SpaceX is an interesting stock. But here’s what I’m buying instead for my ISA

There’s no denying that SpaceX is an interesting stock. The global leader in both rocket launch services and satellite broadband, it has scarcity value.

However, with a market-cap of around $1.8 trillion – equivalent to 96 times last year’s sales – the valuation looks stretched to me. So here’s what I’ve been buying for my ISA instead.

Huge long-term potential

Investment platform operator Robinhood Markets (NASDAQ: HOOD) is one stock I’ve been snapping up, adding to my position near the $110 level.

I like it for several reasons. One is that events like the SpaceX IPO are creating a lot of interest in investing. Another is that it offers access to stocks, crypto, prediction markets, options, wealth management, and more. So it has many ways to win.

There’s also the fact that it’s going to be a major beneficiary of the launch of ‘Trump accounts’, investment accounts available to children in the US.

Finally, I see this stock as a great way to play the ‘Great Wealth Transfer’. In the years ahead, many of its users are likely to inherit wealth from older generations.

I’m prepared for volatility with this stock. If markets take a hit, there’s a decent chance its share price will fall. Its high valuation could also be a source of volatility as it currently has a price-to-earnings (P/E) ratio of around 60.

Taking a five-year view however, I’m optimistic in relation to the return prospects. I see a lot of potential.

An AI play

Another stock I’ve been buying is Micron (NASDAQ: MU), one of the world’s leading memory chip companies.

Now I’ve been quite apprehensive about this stock up to now, mainly because it’s had a huge move higher and memory has historically been a boom-and-bust industry. But the share price has come down quite a bit lately.

I paid $905 per share for my stock – almost 30% less than the 52-week high price of $1,256.

And while I believe the memory industry will continue to be cyclical, I can see the current demand cycle running for a few more years. So I think there’s plenty of room for share price growth from here.

In terms of valuation, Micron looks super-cheap. Taking the earnings forecast for the financial year starting 1 September, the P/E ratio is only six.

This low valuation could potentially be a trap though. If memory supply suddenly catches up with demand and Micron’s growth stalls, earnings could drop swiftly.

Here, I’m making a prediction that the backdrop for Micron will remain strong for a few years however. I’m encouraged by the fact it’s been signing long-term deals with customers.

And I’m encouraged by Wall Street price targets. Currently, the average target here is about 50% above the share price.

Should you invest £5,000 in Robinhood Markets right now?

When investing expert Mark Rogers and his team have a stock tip, it can pay to listen. After all, the flagship Twelfth Magpie Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets.

And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Robinhood Markets made the list?

Edward Sheldon owns shares in Robinhood Markets and Micron