TIM MELVIN'S

Better Way to

WEALTH
MORE MONEY, MORE QUICKLY, MORE SAFELY.
Play Video

The best (and worst) plays for the Space Race

Speaker 1 (00:00):

Hi everyone. I’m Tim Melvin, back to talk about a better way to wealth with you again today. Now the big news that we’ve been following, and I’m sure we all saw it on the news is the space race is underway. We saw both Jeff Bezos and Richard Branson build their spacecrafts and go into the lower levels of space. Over the last month, it’s been kind of interesting to watch and it has people scrambling to buy space stocks. I’m just going to tell you that you’re probably buying the wrong ones and buying right now is a massive mistake. Okay. Now I am also going to say that the coolest thing about all of that with both visits to space was the fact that on the blue origin Jeff pesos ship, while he funk, who was not allowed to go up in space back in 1962, finally got her ride into space well into her eight 80.

Speaker 1 (00:53):

So that was the coolest part for me. But now let’s talk space stocks, space, tourism, look, I’ve written a Virgin Galactica several times as a short, it’s just not a business. It’s a billionaire’s toy company. Okay. There’s never going to be enough people willing to pay six figures to take a ride into lower orbit. Okay? You don’t even really look, you know, it’s not like you’re looking out of Apollo eight window. So it’s not that dramatic. It’s 15 minutes at most, and you’re talking hundreds of thousands of dollars in two days in some godforsaken desert location, playing astronaut. There’s just not that many people willing to write that big a check and we’re decades away from the point where there’s enough craft goat spacecraft going up that the average family could even consider a space-related vacation. It’s not a business it’s going to bleed money.

Speaker 1 (01:55):

They’re going to have to raise a lot more money in Virgin Galactica. The only company that’s public, we found that out, by the way, right after their lunch, the day after their successful lunch, they announced a new stock offering that diluted the stock and the stock has gone straight down ever since they either going to have to sell debt or sell stock continuously or Branson at some point may have to just buy the whole mess back. If he wants to keep it running. There’s just not going to be able to generate enough cash from space tourism and a little bit of research work that they’re being assigned to do for, for profit. So it’s, it’s not a great business. It’s not going to be now space X, that’s a real business. They are launching rockets into space constantly for the government, for the military, for commercial endeavors for the communication business, they’re busy, they’re doing lots of launches.

Speaker 1 (02:51):

They’re also the first ones to figure out that very cool way of printing the booster stage back down onto a Barger onto a landing platform on shore that it’s not only cool. It saves them an enormous amount of money on each rocket launch. So that’s a real business. Unfortunately, Elon Musk has no intention of taking that business public. Anytime soon, it could be several years before he feels the inclination to take space ex public. So there is a lot going on in space. Somebody said recently that the next billionaire is going to come from space and I can’t make an argument against that. It’s highly likely to be a completely true statement. Let’s look at it for a second. We’ve got a lot of satellites up there that have been up there a long time. They’re due to be replaced. That’s going to happen cleaning those old systems up and getting them back down to earth without turning them into space junk.

Speaker 1 (03:49):

Also going to be something that happens going a little further out in time, but at some point, asteroid mining will become a real business. There’s way more rare, earth metals. And so other metals that we need pretty badly. They’re in short supply down here on earth in asteroids, as it turns out, if we could figure out how the mind knows, and we will, I’m highly confident that can be a source of solving some of the renewable energy and electric vehicle problems with rare earth metals. They’re essential to the queue, to the communications industry to have satellites up in space. There’s newer, greater technology being developed every day. So that stuff’s continually going to get launched. Space is a real business. Unfortunately, military usage of space is also going to be a growth industry. Now I’m not the only one talking about this.

Speaker 1 (04:45):

Folks. There have been a lot of special purpose acquisition companies or spec blank check deals done related to space companies. Now some of these are going to be really good businesses. Some of them are nothing more than a pile of hot garbage with a good story. It’s going to take some time to sort that out. We’re watching it. We’re aware of all the companies. We’re also aware that just about every spec deal ever done ends up with the target company, getting too high, a price. There’s just a lot of factors involved that end up with the buyer. Almost always overpaying. We’re going to sit back. We’re going to let all those stocks settle out, see how they play out, and we’ll be ready to recommend and buy the best of the space stocks. Because I do think a ton of money is going to be made in space size, do not fool around with any of these newly minted public companies that came out of this backbone that relate to space.

Speaker 1 (05:41):

They’re either overpriced or they’re garbage one or the other. There’s no greatness going on there. Avoid Virgin Galactica. The space tourism is not going to be a really good business. They’re going to be continually buying stock. So if you really want to play space today, your choices are companies like Lockheed Martin. They’ve been in the rocket business forever. They were part of the original Apollo launches and the Apollo programs they’ve been with NASA pretty much from day one, they’re still involved. They just bought Aerojet Rocketdyne Rocketdyne to expand their presence in the rocket business. So Lockheed Martin is going to be there. Northrop Grumman’s big player. Also in this base business, they’re going to be there for a long time. Boeing is building space, launch systems for NASA, and they’re also building some satellites. And I wasn’t really aware of this till I dug deeper.

Speaker 1 (06:37):

They manage the international space station for NASA. So they’re very much in addition to being, you know, an aircraft manufacturer, they are a space company. Then you’ve got the XR. This was a smaller company. They are building a lot of components for NASA lunar space station. That’s being designed in planned as we speak. They also do a lot of communication and observation, satellite construction. So smaller company, they’re going to be a huge player in the space business going forward. And finally Kronos credo systems. That’s KTU S is the symbol. Unfortunately, they’re going to be involved. And I say, unfortunately, because they’re going to be involved on the military and defense side of the space business, as well as cybersecurity for those space vehicles and satellites that are currently in space. So those are some of the companies you could start to look at. Now, there’s going to be more, we’re looking at them, we’re watching them, we’re evaluating them and we get a great space company at a good price. We’re going to bring it to our page subscribers. Anyway, this is Tim Melvin. Thank you for watching. We’ll be back again tomorrow.

 

TIM MELVIN'S

Better Way to

WEALTH

Subscribe today and receive daily advice right in your inbox, guiding you to a better way to wealth.

Subjects

More Videos

The media and the talking heads love to say that value investing is dead. But that is just the biggest crock of you-know-what in the history of investing. The truth is that traditional value investing, as practiced by Warren Buffett and as he was taught by Benjamin Graham, has never stopped working. However, it only works in the modern world for individual investors who are not trying to put billions of dollars to work.
Yesterday, we talked about cybersecurity, artificial intelligence and Chinese dominance of the modern world, but today we’re going to get back to a kinder, gentler topic. I want to go back to the report on the insurance industry that we talked about on Monday. That report was focused on the new “Dream Big” vision in which insurance companies need to get a lot bigger so that they can have the scale to develop new technology systems to spread costs across a larger asset base, to automate and to gain access to the very best investment talent.

Recent Comments

.