We were incorrect to be bearishly-inclined a week and a half ago.
After the CPI report, breadth inflected and the action has been very strong under the hood. Trump’s comments at the World Economic Forum – demanding lower oil prices and lower rates around the world – did not hurt either. With a spate of new leaders manifesting, we have been aggressively adding risk into week’s end.
Over the past few days we have watched new leadership groups emerge as well. This is always a bullish sign for us and we believe these underlying themes will extend throughout this year.
The Space Group has jumped to the forefront of our scans. During his inaugural speech, Trump pledged:
“We will pursue our Manifest Destiny into the stars, launching American astronauts to plant the stars and stripes on the planet Mars.”
We think Space is still in the early innings of institutional accumulation and ownership. We believe the cycle will accelerate each quarter this year as Trump and Musk lean into various Space initiatives.
In the private markets, Musk’s SpaceX currently garners a $350B valuation. The market cap for Rocket Lab USA Inc. (RKLB) is right around $15B. It is worth noting that RKLB’s Electron rocket, currently ranks 3rd in annual launches behind SpaceX and China.
IF Rocket Lab is successful with its Neutron rocket launcher program this summer, which is designed to compete with SpaceX, the monster valuation gap between the two companies will shrink. As investor interest in Space continues to ramp, we think RKLB can stair-step to $40… $50… $60 – IF successful this summer with Neutron.
Longer term, why couldn't RKLB get to a $45-50B market cap or $100 on the stock price, if the company does, in fact, become a second source rocket-launcher behind SpaceX?
We are long RKLB at current levels. We plan to size into a Top 10 position early next week…
We are also very bullish on Spire Global Inc. (SPIR).
With the sale of its maritime business last November, Spire has $100M+ in cash on its balance sheet to support new growth initiatives for its vast space constellation within the Weather and Defense spaces. If you strip out the cash, SPIR is currently trading for a little under a $400M Enterprise Value.
In 2026-2027, SPIR could do $150-$200M in revenue, earning perhaps $1.00 in 2027.
We believe Spire’s valuation could triple-to-quadruple over the next 2 years and the stock head to $50… $75… or even $100 – should an Uber Bull Scenario unfold.
Technically, SPIR broke out from a huge base in the past two weeks and has been under major accumulation. We plan to aggressively size SPIR into a Top 5 position early next week.
Buy on dips to mid-$18 to $19.
Frequency Electronics Inc. (FEIM) is one for the PA. We actually recommended FEIM in the low-teens last year. You can check out the report here.
FEIM makes the various precision timing, frequency generation and RF control devices that go into these various satellites. The company has a great reputation within the defense and space areas and it is making headway with new verticals. The stock recently gapped-up in early December on impressive Q2 earnings and has been consolidating the gains since then.
President/CEO, Tom McClelland confirmed:
“By all financial metrics the second quarter of fiscal year 2025 performance was excellent. For both the quarter and year to date, revenue, gross margin, and operating income have grown substantially.
The backlog is also holding strong at $81M (an all-time high) compared to $70M at the end of the first quarter, and $78M at the end of last fiscal year.
The results reflect continued solid growth in our core businesses, which show every indication of continuing.”
We think FEIM is heading to $30-40 this year. Longer-term, it has the potential to go to $50-$100 over the next 2-3 years.
Space-based, intelligence platform operator, Blacksky Technology Inc. (BKSY) broke out on strong volume Friday. The company shipped its first Gen-3 Satellite to customer, Rocket Lab, and investors cheered the news, closing the stock at the high-of-the-day.
The Gen-3 is scheduled for a February launch and will provide High Frequency Monitoring, Hi-Res 35cm Imaging along with Real-Time AI-Enabled Insights. The news ushers in, what looks to be, a new chapter to the Blacksky story, one that is just beginning to pick up speed.
On its most recent earnings report in early November, Blacksky missed estimates slightly due to the lumpiness of its business. The numbers however belied the underlying strength and momentum the company has been experiencing.
On the call, Management gushed:
“Demand has never been higher as we delivered near-record bookings.”
In fact, BKSY racked up new awards valued up to $780M in the quarter. Take a look:
What’s more, 2025 should see a steady cadence of Gen-3 deployments, once the “on-orbit performance” of the first satellite is fully established. Management attests that the Gen-3 features are in high-demand:
"Strong demand for this [Gen-3] capability as evidenced by the significant contracted backlog we have already secured...
As we bring Gen 3 capability online, we're going to start unlocking the revenues from the backlog we've already secured around that capability."
Current estimates show a major growth curve beginning in FY25, and we intend to participate.
Technically, BKSY just broke out of a 2mo consolidation, and looks poised to move to $18 and the low-$20s after that. We bought a starter position into the close and will look to add on any pull-back to $14.
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Disclosure: We are long RKLB, SPIR, FEIM, BKSY stock. We may change our positioning at a moment’s notice, without notifying you of any such moves.
Disclaimer: All of the information in this piece has been prepped by Inflections Consulting LLC. Readers should know that it would be incorrect to assume that past and future names of interest will be profitable or will not turn into a loss. Inflections Consulting LLC does not and will not assume any liability for any loss that could occur if you invested in such stocks written about.
All the content in these reports have been prepared by Inflections Consulting LLC. We believe our sources to be reliable, but there is no guarantee here. The information in this piece does not constitute either an offer nor a solicitation to buy or sell any of the securities name-dropped in this piece.
All contents are derived from original or published sources believed reliable, but not guaranteed. This report is for the information of Top Tier Inflections members/subscribers, only. Absolutely none of our content may be reproduced in whole or in part without prior written permission from Inflections Consulting LLC. All rights reserved.
In no shape or manner should the views expressed in this piece be considered investment advice. We reserve the right to change our positioning in our RKLB, SPIR, FEIM, BKSY stock positions at a moment’s notice without updating you on any such change in opinion and positioning. That may be tomorrow, even before our price target is hit. Facts change, our opinions can change quickly too.
Investors need to consider their investment risk tolerance before investing in the stock market and also before investing in any of the stocks mentioned in this report.
