One stock that I’ve wanted in my ISA portfolio for ages is Rocket Lab (NASDAQ:RKLB).
Frustratingly, I watched this one climb from less than $10 in the summer of 2024 all the way to $150 this summer.
Today, though, the rocket stock has crashed all the way back to $65. A fall of 57% in the space of just two months!
Surely, now is my time to strike, isn’t it?
Ticking boxes
It’s certainly tempting.
After all, back in early June when the stock was at $123, I wrote that “while I’m bullish on the company — it’s launching record payloads and has a record $2.2bn order backlog — I can’t justify the crazy valuation. I’ll wait patiently for a better entry point”.
Then in mid-July, when the stock fell to $81, I wrote: “Even though it’s crashed 47%, I believe I’ll get this stock at a lower price, if I’m patient. So that’s what I’ll be.”
Well, here we are, at a lower price of $65. And the company, which is a rocket launcher and space systems builder, still ticks almost all of the things I look for in a growth stock.
First off, the company’s technology is proven, with its Electron rocket having flown 91 orbital flights (with 87 successful missions). Only SpaceX tops that in the West.
We’ve also got strong revenue growth, with 53% and almost 40% expected for 2026 and 2027, respectively. So this is a fast-growing company.
And earlier this week, the firm bagged a record $266m multi-launch contract with the US Space Force. It will execute 12 suborbital launches, with the potential for up to six more launches. The first is expected to take place as soon as the end of 2026.
This landmark contract further solidifies Rocket Lab’s position as a leader in launch and critical mission enabler for programs with significant national importance.
Rocket Lab
More attractive features
Another thing I like here is the optionality. As well as doing launches, Rocket Lab designs spacecrafts and components, and after a recent acquisition (expected to clear in 2027) it will have a satellite constellation.
Then there’s Neutron, a larger rocket under development. This is designed to allow the company to play in the same lucrative medium-lift market as SpaceX’s Falcon rocket.
If successful, Neutron could turbocharge growth because this market is predicted to increase from $24bn in 2026 to almost $71bn by 2035, according to Precedence Research.
What’s the valuation like now?
Looking at the latest price forecasts, Wall Street definitely thinks the stock is undervalued. Right now, it has a target that is 80% higher at $116!
On the other hand, most of these analysts don’t expect Rocket Lab to turn profitable until 2027, possibly even 2028. So this adds considerable risk to the investment case, given how capital intensive the space industry is.
However, the main issue I have here is valuation. The stock is trading at 52 times sales, even after the massive crash recently. Again, this adds significant risk.
Weighing things up, I’m going to hold off investing here and hope the share price keeps falling. If it sinks beneath $45, I might buy a few shares to get some skin in the game.
For now, I’m going to just keep it on the watchlist.
Should you invest £5,000 in Rocket Lab right now?
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Ben McPoland has no position in any of the companies mentioned.
This story originally appeared on Motley Fool
