Grading 3 Stocks in the SpaceX Supply Chain Ahead of IPO
Stocks in the SpaceX supply chain have potential upside.
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Excitement is building for the SpaceX initial public offering. Shares of the aerospace and satellite communications company are expected to be offered to the public for the first time on June 12, under the ticker symbol SPCX.
SpaceX dominates its field, accounting for 87% of U.S. space launches in 2024. The Elon Musk-led company conducted 170 orbital launches last year, or nearly one every other day. SpaceX has launched over 11,500 Starlink satellites since 2019, 10,000 of which are still currently active.
The SpaceX Supply Chain
SpaceX controls much of its own supply chain, designing and manufacturing a variety of parts and components itself. This tactic evolved from necessity, as SpaceX had difficulty obtaining needed parts and supplies in its early days.
However, even SpaceX needs a little help from its friends. Let’s take a closer look at some companies that provide the components, parts, and supplies that help SpaceX soar.
1. Materion Corp (MTRN)
Materion has a market capitalization of just $4.62 billion, but its shares are on fire, gaining 72% year-to-date and 180% over the past 12 months. The Ohio-based company supplies SpaceX with niobium metal, which can withstand extreme temperatures, as well as other advanced materials and specialty metals.
Materion shares traded at an all-time high earlier this week. The stock has formed an A-B-C-D pattern, which projects Materion shares to $275.
GRADE: A-
2. Carpenter Technology Corp (CRS)
Carpenter Technology supplies SpaceX with high-performance specialty metals that are used in Starship and other spacecraft. The Philadelphia-based supplier’s history with the space program extends back to the NASA Apollo missions of the 1960s.
Carpenter Technology shares closed at an all-time high on Wednesday. The stock has gained 36% year-to-date and 93% over the past 12 months.
Shares of Carpenter Technologies are breaking out of a month-long consolidation (shaded teal). Based on the breakout from that formation, our target for the stock is $525.
GRADE: B+
3. STMicroelectronics (STM)
For the past 10 years, Geneva, Switzerland-based STMicroelectronics has been supplying SpaceX with components. STMicroelectronics provides radio frequency antennae chips, microcontrollers, and secure elements used in Starlink terminals.
According to its relative strength index (RSI) indicator, STMicroelectronics has been overbought for the past four weeks. The stock has climbed 147% year-to-date, and gained 34% just over the past month.
What’s the ideal price to buy STMicroelectronics? Ideally, I’d look to buy on a pullback. A 38.2% Fibonacci pullback from the stock’s recent all-time high would place STMicroelectronics at $56.50.
Will the stock drop to that level? This is a momentum stock, so it might not pull back. Aggressive traders could enter a small initial position at current levels, and add on a pullback, if it occurs.
GRADE: B+
At the time of publication, Ponsi was long STI, CRS and MTRN.
