NASA vs. the Private Sector
My Favorite Travel Stock Today
---A curious thing happened last week.
Dragon, a spacecraft designed and launched by Space Exploration Technologies (known as SPACEX), docked with the International Space Station, transferred its payload, and returned to earth safely, a first for a private company.
(And no, this is not my favorite travel stock. Keep reading.)A day later, Heidi Cullen, a scientist at Climate Central, had an op-ed piece in The New York Times arguing that the U.S. needs to put more money into its weather satellite program.
(Climate Central is a non-profit organization that was created in 2008 as a central authoritative source for climate change information.)
Among the facts in that article were these:
About 90% of the data used by the National Weather Service come from government-owned satellites launched in the 1960s.
The annual budget for NASA's Earth Science Division has fallen to below $1.5 billion from about $2 billion a decade ago.
The number of actual and planned satellite missions could decline from 23 this year to six in 2020, reducing the number of earth-observing instruments in space from 90 now to about 20 in 2020.
Finally, in 2009 and 2011, two NASA Earth-observing satellites costing more than $700 million failed to reach orbit and crashed into the ocean.
The immediate blame for those failures went to Orbital Sciences (ORB), a company that got 71% of its revenues last year from the U.S. government. ORB stock has lost 57% of its value since 2008.
But I pin the blame on NASA as a whole (which is going to allow Orbital Sciences to try again--with taxpayer money--in 2013.)
Cullen thinks the solution is more money for NASA, but I suggest it's time to get the U.S. out of the space science business. It's time to let competitive market forces (companies like Space Exploration Technologies) take over, to drive costs down and drive reliability up.
Yes, I know the U.S. still needs satellites for military purposes, but for weather and basic science, we should let the private market take over and everyone will benefit.
Moving on to investing.
Last week the market bounced strongly, sparked by relief that Spain's banks will survive and that in turn, the euro may survive as well.
Casual observers commented that the magnitude of the market bounce was not justified by the minor nature of the news; after all, little has really changed.
But they fail to appreciate that the market's decline of roughly 10% prior to that bounce had set the stage nicely. And they fail to appreciate the role of emotions in the market; the fact that so many people were so nervous about the European situation meant there was little selling power left, and a lot of pent-up buying power.
So now what?
Sentiment indicators suggest more upside is likely in the weeks and months ahead. But until I see consistent strength--not just bounces from oversold positions--I think some caution is still warranted.
But there are bright spots, and if you have cash to invest and you manage your risk properly, you can take advantage of them.
Concur Technologies (CNQR) has a great chart, indicating that growing numbers of investors are becoming aware of this travel stock, learning about the company's business and investing in it because they think the future is bright.
If you're a user, I don't need to tell you about it.
If you're a user, you may already be an investor in the company!
But if you're not, here's what you should know.
In 19 years, Concur has grown to become the world's leading provider of integrated travel and expense management solutions.
It has over 15,000 corporate clients with more than 15 million individual users in more than 100 countries.
And it's still growing at a good clip, with revenues up 28% in its fiscal second quarter.
That's all good, but last week the story got even better.
Last week, the company announced it had been selected by the U.S. General Services Administration (GSA) to manage online travel booking, authorizations and voucher processing for all Federal Agencies. That's huge news, given that the GSA has about 3 million civilian employees.
The stock spiked higher on big volume on the news, and broke out to a new high two days later as the broad market (thanks to Spain) rallied to provide a supportive environment.
That means this travel stock moves to near the top of my watch list. If it does well, I may write about it again.
But if you really want to be assured of continuing coverage of the stock for as long as it remains attractive, I recommend you take a look at Cabot Top Ten Trader, which recommended the stock a month ago and continues to follow it.
For more, click here.
Yours in pursuit of wisdom and wealth,
Editor of Cabot Stock of the Month