I Didn't Buy the SpaceX IPO. Here's Why, and What I Bought Instead.

Space Exploration Technologies' (NASDAQ: SPCX) initial public offering was a big hit. The company's share price is up 15% since market close on the day of its public debut even after a recent pullback, and its market capitalization has soared to $2.43 trillion from the $1.77 trillion valuation that the company's shares were first sold at.

SpaceX's IPO has made CEO Elon Musk the world's first trillionaire, and the tech leader has bold predictions about how quickly the business could grow. Strikingly, Musk has said that the business could reach $1 trillion in revenue by 2030 -- up from sales of $18.7 billion in 2025. But while SpaceX's market debut has been red hot and excitement surrounding the stock has been high, I haven't been buying shares because I think the valuation looks too rich based on its current sales profile. Instead, I've been buying shares of Kraken Robotics (OTC: KRKNF) -- a subsea technologies specialist that's attracting much less attention. Here's why.

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This small-cap growth stock could be a huge winner

Kraken is a manufacturer of subsea batteries that are used in underwater drones, and its tech is best in class. The company is also a leader in synthetic aperture sonar for mapping the seabed and technologies for detecting and removing mines.

Kraken currently has a market capitalization of roughly $2 billion, and there's a lot of strong growth priced into that valuation level. For reference, the company recorded revenue of roughly 102 million Canadian dollars last year -- so the stock's valuation profile definitely comes with risk. On the other hand, Kraken's revenue picture is set to change rapidly.

For starters, the company is on track to close its acquisition of Covelya on July 2. Covelya specializes in subsea sensors and other technologies, and was projected to have generated between CA$249 million and CA$275 million in sales last year as of the last official update. Meanwhile, the Kraken side of the business is projected to see sales between CA$165 million and CA$175 million.

Kraken's sales base is poised for a massive expansion this year, and the Covelya acquisition should help the company expand into new markets and leverage cross-selling opportunities across the combined product portfolios. Across its product categories, Kraken looks poised to benefit from growth trends in the defense and offshore energy markets.

Defense spending is on the rise worldwide, and Kraken should benefit from tailwinds as militaries modernize their fleets and expand drone capabilities. Meanwhile, new offshore energy projects and mining initiatives also look poised to provide ramping up sales catalysts.

Space stocks are undeniably exciting and are understandably attracting a lot of attention right now, but I think there's a good chance that underwater technologies will have their moment in the sun. If so, I think Kraken Robotics has what it takes to be a huge winner for patient investors.

Keith Noonan has positions in Kraken Robotics. The Motley Fool has positions in and recommends Kraken Robotics. The Motley Fool has a disclosure policy.