Today, Ouster (NASDAQ:OUST), Rocket Lab (NASDAQ:RKLB) and Cerebras (NASDAQ:CBRS) are unlikely components of a portfolio belonging to a passive income investor.
However, that’s a statement about today. In 14 years’ time, it could be different.
What do these companies do?
You’ve probably heard of Rocket Lab — the New Zealand-founded launch company that puts small satellites into orbit and is building a bigger rocket, Neutron, to compete with SpaceX. Ouster is less familiar. It makes lidar sensors, the units that let robots, delivery vehicles and industrial systems see the world in 3D. Cerebras builds AI chips the size of a dinner plate, designed to run models faster and cheaper than the graphics cards Nvidia sells.
In September 2026 all three have a net cash position. Cerebras holds $7.92bn against $1.49bn of debt, Rocket Lab $2.3bn against $134m, and Ouster $261m against $16m. Rocket Lab’s changes in 2027, when it part-funds its $8bn Iridium buyout with debt.
Growing into the valuation
None of these stocks looks cheap today, but the consensus forecasts suggest that will change. Rocket Lab isn’t forecast to earn anything meaningful until 2027, and even on 2029 earnings it trades at 99 times. Ouster reaches 71 times on 2028 forecasts — but that’s where the forecasts end. Cerebras is the most interesting: 154 times 2027 earnings, 31.9 times in 2028, and 11.7 times by 2029, with consensus earnings growth of 383% and then 172%.
Those multiples collapse because the earnings arrive that quickly. Expensive, but potentially not for long. Growth companies become income stocks as capital spending peaks, growth slows, and the cash piles up until the board runs out of better uses for it.
The bullish consensus
Wall Street likes them. Rocket Lab carries a Buy rating from 19 analysts and an average target of $111, some 74% above the current $63.77. Ouster is a Strong Buy on six ratings, with a $59.40 target implying a 61% gain. Cerebras is a Strong Buy on 11, targeting $291.64 against $190.79 today.
But treat those numbers carefully. Analysts are often wrong.
No investment is without risks
Rocket Lab is the only Western small-launch operator flying regularly, and it’s buying Iridium — a satellite business with a quarterly dividend at a 57% margin. But Neutron carries most of the valuation, and it hasn’t proved itself yet.
Ouster is the surviving pureplay in lidar, at a point where sensor prices are finally low enough for volume orders. But it keeps issuing shares to fund itself, and likely won’t break even until 2028. Rising revenue doesn’t help much if the share count rises with it.
Cerebras has chips that beat GPUs on inference speed and close to $8bn in cash to fund growth. It also depends on a small number of large customers, and Nvidia is a brutal opponent.
The bottom line
For the past couple of years, I’ve seen my portfolio triple and that’s largely because I’ve invested in stocks that have been temporarily mispriced.
But these three are different. Nothing about them is mispriced in the usual sense — they’re expensive on every measure that works today. The case rests on what they earn in the next decade.
My take is they could be big winners, and future dividend payers, but only time will tell.
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James Fox has positions in Cerebras Systems, Ouster, Nvidia and Rocket Lab Corporation.
This story originally appeared on Motley Fool
