The industry is shooting for the stars. But when it comes to investing in Virgin Galactic (NYSE:SPCE) and SPCE stock, it’s enough to stay tethered to the price chart as well as a smart risk-adjusted position in a sometimes hostile investing environment. Let me explain.
Space, it’s the final frontier. And this week we got a bit closer to exploring those boundaries face-to-face than we’ve been in a long time. Tesla’s (NASDAQ:TSLA) Elon Musk was expected to send two astronauts into orbit via his privately held SpaceX venture on Wednesday. It would have marked the first manned mission into space in more than nine years. However, Mother Nature scuttled the launch.
For many stargazers watching from the sidelines should be rewarded Saturday when a second attempt is planned. But for those that want to participate on a whole other level and where “mission accomplished” can spell big-time profits, it’s time to consider buying SPCE stock.
SPCE stock is the publicly-traded version of Sir Richard Branson’s Virgin Galactic. The venture’s angle on the race to space is commercial tourism. And amid the skepticism and worries, there’s stronger reasons to see shares as positioned for huge future success.
To be clear, right this second, it isn’t a risk asset that’s going to be universally appealing. The company’s lack of profitability among other metrics investors find useful, is certain to keep many looking the other way. Nevertheless, Virgin Galactic is positioned as the kind of investment that could eventually yield a multi-bagger return. But don’t just take my word for it.
InvestorPlace’s Louis Navellier — a guy who knows a thing or two about finding massive ground floor investment opportunities — is on board with SPCE stock. A March recommendation has proven “early,” but with his bullish thesis largely intact, today’s investors are reasonably at an even stronger advantage. And Louis isn’t the only pro bullish on Virgin Galactic.
More recently, Matt McCall asked investors to look past the company’s recent mixed earnings report and embrace shares as an “excellent spec play.”
Matt and his research team are upbeat on the stock’s prospects after factoring in fine print within the quarterly press release. Those devilish details announced Virgin’s Space Act Agreement with NASA to develop high-speed travel technologies that will be used right here on planet Earth. And that could be a very profitable win for the company regardless of what happens in the final frontier.
Okay, but how about Richard Branson’s sale of 2.6 million shares earlier this month? Top insider selling could be cause for investors to hit pause, instead of the buy button. That would be a mistake though. The sale, which netted in the neighborhood of $500 million and reduced the founder’s stake by about 22%, is being used as a lifeline to support his other global and consumer driven businesses hurt by the novel coronavirus. All told, the headline fails to tell the whole story.
SPCE Stock Weekly Chart
Source: Charts by TradingView
Similar to most growth stocks in their earliest phase of being introduced to investors, SPCE stock has seen euphoric highs backed by unsustainable optimism followed by “end of times” like bearish behavior. From Amazon (NASDAQ:AMZN) to Netflix (NASDAQ:NFLX) or Nvidia (NASDAQ:NVDA), it has happened to the very best of them.
To be fair, the next part of those storied journeys, which delivered massive future returns, is the more difficult task to replicate. But SPCE stock is in position technically right now to begin its own launch higher.
Shares are currently in the early stages of a building uptrend after this year’s ride into the high heavens and crash back down to earth. What makes a purchase today more interesting is that the stock has pulled back fairly hard the past couple weeks from its own ubiquitous novel coronavirus bottom to form a new, but possibly questioned pivot low.
The chart above details how last week’s pivot undercut a low in April. It’s certain to have raised a flag or two for some investors. More importantly, shares have now confirmed a new modestly lower low without failing the initial pattern on a closing basis. Along with a bullish stochastics crossover inside oversold levels, I’m optimistic of Virgin Galactic’s chances for a sustainable rally from here.
Today’s forecast is calling for a price target that breaks above the 38% retracement level, which acted as resistance earlier this month. Specifically, I’m looking for shares to reclaim the 50% to possibly 62% levels in the second half of 2020.
But don’t expect an easy ride, even if the outlook proves correct. A rally is also very likely to remain bumpy, counterproductive at times and able to knock the best stop losses out of contention. With that in mind, one favored way to position for your own potential multi-bagger with vastly reduced and limited risk is the Oct $23 / $30 bull call spread for about $1.15. This also requires much less from SPCE stock.
Disclosure: Investment accounts under Christopher Tyler’s management do not currently own positions in securities mentioned in this article. The information offered is based upon Christopher Tyler’s observations and strictly intended for educational purposes only; the use of which is the responsibility of the individual. For additional market insights and related musings, follow Chris on Twitter @Options_CAT and StockTwits.