It’s official…
At long last, Elon Musk’s SpaceX is going public later this year under the ticker symbol SPCX. If all goes as planned, it could become the biggest initial public offering (IPO) in history, with a valuation reportedly at $1.75 trillion.
The space economy is undeniably exciting – and it’s already starting to resemble something from Star Trek. Musk has floated plans to launch data centers in space, a permanent Moon colony and eventually a human settlement on Mars.
Some of this still sounds far-fetched. But SpaceX has very real, tangible businesses in place, including its Starlink satellite internet service and its ongoing partnership with NASA.
So the question is, should you buy the hype?
Maybe.
Over the past two decades, betting against Elon Musk has often been a losing proposition. He built Tesla (TSLA) from essentially nothing into one of the largest tech companies in the S&P 500 Index.
Still, it’s impossible to know in advance how successful the IPO will be. And with no trading history, there’s no way to model the stock.
For example, two of the six factors that go into my Green Zone Power Ratings system – momentum and volatility – simply won’t be usable until the stock has traded for a meaningful period of time.
And history shows not every Big Tech IPO is an immediate success. Meta Platforms (META) is one of the most valuable companies in the world today. But its IPO was rough. Immediately after going public, it started dropping and would go on to lose more than half its value.
Uber’s (UBER) IPO was also a dud. The company has since done well, but it lost a third of its value in its first six months as a publicly traded stock.
I have no reason to believe SpaceX will flop. But I also have no objective rationale for predicting it will succeed. As I said, I can’t really model it until it has history.
My advice?
If you’re absolutely itching to get in on the space economy, then sure, buy some SpaceX shares once it goes public … but don’t go nuts. Keep your position size small. And for the bulk of your portfolio, stick to a system that has been proven to work.
And speaking of that…
My “Tech Titans” portfolio will begin rating SpaceX (SPCX) as soon as the stock is added to the Nasdaq 100. That portfolio’s system uses a subset of the six factors included in the Green Zone Power Ratings system.
I’m revealing the full details of that system this coming Wednesday at 1 p.m… and showing case studies on how it has identified some truly remarkable stocks this year (psst: heard of Micron?).
SPCX could very well land in our Tech Titans portfolio this year, so the time to prepare is now!
Otherwise for today, I’ll be reviewing the stocks that have recently passed the “Bullish” threshold on my Green Zone Power Ratings system. Stocks with a rating of 60 or higher out of 100 rate as “Bullish,” and decades of research have shown that “Bullish” rated stocks outperform the market by 2x on average.
Let’s start with the newly “Bullish” stocks in the S&P 500.
S&P 500 New Bulls
I ran my usual screen for S&P 500 companies that popped up as “Bullish” this week, and this is what I came up with:
It’s an eclectic mix this week: a health insurer, an electric utility, a REIT and a cloud services stock.
If there is a tie that binds them, it would be that all rate as “Bullish” on their volatility factors. My system is showing a clear preference for more conservative, lower-volatility stocks.
Last week, we also had a mix of mostly low-volatility stocks in the New Bulls list. And it’s important to keep in mind that we’re currently in the seasonal period that tends to reward a little conservatism (“sell in May and go away,” as the traders say).
This doesn’t mean we should sell everything and hide under a rock. But it’d be wise to exercise a little extra caution amid this environment.
New Bulls Outside of the S&P 500
Let’s cast the net a little wider and look at the newly “Bullish” stocks outside of the S&P 500.
I ran a screen for the top 20 stocks with the largest score increases over the past month, and this is what popped up:
This expanded list is a little less stodgy. There are a few potential high flyers I’d like to highlight.
Highlander Silver Corp (HSLV) is a gold and silver miner with assets in Peru, including the bonanza-grade San Luis project.
Naturally, a South American miner should be viewed as a high-risk, potentially high-return speculation. But it’s worth noting that the project counts among its major shareholders the Augusta Group, the Lundin family and Eric Sprott – all storied mining investors.
Jaguar Mining (JAGGF) is a Brazilian gold miner with 42,000 hectares in the Iron Quadrangle, one of the world’s great historic gold mining districts.
Miners weren’t the only interesting additions this week. At the very top of the list we have Ondas, Inc. (ONDA), a small-cap defense technology play at the intersection of autonomous drones and counter-drone warfare.
As the wars in Ukraine and Iran have shown, autonomous systems are the future of warfare, and Ondas is a major player in this space. Its Iron Drone Raider is a fully autonomous counter-drone interceptor designed to neutralize hostile drones.
To good profits,
Adam O’Dell
Editor, What My System Says Today
