If the Market Crashes, This Is the 1 Space Stock I Can't Wait to Buy

If the stock market crashes, one of the first stocks I'll be watching is Rocket Lab (NASDAQ: RKLB). Not because I expect Rocket Lab to hold up particularly well during a crash. Quite the opposite, actually.

You see, high-growth stocks with ambitious expectations can get crushed when investors start dumping risk. And Rocket Lab has reached a valuation where plenty of future growth is already baked into the stock. It's already valued at nearly $40 billion, or roughly 50 times trailing sales, meaning investors are paying a hefty premium for growth that has yet to materialize. But underneath that valuation is a space company that is becoming increasingly difficult to ignore.

Rocket Lab generated a record $234 million in second-quarter revenue, up 62% year over year. Its backlog reached another record at $2.36 billion, up 137%. The company also said it had secured more than $437 million in new launch contracts during the quarter and shortly afterward. That's a very different business from the speculative space start-up Rocket Lab was just a few years ago.

More than rockets

Rocket Lab is probably best known for Electron, its small-launch rocket. Electron has now completed 96 missions, including three launches in September alone. But launch is only part of the business.

Rocket Lab builds satellites, solar cells, flight software, separation systems, and other spacecraft components. It's increasingly positioning itself as an end-to-end space company capable of building the satellite, launching it, and supporting the overall mission. And government contracts are becoming a bigger part of that opportunity.

In July, Rocket Lab landed a $266 million U.S. Space Force contract covering 12 suborbital launches, with options for six more. It was also awarded a $397 million contract to build and launch spacecraft for the Space Force's Space-Based Airborne Moving Target Indicator program.

Image source: Getty Images.

Then there's Neutron. This is Rocket Lab's larger reusable rocket that's designed to compete for constellation deployments, national-security missions, and other launches that Electron simply can't handle. The company already has customers lined up, including a confidential customer that booked five Neutron missions as part of Rocket Lab's largest launch agreement at the time.

To be sure, Neutron still carries significant execution risk. Delays, cost overruns, or launch failures could quickly change the investment thesis. Rocket Lab also remains unprofitable. So this isn't some low-risk blue chip stock disguised as a space company. But the balance sheet gives Rocket Lab room to keep investing. As of June 30, it held roughly $2.1 billion in cash and cash equivalents, plus another $258 million in marketable securities.

That combination of rapidly growing revenue, billions in backlog, government contracts, a proven launch business, and Neutron's potential is why Rocket Lab would be near the top of my shopping list during a market crash.

Don't get me wrong. I wouldn't be hoping the business stumbles. In fact, I'm quite bullish on this one. But if the market does crash, I'll be eagerly awaiting an opportunity to buy a few shares at a massive discount.

Jeff Siegel 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.