The New Space Race is still in its very early stages but a particular small-cap maker of rocket engines is already generating an amazing amount of thrust.
Here's the thing. While the stocks of the major U.S. aerospace ventures have generated miniscule returns over the past year, shares of this California firm have soared by nearly 105%.
And that's just a start.
Indeed, the shares of this company experienced a 6% surge in a single day last week when billionaire investor Mario Gabelli told viewers of the popular CNBC Squawk Box program that this company's shares could double from here.
I'm talking, of course, about the Rancho Cordova-based GenCorp Inc. (NYSE: GY), an aerospace company I've followed for years.
GenCorp and the New Space Race
GenCorp finds itself in a unique position because the firm's Aerojet division supplies the engine for the highly anticipated Antares Rocket.
As much as any other development in the space industry today, the Antares program shows how the United States is moving steadily toward a true commercial space system.
Under that long-term plan, more of NASA's work will shift to the private sector. That's great for investors like you and me, because it gives us a chance to profit from firms that will gain from this accelerating trend.
With that context, you can see why an Antares rocket launch scheduled for next month is such an important milestone – and is providing GenCorp's stock with a powerful lift.
Officially, this is just a "test flight" of the system. But as a veteran observer of the aerospace industry, I can tell you that this Era of Radical Change event is anything but "routine."
This new rocket system is being built to launch a private robotic spaceship on cargo trips to the International Space Station. It features a streamlined design that is supposed to lower the costs of space-cargo flights at a time when NASA (and Washington in general) is learning to live with increasingly tighter budget constraints.
Technically speaking, this project really is the domain of rocket maker Orbital Sciences Corp. (NYSE: ORB). With Orbital at the helm, Antares will make eight deliveries for NASA worth up to $1.9 billion.
There is more than a little irony here. To even the most casual aerospace investor, Orbital is a recognizable household name. GenCorp, on the other hand, often flies under the radar even though its Aerojet unit is a trusted builder of rocket engines with decades of experience.
And if you were to judge by stock performance alone, clearly GenCorp is the Antares star. Orbital's stock is up just 7% over the past year.
That means GenCorp generated 15 times Orbital's return.
(Just so you don't think I'm cherry-picking here, Orbital has been catching up with GenCorp in the past three months, generating gains of 27% compared with gains of 42% for owners of GY shares.)
There's a Lesson Here
As an industrial/aerospace firm, GenCorp might not initially seem to fill role as an Era of Radical Change player. But not every breakthrough will be made by a highly caffeinated night-owl software maestro laboring at a fledgling startup or in the family garage.
A hefty number of needed innovations will be engineered by longstanding industrial firms or Silicon Valley denizens that have been able to evolve with the times.
That means that corporate turnarounds like the one at GenCorp can be rich hunting grounds for us to visit as we search for new-era profit opportunities.
To see what I mean, think back to America's return to Mars last July. The feat made headlines around the world as the spacecraft and its robotic rover captured the public's imagination.
Known as the Mars Science Laboratory (MSL), the new craft is designed to carry out a wide range of scientific tests needed to unlock the deep mysteries of the red planet.
GenCorp's Aerojet unit supplied 24 thrusters that helped make the descent and landing go smoothly. This was hardly an easy task. The MSL mission was by far the most complex planetary touchdown in the history of space travel.
Aerojet's history mirrors that of America's space missions. Founded in 1942, Aerojet has worked with NASA since the dawn of manned space flight. It has a reputation for making the very best equipment money can buy.
But that platinum reputation wasn't enough to keep the business from falling on hard times not too long ago when the Obama administration cancelled plans to resume manned missions to the Moon.
But as investors now know, the White House supports missions to Mars, as well as exploratory missions to asteroids. In all likelihood, that means Aerojet will continue to supply engines for a number of coming space flights.
Aerojet is the only U.S. propulsion firm that makes both solid rocket motors and liquid rocket engines. And GenCorp wants to make certain that Aerojet remains the sector's Top Gun. That's why, just last year, for instance, the parent company dropped $550 million to acquire Pratt & Whitney Rocketdyne from United Technologies Corp. (NYSE: UTX).
Rocketdyne makes space-launch vehicles, missile-defense systems and advanced hypersonic engines. To date, it has powered nearly all of NASA's manned spacecraft, as well as the space probes that have traveled to nearly every planet in our solar system.
That deal is one of the reasons that Gabelli, a high-profile money manager who is frequently featured by CNBC and Barron's, believes GenCorp shares are ready to rocket. It was a shrewd acquisition, and one that will add to the company's earnings and market reach.
What he didn't say – but we will – is that GenCorp is clearly setting itself up to play a leading role in the New Space Race.
But what Gabelli and I are both saying is that the shares of this under-the-radar tech play are literally ready to rocket.
So climb aboard …
[Editor's Note: When Michael Robinson says he's followed the aerospace industry for years, that's not hype. During a long career as a Pulitzer Prize-nominated journalist, Michael followed aerospace-and-defense firms, and established an impressive network of contacts. You might even say he was born for the role: While Michael was growing up, his father worked as an editor with the prestigious Aviation Week and Space Technology magazine – the publication that's generally viewed as the bible of the aerospace industry.]
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About the Author
Michael A. Robinson is a 36-year Silicon Valley veteran and one of the top tech and biotech financial analysts working today. That's because, as a consultant, senior adviser, and board member for Silicon Valley venture capital firms, Michael enjoys privileged access to pioneering CEOs, scientists, and high-profile players. And he brings this entire world of Silicon Valley "insiders" right to you...
- He was one of five people involved in early meetings for the $160 billion "cloud" computing phenomenon.
- He was there as Lee Iacocca and Roger Smith, the CEOs of Chrysler and GM, led the robotics revolution that saved the U.S. automotive industry.
- As cyber-security was becoming a focus of national security, Michael was with Dave DeWalt, the CEO of McAfee, right before Intel acquired his company for $7.8 billion.
This all means the entire world is constantly seeking Michael's insight.
In addition to being a regular guest and panelist on CNBC and Fox Business, he is also a Pulitzer Prize-nominated writer and reporter. His first book Overdrawn: The Bailout of American Savings warned people about the coming financial collapse - years before the word "bailout" became a household word.
Silicon Valley defense publications vie for his analysis. He's worked for Defense Media Network and Signal Magazine, as well as The New York Times, American Enterprise, and The Wall Street Journal.
And even with decades of experience, Michael believes there has never been a moment in time quite like this.
Right now, medical breakthroughs that once took years to develop are moving at a record speed. And that means we are going to see highly lucrative biotech investment opportunities come in fast and furious.
To help you navigate the historic opportunity in biotech, Michael launched the Bio-Tech Profit Alliance.
His other publications include: Strategic Tech Investor, The Nova-X Report, Bio-Technology Profit Alliance and Nexus-9 Network.