Okay, now it's time for the main entree. So, Redwire RDW. Now, Redwire is a stock that we called out on May 5th as a great buy. It was at just under $9 at the time, $8. 69 to be exact. And as of today, it's just at over $11, which is around a 30% plus run, and not very long, a little bit over a week and a half. But let me explain why I believe this has 10x potential, and why you're going to be hearing more and more about this before the SpaceX IPO hits. Now, to understand what they offer, understand that when a satellite goes up, somebody has to build the solar arrays that actually power it. Somebody has to build the structures that unfold in orbit. Somebody has to build the navigation systems that keep it pointed in the right direction. Somebody has to build the docking mechanism, the antenna, the inspace manufacturing platforms. And a lot of that time that somebody is redwired. They've put hardware on the International Space Station. Their advanced optical imaging and sun sensor technology was flying on NASA's Aremis 2 mission, the first crude mission of the Aremis program. And on top of that, they own one of the most important small drone platforms in the US military called the Stalker. Here's what you have to understand about the Stalker. Our Marines and our Navy are now flying the Stalker on over 250 aircraft and the Marines just placed the first order for the upgraded advanced navigation version of the platform. Now, let's talk about the rerating potential around the SpaceX IPO. So, unless you've been living under a rock like Mr. Patrick Star, well, you know that this massive SpaceX IPO is coming within the next couple of months, probably sometime at the end of next month, and you know that they're targeting an up to two or $2. 5 trillion valuation. And this means that a lot of funds are going to be buying into anything SpaceX related or anything space related before that and that's already been happening to a large degree. Now the reason why I'm focusing today on Redwire is because really it hasn't had much runup at all on the space hype and and it's really undervalued even for the underlying company itself. And I'll show some actual proof of that later with the actual earnings that they just reported. But you have to understand one big thing. When SpaceX hits the public markets or even when the anticipation of that event reaches fever pitch, well, something very predictable is going to happen. Every retail and institutional investor on the planet is going to start looking for ways to play the space economy and they're going to discover something very, very uncomfortable. There's almost no public pure place on space infrastructure. You've got Rocket Lab, which is mostly launch. You've got a space mobile, which is satellite to phone. You've got Planet Labs, which is Earth observation. And then you've got Redwire, the only public company that builds the actual components and infrastructure that goes inside spacecraft across the industry and also happens to be one of the only ones on the list that hasn't run up 500% year-over-year. And that's why I believe there's such a strong case for an anticipatory rerate heading into the SpaceX IPO. Next, I want to talk about competition. So, one key thing that you have to understand with Redwire is that it's very, very difficult to compete with them for several reasons. For starters, you need clearances and qualifications that take years to build, if ever you can get them. Redwire holds facility security clearances that are required to even bid on classified DoD work. Those clearances don't just get handed out. They take years of background investigations, facility audits, and a continuous track record of protecting classified material. A new entrant doesn't get clearances by writing a check. Redwire. Redwire already has them. Anyone showing up tomorrow does not. Second, you need flight heritage. This is the single biggest barrier in space. Before anyone, NASA, DoD, ESA, Lockheed, Northr, SpaceX will let your hardware fly on their mission. You have to prove the hardware has already worked in space. Redwire's hardware has been flying in space for years. Their solar arrays power satellites are already in orbit. Their imaging systems are flying on the Aremis 2. Their structures have deployed on the International Space Station. So again, very key barrier to entry here for any competition for red wire. Third, you need decades of engineering talent that doesn't exist in the open labor market. The number of engineers in the world who can design, build and qualify space rated hardware is very small, minuscule. Most of them work at the legacy primes like Loheed, Northrup and Boeing at NASA or at Redwire. Redwire spent years rolling up companies specifically to acquire this talent. They've absorbed made in space, rocker, adcore, deep space systems, load path, oakman aerospace, and deployable space systems. And that's before you get into the recent edge autonomy on the drone side. Each of these acquisitions brought with them irreplaceable engineering teams with decades upon decades of experience. And a new competitor can't just come onto the scene and all of a sudden hire this talent. It takes a long time to build up that talent, even if you want to try poaching them. Fourth, you need qualifications for individual products that cost millions to obtain. Every component that flies into space, as you might imagine, has to go through environmental testing, radiation hardening, qualification, vacuum testing, thermal cycling, vibration testing, and on and on. Fifth, the customer base is structurally locked. The Pentagon doesn't shop on price as we know. They shop on trust, track record, integration, nepotism. I mean, sorry, didn't mean to say that last one. But once a vendor is qualified on a major program, the switching cost to bring in a new supplier is enormous. So, so again, that's another moat there. Sixth, even the drone side has structural barriers that most people miss. The stalker platform is on the blue UAS list. The Defense Innovation Unit's approved list of drones required and cleared for universal use across government agencies vetted for cyber security. So anyways, you have quite the moat here. Now, we have to talk about the earnings because what the earnings revealed and why so many people were talking about Redwire after the earnings was specifically because of this backlog line. Redwire's backlog. The dollar value of contracts they've signed but haven't delivered yet hit a record $498 million. That's a 21% jump from just three months ago and the highest in company history. But the number behind the number is even better. Their booktoill ratio was 1. 92. In plain English, this means that for every dollar of work they delivered last quarter, they signed nearly $2 of new business. Very beautiful, very juicy. And that's not normal. By the way, most defense companies are happy with a book to bill above 1. 0. Nearly hitting 2. 0 means demand is overwhelming supply to a massive degree. Zoom out to the trailing 12 months, and the picture gets even cleaner. Bookto bill went from 0. 9 a year ago to 1. 54 today. Now, why does this matter for the 10x thesis? Well, revenue is a backward-looking number. Backlog is a forward-looking number. And given the moat that we just talked about, that backlog in my view is essentially locked in. Now, the other part that you have to be aware of is the margin story. And oof, is this one juicy McJuicy. Comment down below if you think it's juicy McJuicy. So, gross margin jumped from 14. 7% to, wait for it, drum roll, boom, boom, boom, to 26. 6% year-over-year. A nearly 12 percentage point expansion in gross margin in a single year tells you that the business model overall is fundamentally improving as the underlying demand for the business is going parabolic. as the competition itself is virtually non-existent. You combine 58% revenue growth with a doubling of gross margin, you get the kind of operating leverage that turns a story stock into a very serious, beautiful business. Juicy McJuicy. It's like that orange juice with the extra pulp. You know, I don't really like drinking the pulp, but you know, it's a lot fancier with the pulp. The revenue growth alone could get you at three, four, maybe 5x current trading prices over the next few years. But revenue growth with margin expansion, o, that's where you get into the 10x plus territory. Now, let's talk about some of the specific contract wins that really move the needle here. For starters, the 1. 8 billion Andromeda IDIQ. This is a long-term advanced spacecraft contract with the Pentagon. The total ceiling is roughly four times Redwire's annual revenue. The full ceiling, if it gets utilized over time, transforms the company entirely. And remember the moat. Once you're in a contract of this size, well, the chance you get displaced is near zero. Then you have their first ELSA order. Elsa stands for extensible lowprofile solar array. This is a new high-performance low mass solar array product Redwire developed. The first sale was a $12. 8 million contract to first orders of a brand new product are always the most important orders because they validate the product is ready for prime time. And now Redwire has a new product line with proven customer demand and no real competition. And I think more are going to follow more stalker drone orders from the Marines and Navy. They received over $20 million in follow-on orders for stalker drones in Q1, including the first buy of the upgraded advanced navigation configuration. First buys of upgraded configurations are usually the signal that a program is about to scale meaningfully, at least in terms of other companies that we followed in the space. We're at the beginning of a massive drone procurement cycle overall. And I think that Red Wire really, really has its foot in the door. and they're one of the very few blue UAS approved government contractors. So anyways, bigger picture, I believe that Red Wire is a 10x idea. And the reason is not because I think the technology is cool, not because space is hot alone, but because every single thing you'd want to see in a 10x candidate is already showing up. Not only are we in the right market condition heading into the anticipation of the SpaceX IPO, but the company itself has explosive revenue growth and accelerating backlog, a massive backlog already locked in there, expanding margins, a profitable core segment. It's got generational macro tailwinds, and it's got a moat that prevents competition for from meaningfully coming in the way for any realistic stretch of time. So, anyways, there you have it. That's my case for Redwire RDW. Let us know your thoughts on the stock down below. And now it's time to move on to our sponsored
segment. And now it's time for our sponsored segment on the metals royalty company, ticker symbol TMCR. TMCR is a newly public company built around a simple idea, helping America finance the critical minerals it needs instead of depending on foreign supply chains controlled by countries that may not always have America's interests in mind. For decades, the United States let more and more of its mineral supply chain move offshore. The metals used in electric vehicles, batteries, defense systems, grid storage, semiconductors, and advanced manufacturing are now tied to supply chains that run through China and other foreign jurisdictions. Well, Washington is trying to reverse that. Critical minerals have become a national security priority. We are seeing executive orders, governmentbacked funding, direct equity stakes, institutional capital, and now permitting pathways, all aimed at rebuilding American mineral security. TMCR was built directly into that trend. The company owns a royalty on the Nori project operated by TMC, the metals company, ticker symbol TMC. And Nori sits in the Clarion Clipperton zone, a stretch of Pacific Ocean seabed between Hawaii and Mexico. The seafloor there is covered in poly metallic nodules, basically potato- sized rocks with significant concentrations of nickel, copper, cobalt, and manganese. These are the exact metals that go into batteries, electric vehicles, defense systems, grid storage, and a lot of modern industry. So, this is not just another small mining story. TMCR is aiming to build a royalty company around the metals America actually needs to rebuild its industrial base. Now, here's the simplest way to think about TMCR. They don't take anything out of the ground themselves. A mining company, on the other hand, has a very brutal job. They spend huge amounts of money trying to move a project forward. They raise capital. They hire people. They buy equipment. They pay for fuel, electricity, engineering, chips, processing, studies, and construction. If any of these costs go up, their margins can shrink. A royalty company like TMCR sits in a very different layer of the business. They put capital into a project or acquire a financial interest in a project and in exchange they get a percentage of revenue if that project reaches production. No direct operating costs come out of their royalty. No fuel bill, no labor bill, no construction bill, no equipment bill. They are not the operator. They own the royalty. And that is why the royalty model can be so powerful. When a project grows, when more resources found, when production scales, when commodity prices rise, the royalty company can participate in that upside without directly paying the day-to-day costs of running the project. This is why the big royalty names in mining such as Franco Nevada, wheat and precious metals, and Royal Gold became such important businesses. The market figured out that owning the royalty can be a cleaner way to get exposure to metals than owning the mine itself. TMCR is aspiring to apply that same idea to critical minerals. Not gold, not silver, critical minerals. nickel, copper, cobalt, manganesees, and the metals America needs for batteries, defense, electrification, and industrial security. The cornerstone asset is a 2% gross overriding royalty on the Nori project. That royalty is tied to all metals and minerals produced and sold from the Nory area, subject to the terms of the royalty agreement. And that structure matters because this is a gross overriding royalty. It is tied to topline revenue from products sold from the royalty area, not the operator's net profit after operating costs. So if Nori reaches production, TMCR is not making money by operating ships, running processing plants, managing crews, or paying energy costs. TMCR is positioned to collect its royalty from products sold from the project for the life of the project subject to the agreement and the risks investors need to understand. And the scale of the underlying project is what makes this interesting. Nori is one of the most closely watched critical mineral projects in the world. TMC has spent 15 years and more than 700 million moving the project from concept towards commercial reality. They have completed more than 20 offshore research campaigns with global deep sea research institutions. In 2022, TMC and LC successfully lifted more than 3,000 tons of nodules from the seafloor during an integrated collection system test. That matters because this is not just a map and a dream. There has been real technical work. offshore testing. There are real strategic partners involved. All Sees is TMC's offshore partner and second largest shareholder. Korea Zinc invested and became a processing and refining partner. Glen Core has signed an offtake agreement covering 50% of expected nickel and copper production plus a letter of intent covering manganese production. Now, none of this removes the risk. Nori is still in commercial production. It still needs permits. It still depends on TMC advancing the project. financing, engineering, environmental review, policy support, commodity prices, and execution. But it does explain why TMC believes the royalty could be a platform asset. If Nori reaches commercial production, TMCR holds a contractual royalty on a project tied to four of the most important metals in the critical mineral supply chain. Now, this is a small cap stock and small cap stocks are inherently risky and volatile. PMCR does not currently generate royalty revenue from Nori. The Nori project is still pre-production. The royalty only becomes meaningful if the underlying project is permitted, financed, developed, and brought into commercial production. TMCR does not control that process. It depends heavily on TMC. If TMC runs into permitting issues, environmental challenges, construction issues, financing problems, technical delays, policy changes, or execution problems, well, TMCR's potential revenue could be materially affected. The regulatory environment for deep sea mining is still developing and policy support today does not guarantee policy support forever. Metals prices can move hard in both directions. Nickel, copper, cobalt, and manganese prices are volatile. demand for batteries, electric vehicles, defense applications, grid storage, and industrial uses can change over time. TMCR's royalty is also subject to buyback rights, which investors should review carefully in the company's filings. The company may also need to raise additional capital in the future, and because the public float is small, the stock price can swing hard in either direction. So, make sure you're doing your own due diligence on the risks and coming to your own conclusion. This is not investment advice. This is not a recommendation to buy or sell any security. But bigger picture, TMCR owns a royalty on one of the most closely watched critical minerals projects in the market. It is tied to nickel, copper, cobalt, and manganesees. It is tied to America's push to rebuild mineral supply chains. It uses a royalty model that has created enormous value across the mining sector for decades. And it has a tight ownership structure, strong insider and strategic backing, and a major permitting catalyst now moving through the US process. If Nori advances, TMCR does not need to operate the project. It pay the operating cost. build the mine. It holds the royalty. That is what makes the story interesting. A newly public royalty company, a 2% gross overriding royalty on a potentially world-class critical minerals project, a national security theme, a tight float, and a defined regulatory catalyst ahead. Again, this is a paid advertisement on behalf of the Metals Royalty Company, Inc. Do your own research, read the company's filings, understand the risk, and if you'd like to learn more, I'll put link to their investor relations page down below. Have a great rest of your day. We'll see you next time.
