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Deporre: Redwire Has Space to Grow

Supplier to space-related companies is already cash flow positive.

James “Rev Shark” Deporre is a big fan of sector investing -- but only if you drill down to the top performers.

“One approach to growth investing is to identify a theme like cloud computing, genomic biotechnology, financial technology, etc., and then look for the best names within those groups of stocks,” Deporre said.

Recently, Rev Shark has been taking a hard look at names that are "space" related.

“There are space tourism stocks such as Virgin Galactic SPCE, communications names like AST SpaceMobile ASTS, and imaging and data companies like BlackSky Technology BKSY,” he noted recently on Real Money.

Most of Deporre’s space stock favorites are early stage and will not see much revenue for a while, but he believes one of the better stocks in the group is Redwire Corp.  (RDW) - Get REDWIRE CORP Report.

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“Redwire is a space infrastructure company based in Florida,” Deporre noted. “It sells the things that other companies need in this area. It can service all types of space missions and should grow along with the overall space economy.”

Unlike other space-related stocks, Redwire is already cash-flow positive and has estimated 2021 revenue of $163 million. Its enterprise value of just $600 million is substantially less than others in this group.

What does Rev Shark find particularly interesting about the stock? One factor is that Amazon   (AMZN) - Get Amazon.com, Inc. Report has been working on something called Project Kuiper. “The goal of this project is to launch a series of low-Earth orbit satellites that will provide global broadband service,” he said. “There is speculation that Redwire will be a supplier to this project.”

Deporre believes Redwire is the best value in the space sector. “There’s still a chance that some sort of news may eventually come from the Project Kuiper situation,” he said. “Amazon is spending $10 billion on this project, and Redwire is a key supplier of many items it will need to become operational.”

Technically, the stock has good support at $10. It recently spiked on interest in social media chat rooms Reb Shark added. “My belief is that they will rediscover this play again and cause another sharp move.”

Please note that due to factors including low market capitalization and/or insufficient public float, RDW should be considered a small-cap stock. You should be aware that such stocks are subject to more risk than stocks of larger companies, including greater volatility, lower liquidity and less publicly available information, and that postings such as this one can have an effect on their stock prices.

Get more trading strategies and investing insights from the contributors on Real Money.