💼 Inside the Portfolio: Updates from our Swing Trading Desk
24 Jan 2025 - Insights, adjustments, and forecasts about our latest swing trades 💹
Position Updates:
None
New Positions and Subscriber Insights:
This week, we initiated two exciting new positions further to enhance the quality and diversification of our portfolio. One of these additions is Rocket Lab USA Inc. (RKLB), a leading aerospace company specializing in small satellite launches and space systems. The second position, which we believe holds significant potential, was communicated exclusively to our premium subscribers.
As always, entry points and specific details for these new positions were communicated in real time to our paid subscribers via chat through our premium alert system, ensuring they had the opportunity to execute trades promptly. This approach demonstrates our commitment to providing timely, actionable insights to our valued premium members.
1. Rocket Lab USA Inc (RKLB)
Rocket Lab USA, Inc., a space company, provides launch services and space systems solutions for the space and defense industries. The company offers launch services, spacecraft engineering and design services, spacecraft components, spacecraft manufacturing, and other spacecraft and on-orbit management solutions; constellation management services, as well as designs and manufactures small and medium-class rockets. It also designs, manufactures, and sells Electron small orbital launch vehicles and the Photon satellite platforms, as well as developing the Neutron 8-ton payload class launch vehicle; conducts remote launch activities; and designs and manufactures a range of components and subsystems for the Photon family of spacecraft and broader merchant spacecraft components. The company serves commercial, aerospace prime contractors, and government customers. The company was founded in 2006 and is headquartered in Long Beach, California.
Summary & Technical Analysis
Rocket Lab USA has established itself as a leading aerospace company, with its Space Systems segment generating 80% of sales through satellite components and services. The company's vertical integration strategy enables end-to-end solutions, eliminating intermediary margins and enhancing growth opportunities. With a robust $1.05 billion backlog (80% YoY growth), the company demonstrates strong momentum in both launch services and space systems segments.
The company achieved 16 successful Electron launches in 2024, with average revenue per launch reaching $7.5M. Q3-24 revenue hit $105M, driven by scaling production and space system segment growth. The company maintains a healthy cash position of $297M (+105% YoY), with pre-launch payments helping to stabilize near-term cash flows.
Rocket Lab's upcoming Neutron rocket program, targeted for a 2025 test flight and planned to scale to seven launches annually by 2028, is expected to boost launch volumes, revenues, and margins significantly. The company has already secured initial constellation contracts, positioning itself strongly in the rapidly expanding global space economy, which is projected to triple by 2035.
Despite current operational losses, which reflect the company's investment phase, RKLB's valuation suggests a 43% upside potential. This outlook is supported by the company's technological leadership, growing backlog (approximately 50% of which is expected to convert to revenue within 12 months), and strong positioning against competitors like SpaceX in the small satellite launch market.
Entry Point: the security exhibited an explosive breakout characterized by exceptional velocity, precluding execution at market open. Following our disciplinary approach, we monitored the initial retracement to validate the breakout's legitimacy. Analysis of the 5-minute time frame revealed strong bid support during the pullback phase, prompting position initiation. Despite subsequent price action testing our entry-level over the following two sessions, we maintained conviction in the position based on the breakout's robust volume signature, which significantly exceeded the average daily volume (ADV), justifying a more patient holding period.
Support and Resistance Levels:Â The daily chart shows support at $30.00. There is no resistance because the stock is at all-time highs.
Additional Notes: Hot theme/sector.
Entry Day: 21 January
Price: $28.77
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