The Nasdaq Composite is jam-packed with development shares of all styles and sizes. A lot so, the index has outperformed the S&P 500 over the previous decade, returning 282% versus 185% for the latter (excluding dividends).

Right here’s one Nasdaq inventory that’s caught my eye.

Investing in house

Rocket Lab USA‘s (NASDAQ: RKLB) a vertically built-in rocket and satellite tv for pc firm that went public in 2021.

Since then, the share price has risen by round 160%. Nevertheless, the inventory’s actually taken to the heavens up to now yr, surging from $4 to $26. That’s a achieve of greater than 500%!

I’ve been desirous to spend money on the worldwide house economic system since I learn Christian Davenport’s 2018 guide The Area Barons: Elon Musk, Jeff Bezos, and the Quest to Colonize the Cosmos.

Sadly, Musk’s SpaceX and Bezos’ Blue Origin stay personal firms, that means on a regular basis buyers like myself can’t purchase shares in them. That’s a disgrace as a result of SpaceX’s worth has elevated 10-fold since 2018!

Anyway, Rocket Lab inventory does supply a method to spend money on the booming house economic system.

Rocket Lab vs SpaceX

In contrast to SpaceX, which focuses on bigger payloads and desires to finally colonise Mars, Rocket Lab at the moment specialises within the small satellite tv for pc launch market. Governments and business prospects pay it to get their know-how into house.

In fact, SpaceX is a beast, because it accounted for over half of all orbital launches globally final yr. And its Falcon 9 rockets are totally reusable, whereas Rocket Lab’s present rocket (Electron) isn’t. SpaceX additionally has its fast-growing Starlink satellite tv for pc web service.

Nonetheless, Electron did 16 profitable launches in 2024, which was 60% greater than the yr earlier than. This helped raise the corporate’s income 78% to $436m. Income in This autumn 2024 reached $132.4m, a 382% improve in comparison with This autumn 2021 (its first full quarter after going public).  

Later this yr, Rocket Lab’s aiming to launch its new Neutron rocket. Its bigger dimension and elevated payload capability ought to open up alternatives within the medium-lift launch market. 

Challenges

Now, the primary threat right here is that the corporate nonetheless isn’t worthwhile. In Q1, it reported a $61m internet loss, and is predicted to lose cash for the remainder of the yr.

Additionally, Rocket Lab’s aiming for partial reusability with Neutron. However that is notoriously troublesome to grasp (most consultants stated, wrongly, that SpaceX would by no means obtain it). Explosions and setbacks are inevitable for all gamers, together with SpaceX.

In any case, it’s not referred to as rocket science as a result of it’s straightforward!

On my listing

Encouragingly although, analysts anticipate the agency to show worthwhile in 2026, with income almost tripling from final yr’s ranges to achieve $1.2bn by 2027.

Trying forward, McKinsey estimates the worldwide house economic system shall be value $1.8trn by 2035, up from $630bn in 2023. And Rocket Lab’s one among solely 5 suppliers chosen by the US Area Power as eligible to launch the nation’s highest precedence nationwide safety missions.

So development alternatives shouldn’t be a problem right here, particularly because the agency just lately expanded into Europe by way of an acquisition.

Proper now, the inventory’s very dear, buying and selling at 14 occasions subsequent yr’s forecast gross sales. I’m hoping for a greater entry price, however that is undoubtedly one I’m eyeing up for my ISA sooner or later this yr.