A Growing Industry with Limited Investment Vehicles
A couple of reports are getting a lot of attention today in the financial press.
One is a report on the top 10 investment themes put out by Bank of America. And the other is a report on investing in Space put out by CNBC. The 10th investment theme in the BofA report is Space.
The CNBC report breaks space investment into 4 areas.
- Human Spaceflight
- National Security Space
- Satellite Communications, or SATCOM, and
- Imagery and Data Analysis
I’ve worked with a few of the companies in the report as a consultant, and am familiar with the rest. So there wasn’t any aha moment about who was in the report.
But, I did come away with one more solidified thought that has been bouncing around in my head the past few weeks as I’ve written about Virgin Galactic (SPCE, SPCEWS).
And that is the fact that there really aren’t any pure Space plays to invest in besides Virgin Galactic.
Human Spaceflight is dominated by the big players, like Boeing (BA) which can’t really be looked at as a space play. The obvious example being the 737 MAX issues. Those types of non-space issue can affect any of the large players.
And Blue Origin and SpaceX are not close to doing IPOs.
National Security Space is again a big dogs game, and any investment is again buried in companies like Boeing and Lockheed Martin, making them really not space plays.
SATCOM is at its core really made up of internet or “cable” providers. Like DISH Network (DISH). Not saying it’s a bad investment, but it’s not what I would call a Space investment.
And finally Data and Analysis. A lot of these capabilities are buried in companies that serve specific industries. For example, John Deere does a lot of this type of work in agriculture, using satellites to gather crop imagery as part of its drive to do precision farming.
A great use of the technology, conserves water, reduces chemical use, etc. but again, not a Space investment.
There was one company in the report that you may want to keep an eye on in the data and analysis section. That is Maxar (MAXR).
I’m not familiar with the company’s fundamentals, but from a technical perspective it has broken out of a range after its latest earnings report. It broke above $10, which was a very clear resistance level. The next resistance levels look to be at $15, which I would call minor resistance, and then close to $20.
But, apart from possibly MAXR, the only pure space investment available to investors right now is Virgin Galactic.
At least in the short term, that should provide additional support for the stock, as any investments by large funds in the sector will have a hard time not including SPCE as a component.
After a 44% gain flipping the warrants in the Faux Hot IPO, I’m back in the warrants. As I told another reader recently I like the base the stock has put in, especially the candlestick the stock put in on November 5th. I think that shook out some weak hands.
I anticipate the stock moving back toward $11 (and possibly back to $12) as opposed to $9, where it found support after the selloff following the IPO. I’m using $9 as a very hard stop. If it goes through that level I’ll be back out of the warrants.
If you are trading this one, and you’re comfortable with options, remember SPCE does have options trading on it.
And, finally, if you wished you’d gotten that 44% gain on the IPO flip, and you want more warrant ideas shared with my monthly subscribers check out the Warrant Observer membership here.
Or, let’s put it this way. If you had invested a mere $1,000 into SPCEWS when I told readers about the trade, you would have more than covered a full year at the discounted annual price. Not too shabby.