RKLB Blasted Off 769% in a Year. It’s a Must-Watch SpaceX Rival

Shares of Rocket Lab (NASDAQ:RKLB | RKLB Price Prediction) have skyrocketed into orbit this year, surging more than 760% in the last year. Indeed, for investors who wanted a publicly traded SpaceX alternative, they now have one. But with multi-bagger gains now already in the books, there’s a fear that the name could come drifting back to earth in a hurry. Indeed, a year ago, shares were going for $5 and change. Today, they’re going for north of $46, even after dipping 9% from recent all-time highs just north of $50 per share.

Though Rocket Lab isn’t for the faint of heart, I do find the SpaceX rival as intriguing, to say the least, especially for those who’ve been eagerly waiting for a firm that designs, makes, and launches its own rockets. For now, I have trouble valuing the company based on traditional metrics.

Rocket Lab stock has blasted off. New investors should expect nothing less than turbulence

Of course, a name like Rocket Lab is going to be expensive. After all, there’s a scarcity premium expected with such a name. At the time of this writing, shares of RKLB trade at over 50 times price-to-sales (P/S). With an explosive growth rate and room to expand in the ever-expanding frontier that is space, the $22.5 billion company certainly has the total addressable market (TAM) to grow into such a seemingly frothy multiple. However, the big question is whether CEO Peter Beck and his team can execute on the growth opportunity to be had as Rocket Lab clashes with the likes of Elon Musk’s SpaceX.

While there’s still much work to be done before the firm can make the shift into profitability, I do think it’s a must-watch stock for those who have taken an interest in opportunities beyond the stratosphere. Perhaps the biggest reason to keep shares of RKLB on your radar is the fact that the name is now a top holding (and big winner) within Cathie Wood’s Ark Space Exploration & Innovation ETF (ARKX).

Looking ahead to the Neutron launch

It’s one of the very few pure-play space and rocket companies out there. And while it’s tough to tell how the firm will fare against SpaceX over the next five years, I find its reusable two-stage Electron rocket to be a suitable contender to SpaceX’s offering. The rocket has had a pretty respectable track record after three straight successful launches of Electron in June. Indeed, it stuck the landing and scored the launch hat-trick last month.

Also, prospective investors should keep a close watch for the coming launch of its reusable medium-lift rocket Neutron (capable of larger payloads). Indeed, there’s a lot on the line for RKLB stock as Neutron faces its moment of truth later this year.

And while there’s a lot more to Rocket Lab than its launches (think its satellite tech and end-to-end solutions), it’s not hard to imagine that most investors are going to be following every rocket launch very closely. After all, they’ll be the major needle-mover for the stock and a very public way for new investors to judge the name.

In the meantime, positive news events (think partnerships and contracts) could act as a steady source of rally fuel for the shares. Just a few weeks ago, RKLB gained when news broke that it inked a deal with the European Space Agency to launch some of its satellites.

Indeed, RKLB is an exciting name, but one that I’m in no rush to purchase right here, at least not until more analysts raise their price targets (the Street-high sits at just $50, just 6% higher from Tuesday’s closing price). If all goes well with Neutron, there’s no telling how much higher shares could fly. For now, though, waiting and seeing could prove most prudent, especially for those who can’t stand to take on more volatility from a hyper-grower.