: Felix highlights Mercury Systems as the "brains inside America's missiles," building electronic components for advanced weapons (F-35, Patriot missiles). He previously recommended MRCY, which has since seen over 110% growth, and views the current moment as a "second chance" for investors. The company reported $235 million in revenue last quarter, significantly beat Wall Street's earnings estimates, and boasts a $1.5 billion backlog. Its strong moat stems from requiring top-secret security clearances and its Modular Open System Architecture (MOSA). While trading at all-time highs, Felix believes stocks at new highs tend to make new all-time highs. He notes the company is targeting positive free cash flow, which typically attracts institutional investors.
Reasoning: Astronics Corporation powers "every cockpit," quietly building electrical systems for commercial (e.g., Boeing, Airbus, phone chargers) and military aircraft (defense test systems for US Army communication). The company is guiding to about $1 billion in revenue this year with a $734 million backlog. Its strong moat is due to deep integration into aerospace supply chains requiring years of certification and security clearances for defense contracts. Felix advises against buying the stock at its current price and suggests waiting for it to break out of recent highs, emphasizing a logical strategy behind buying at higher prices after a breakout.