I'm pleased to report that some of my readers (hopefully you're among them) are sitting on double-digit gains in less than three months. Let me explain...

Back on November 22, I told you about a company that was a great play in the booming market for outer space, a market already worth more than $420 billion.

My excitement stemmed from America's first lunar-focused program in 50 years and the overwhelming investment potential that lay ahead. But here's the thing...

The investment thesis I laid out two months ago was right on the money. However, investing directly in this company, Aerojet Rocketdyne (NYSE: AJRD), won't be an option for much longer.

Why? Drumroll, please... This maker of advanced rocket technology is being acquired! And if that weren't enough, its acquirer is another company I alerted you to, just weeks before Aerojet.

If you took my advice and invested in Aerojet back in November, you're sitting on gains of around 12% in less than two months. That works out to annual returns of almost 75%!

If you didn't, don't worry... This new combined operation has just as much market-crushing potential. Let me show you...

A Recap of Our Space Plans

On January 2, former astronaut and current U.S. senator Bill Nelson announced the following:

"It is a fact: We're in a space race. And it's true that we had better watch out that [the Chinese] don't get to a place on the moon under the guise of scientific research. And it is not beyond the realm of possibility that they say, 'Keep out, we're here, this is our territory.'"

This race between China and the U.S. has been revving up for quite some time. And it's why America is working hard to build out its Artemis program.

Artemis is the next iteration of the Apollo moon missions. And it's well on its way to taking people to the moon and beyond.

Aerojet Rocketdyne plays a significant role in this project. It's the prime rocket engine contractor for the Space Launch System ("SLS") launch vehicle. The first phase of Artemis was completed after NASA successfully launched the SLS and watched the unmanned Orion capsule orbit the moon several times without issue.

Space Race 2.0

While Artemis is a project worth nearly $30 billion over the next five years, it's only the beginning of what I call "Space Race 2.0."

You see, Artemis is about setting up a space port that permanently orbits the moon and establishes a lunar base. That way, equipment, resources, and even astronauts can be ferried back and forth.

The project will also include a launch base to send rockets deep into outer space, opening up opportunities for commercial and governmental space travel.

This ambition is why Lockheed Martin (LMT), the largest military contractor in the world, tried to acquire Aerojet a couple of years ago. But the move was rebuffed by federal officials due to possible antitrust concerns.

To be clear, though, Aerojet's value didn't diminish as a result. In fact, as the headlines quieted down, another military powerhouse stepped in and scooped up the company.

A Stealthy Buyer

That stealthy buyer was L3Harris (NYSE: LHX), one of the largest electronics and communications companies in America and a major player in secure communications for the military, intelligence, and outer space sectors.

Part of the reason the deal between Aerojet and L3 is so exciting is because it's a great fit for both companies.

Based in Sacramento, California, Aerojet is the nation's largest maker of rocket propulsion systems. It's produced engines for the Pentagon and NASA and brings in annual sales of around $2.3 billion. Notably, the Stinger, Patriot, Tactical Tomahawk, and Javelin missiles — all key to U.S. defense efforts — rely on Aerojet's technology.

As for L3Harris, the $4.7 billion acquisition of Aerojet is a great add-on business. To start, it enables the company to target the $41.7 billion allotment for missiles and defense systems, earmarked in the $858 billion 2023 defense budget.

Additionally, the deal doesn't stifle competition for contractors, agencies, or businesses looking for a rocket engine partner, which was the concern with Lockheed Martin, since it already makes missiles and rockets.

What's more, L3 is headquartered in Melbourne, Florida, just 30 minutes from Cape Canaveral, NASA's site for Artemis launches.

L3 was originally Harris Corporation, and its drive to the stars began way back in 1912 when it built the Thaws telescope. In 1935, the company built the first practical microwave screening radar. And in 1941, its Link pilot trainer trained more than 500,000 U.S. airmen.

Bottom line: L3 is a proven tech innovator. Now it will cement its place as a vital contractor for NASA, the U.S. Space Force, and commercial companies with whom it continues to do business.

Underestimated by Wall Street

Perhaps the best part about all of this is that L3 isn't a headline-grabbing firm. So its value is underestimated on Wall Street.

The company significantly outperformed the S&P 500 last year, falling just 3.6%, compared with the index's almost 20% drop.

This classic defensive stock has proven to perform even in times of heightened inflation and rising interest rates. So be sure to scoop up shares as Space Race 2.0 heats up.

And if you're a "Pro" subscriber, I'll share an even better way to maximize your upside potential with this stock, an opportunity that could translate to 300% gains by this August. Don't miss out!

Cheers and Good Investing,

Chief Investment Officer
Trend Trader Daily

Tags: aerospace rockets