Don’t buy SpaceX. Buy these smaller space stocks instead.

Today’s issue in preview:

• Don’t buy SpaceX. Buy these smaller space stocks instead.

• You can get paid a regular income to power AI

• Boomers are set to spend trillions in this industry. How to ride the tidal wave.

• Our incredible track record gets even better: Our thematic trades in Oil, Pipelines, and AI infrastructure produce more gains.

Don’t buy SpaceX. Buy these smaller space stocks instead.

Credit: yucelyilmaz

In yesterday’s edition, we detailed the potentially explosive trend that will be created in the wake of SpaceX’s IPO.

If SpaceX goes public this summer, Elon Musk will have more than $50 billion in cash to fuel the next chapter of his storied business career.

Elon is expected to spend this pile of money on building an enormous semiconductor complex in Texas, increasing SpaceX’s rocket launch cadence, and on a multi-year program of building, launching, and operating space-based AI data centers.

If Elon pulls off his “AI data centers in space” master plan, he will eventually have many deep-pocketed customers like Google lining up to pay SpaceX tens of billions of dollars to launch their own data centers into space.

Very soon, we will have a situation where Elon Musk – the most aggressive, most successful manufacturing mind of our time – is directing huge money flows into specialized semiconductor, satellite, high-tech materials, and communications equipment industries.

Musk is about to create a series of rolling “demand shocks” that will generate enormous wealth and big stock market moves.

To be clear, we are not talking about “supply shocks” where a war or a pandemic abruptly cuts off the supply of a resource like oil.

Instead, I’m talking about a “demand shock,” where demand for a raw material or manufactured product suddenly skyrockets… and sends its price hundreds of percent higher.

Twenty years ago, demand shocks for manufactured goods and raw materials were rare. Businesses had time to anticipate new sources of demand and plan accordingly. AI has changed the rules, however. It is the fastest evolving technology in history… and its progress is being fueled by the largest collective investment effort of all time.

As a result, key industries in the AI infrastructure boom – such as computer memory, optical networking gear, and semiconductors – are enjoying significant order and revenue growth. Investors are reaping the benefits, as many stocks in these industries have jumped 100%+ in less than 12 months.

With all this in mind, it’s worth knowing which individual companies stand to benefit from Musk’s huge investments in space-based industries. In yesterday’s issue, we looked at direct suppliers to SpaceX such as Filtronic (FLTCF) and Sphere Crop (KRX: 007610).

However, some companies that are not necessarily SpaceX suppliers also stand to benefit from the post-SpaceX IPO investment boom… simply because this IPO will lead to increased investment in the space economy… while also generating significant investor interest in the theme.

Well positioned companies include:

Frequency Electronics (FEIM) is a $600 billion company that designs atomic clocks. Atomic clocks are extremely high-tech, extremely accurate timekeepers that count the natural vibrations of atoms at exactly 9,192,631,770 oscillations per second. These clocks are key components in satellites and other defense equipment.

In space, tiny timing errors cause huge problems. A one nanosecond error in GPS timing leads to a 30cm positioning error on Earth, which can lead to communication failures, satellite crashes, and mission failures. FEIM’s largest customers are the U.S. government and big defense contractors like Lockheed Martin (LMT)

Comtech (CMTL) is a $100 million electronic equipment maker with $732 million in funded backlog. Its Satellite and Space Communications segment manufactures traveling wave tube amplifiers, satellite modems, frequency converters, and other space components for Low Earth Orbit and Geostationary Earth Orbit satellites.

Comtech has another segment that supplies next-generation infrastructure to emergency services. However, the space segment alone generated $2.5 million in operating income in the most recent quarter. This is about $10 million in annualized operating income. That means at a $100 million market cap, CMTL is trading at 10x earnings. This is also during a turnaround period, so the upside here is large if management executes well. But keep in mind the company is very small and carries more risk than most larger defense firms.

Intuitive Machines (LUNR) is an $8 billion vertically integrated space infrastructure contractor. It builds and operates lunar landers that physically transport payloads, scientific instruments, cargo, and infrastructure equipment from Earth to the lunar surface. NASA is a major customer. In Q1, it hit $187 million in revenue, which is nearly triple that of the previous year. It also has a backlog of $1.1 billion, which is up $842 million in the year. The stock is up 55% since we profiled it in January.

Redwire (RDW) is a $2.7 billion space infrastructure company deeply embedded in the space economy. While many suppliers focus on one or two components, RDW produces a broad range of technologies, including solar arrays, avionics, sensors, docking systems, and in-space manufacturing capabilities. Its products are used across both commercial and government space programs, positioning the company at the center of the rapidly expanding Low Earth Orbit (LEO) ecosystem. Major customers include NASA and the Department of War.

As more satellites, infrastructure, and manufacturing move into orbit, demand for the systems RDW builds should increase materially. This makes RDW a more aggressive way to play the downstream effects of SpaceX’s success rather than the company itself.

Elon Musk is about to get control of an extraordinary amount of money. He has huge ambitions and wants to move as fast as humanly (and robotically) possible. This means the future is bright for well-positioned SpaceX suppliers and other players in the expanding space economy.

You can get paid a regular income to power AI

Credit: kyletperry

They don’t have a very exciting business models… but oil and gas pipeline stocks have become one of the hottest trades on Wall Street.

This week, oil and gas pipeline operators Enbridge (ENB), Enterprise Products (EPD), Kinder Morgan (KMI), Pembina Pipeline (PBA), Western Midstream Partners (WES), Plains All American Pipeline (PAA), DT Midstream (DTM), Energy Transfer (ET), and Hess Midstream (HESM) surged to new all-time highs.

This fresh round of new highs makes pipelines one of the market’s leading industry groups… and has made our call to own these stocks a huge winner.

In early 2024, I began to see the natural gas pipeline business as the best way to generate substantial passive income from the AI boom… and I’ve reiterated my recommendation to own them many times in Money & Megatrends.

Given AI’s enormous promise, big tech firms Meta (META), Google (GOOG), Amazon (AMZN), OpenAI, and Microsoft (MSFT) are racing to build the world’s best AI models and infrastructure. They’ve already spent more than a trillion dollars. This year, they are on pace to spend over $700 billion on AI infrastructure, with more than $3 trillion expected to follow. A lot of this money is flowing into optical networking equipment.

All that AI infrastructure is poised to consume vast amounts of electricity. S&P Global estimates that global electricity demand will increase by nearly 50% by 2040.

I’ve frequently mentioned that AI’s growing power demands are a bullish driver for natural gas, as it is the preferred clean-burning fuel for power plants that support AI data centers. This is why I believe natural gas producers such as EQT (EQT), Antero Resources (AR), Expand Energy Corp. (EXE), and Range Resources (RRC) are compelling long-term stock ideas. The U.S. sits on enormous reserves of natural gas. These companies play key roles in extracting them.

However, all the natural gas in the world isn’t worth much if you can’t transport it to customers.

This is where America’s vast natural gas transportation, processing, and storage industry comes in. An extensive network of pipes crisscrosses America to allow energy companies to transport natural gas from the wellhead to the power plant. If we get an AI-driven boom in natural gas consumption, we get a boom in natural gas transportation by default.

Plus, the Iran war and its constriction of Middle Eastern energy flows have made U.S. natural gas exports increasingly more valuable to customers in Europe and Asia. As I mentioned on May 13, U.S. natural gas exports are soaring… and somebody has to get paid to move all that gas.

Those two megatrends are producing a wonderful business environment for oil and gas pipeline operators. For example, industry giant Kinder Morgan recently reported a 36% year-over-year increase in quarterly earnings. Fellow industry giant Western Midstream recently reported 22% year-over-year increase in quarterly revenue. The gale-force tailwinds working in the pipeline industry’s favor have propelled the Alerian MLP ETF (AMLP) to a huge 21% gain so far this year.

The typical pipeline operator is not your conventional “high-risk, high-reward” AI play. Instead, it’s a boring, predictable business that generates steady cash flows and shareholder distributions. And it’s become one of the hottest trades on Wall Street. I expect this trend to keep running.

Boomers are set to spend trillions with this industry. How to ride the tidal wave.

Credit: RiverNorthPhotography

All the good times… and all the bad times.

Every boom and every bust.

They all end up in the landlords’ laps.

They all end up making somebody a lot richer or a lot poorer.

In the case of the Boomer health care megatrend, it’s all good times for senior living facility landlords. This month, three industry leaders – Omega Healthcare (OHI), Sabra Health Care (SBRA), and Ventas (VTR) reached new all-time highs.

For more than three years, I’ve made “Boomer health care” one of my highest conviction long-term investment themes.

Regular readers are familiar with the bull case here. More than 10,000 Americans reach retirement age every day. This is the enormous Baby Boom generation entering the phase of life where health care and longevity spending skyrockets. For many boomers, a typical month involves going to see at least one doctor to have something looked at, removed, or treated.

This means many health care businesses are experiencing huge demand now – and will for at least the next decade.

A big beneficiary of the Boomer health care theme is the senior living and care industry. This is a huge business comprising nursing homes, assisted living communities, and specialized nursing services. Driven by the aging Boomer generation, the 80+ year old demographic is projected to surge from 14.7 million in 2025 to nearly 30 million by 2045.

Many of the largest businesses in the industry are structured as Real Estate Investment Trusts (REITs). REITs own, operate, or finance income-producing real estate – such as apartments, office buildings, shopping centers, warehouses, or data centers – and allow investors to buy shares in that real estate portfolio.

By law, REITs must distribute most of their taxable income (typically at least 90%) to shareholders as dividends, which is why they’re often known for generating steady income.

Real estate businesses – whether publicly or privately traded – can be wonderful vehicles for trading big industry or technological trends. As I mentioned earlier, all the good times and all the bad times eventually end up in the laps of landlords.

For example, when oil is in a bull market, prime real estate in the oil industry hub of Houston does well. When corn and soybeans are in bull markets, land in Iowa soars in value. The value of prime properties in Silicon Valley and San Francisco rises and falls with big tech company valuations. The massive expansion of the Chinese steel exporting industry in the late 1990s and 2000s was terrible for real estate prices in U.S. steelmaking capital of Pittsburgh.

Yes, real estate is essentially a “catch basin” where money either flows into or out of, depending on a region or industry’s economic health and prospects. This is why well-positioned Boomer health care landlords are rolling in money right now and will be doing so for a long time.

Kind of odd sounding… The money always flows to landlords.

Market Notes

• Our recommendation to ignore the AI bears and stay long AI infrastructure continues to pay off. AI infrastructure leaders Arm (ARM) and Astera Labs (ALAB) hit new highs today. ALAB is now up 10% today and 184% over the last year.

• Our September 2025 recommendation to get long oil stocks continues its winning ways. Oil giants Halliburton (HAL), SLB (SLB), Noble (NE), Cenovus Energy (CVE), Seadrill (SDRL), Cactus Inc (WHD), and SM Energy (SM) reached new one-year highs today.

• LNG shipping leaders are hitting new highs. Dorian LPG (LPG) and BW LPG (BWLP) hit new highs today.

• Our May 5th recommendation to own Bitcoin miners is off to a great start. CleanSpark (CLSK) surged 8% this morning to reach a new three-month high. It’s now up 24% over the last month alone.

Regards,

Brian Hunt
Editor, Money & Megatrends

An urgent message from our colleagues:

Only Hours To Go: Elon’s Biggest Move Ever?

After meeting Elon Musk and analyzing months of research… Former CIA consultant Dr. Mark Skousen believes June 2026 a potential SpaceX IPO announcement could take place. He found an “access code” that could let you get exposure ahead of it.

Learn how to claim your stake before time runs out.