The Smartest Growth Stock to Buy With $1,000 Right Now

As the S&P 500 trades at historically high valuations, it's not the best time to plow your life savings into high-growth stocks. But if you can afford to set aside a modest investment of $1,000 for at least a few years, there are still a few potential multibaggers worth chasing.

One of those stocks is Rocket Lab (NASDAQ: RKLB), a developer of reusable orbital rockets that went public by merging with a special purpose acquisition company (SPAC) four years ago. Its stock started trading at $11.58, sank to an all-time low of $3.79 in June 2022, but now trades near its all-time high at around $57. Let's see why Rocket Lab's stock soared -- and how it could churn $1,000 into tens of thousands of dollars over the next few years.

Image source: Getty Images.

Why did Rocket Lab's stock blast off?

Rocket Lab's Electron rocket can carry small payloads of up to 300 kilograms (kg) into low Earth orbit (LEO). By comparison, SpaceX's Falcon 9 and Falcon Heavy rockets are used to carry much larger payloads of 22,800 kg and 63,800 kg, respectively, into LEO.

Rocket Lab has already launched the Electron rocket 70 times to deploy 238 satellites, and its top customers include NASA, the U.S. Space Force, the Swedish National Space Agency, Capella Space, Kinéis, and BlackSky Technology (NYSE: BKSY). It launched six rockets in 2021, nine rockets in 2022, 10 rockets in 2023, and 16 rockets in 2024. It's already completed 12 launches in 2025, and it plans to achieve at least 20 launches for the full year.

Over the past five years, Rocket Lab's revenue rose as it launched more rockets, offered more "ride-sharing" services to deliver additional payloads to space alongside its core missions, and expanded its add-on services (like its Photon satellite bus platform, which shifts satellites into their correct orbits).

Its adjusted gross margin also rose as economies of scale kicked in, it produced more of its components in-house instead of relying on third-party suppliers, and it expanded its higher-margin Space Systems segment -- which produces spacecraft, satellites, and subsystems for other companies and government agencies. However, it remains unprofitable on a generally accepted accounting principles (GAAP) basis, and its adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) is still negative.

Data source: Rocket Lab.

Nevertheless, its surging sales, expanding gross margin, and upcoming catalysts impressed the bulls. It plans to launch its second rocket model, the Neutron (which can carry larger payloads of up to 13,000 kg), by the end of the year. It's already secured Neutron contracts with several of its top customers, including NASA, the U.S. Air Force Research Lab (AFRL), and the U.S. Space Force. It recently acquired Mynaric, a leading laser communications provider, in its latest step toward becoming an "end-to-end" space company.

It's also heading to Mars on the NASA-backed ESCAPADE (Escape and Plasma Acceleration and Dynamics Explorers) mission for UC-Berkeley. It built the spacecraft, which will be propelled by its Photon satellite bus, while Blue Origin's New Glenn rocket will carry it to Mars. That launch is scheduled for late October.

How much higher can Rocket Lab's stock soar?

From 2024 to 2027, analysts expect Rocket Lab's revenue to grow at a CAGR of 40%. They also expect its adjusted EBITDA to turn positive in 2026 and nearly quadruple to $176 million. That growth should be driven by the market's growing demand for smaller commercial satellites, new military space defense projects, and more research missions at NASA and other space agencies. Its scale should continue to dilute its expenses as it launches its new Neutron rockets and expands its end-to-end space services platform. Without any meaningful competitors in its niche weight class in the reusable orbital rockets market, its pricing power will also improve.

With an enterprise value of $27.4 billion, Rocket Lab might seem expensive at 23 times its projected sales for 2027. But we should remember that SpaceX, which generated an estimated $13.3 billion in revenue by achieving 134 orbital launches in 2024, was recently valued at $400 billion -- or 30 times last year's sales -- after its latest funding round.

If Rocket Lab continues to expand and eventually launches more than 100 rockets per year, it could grow much larger and command an even higher valuation over the next few years. It will inevitably endure some wild swings with the broader market, but it could generate more multibagger gains for its patient investors.

Leo Sun has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Rocket Lab. The Motley Fool has a disclosure policy.