There’s been plenty of chatter about a looming stock market crash lately, and some investors have been moving into cash. Warren Buffett’s Berkshire Hathaway, for example, had cash holdings of $382bn in Q3!
Obviously, I don’t have anywhere near $382bn in my humble Stocks and Shares ISA. But I do have some cash for a couple of stocks, were a market meltdown to occur.
Here are two I’d love to add to my portfolio at cheaper prices.
Nasdaq stock
According to McKinsey, the global space economy is projected to reach $1.8trn by 2035, up from $613bn in 2024. This will be driven by more satellite launches, internet-from-space connectivity, potential lunar missions, space tourism, and more.
As a result, I’m keen to get Rocket Lab (NASDAQ:RKLB) shares into my portfolio. This company has found great success serving a niche part of the market that industry leader SpaceX doesn’t bother with — rocket launches for small payloads.
Year to date, it has carried out 18 successful launches of its Electron rocket. That’s nearly double the 10 missions flown in 2023. And in Q3 alone, it secured a record 17 launch contracts.
Rocket Lab is on course to grow revenue from $436m in 2024 to around $1.2bn by 2027. It’s also expected to turn profitable by then.
However, the company’s new medium-lift reusable rocket Neutron could be a game-changer. If successful, Neutron would allow the company to compete with SpaceX in the more lucrative mid-market. It would expand Rocket Lab’s market opportunity significantly.
So, why wait to snap up shares? Well, even after a 27% pullback since October, the stock is trading at 45 times this year’s forecast sales.
Unfortunately, at this valuation, I see a lot of risk. The Neutron rocket might not work as intended, delaying the firm’s move into profitability.
That said, with Western governments wanting to reduce reliance on SpaceX, I’m bullish on Rocket Lab long term.
Meanwhile, in the private sector, Google is reportedly planning to put AI data centres in space by the 2030s. With trial equipment due to be sent up as soon as 2027, this could open up another huge opportunity for Rocket Lab.
FTSE 100 stock
The second stock I’m keen to buy is 3i Group (LSE:III). This is a private equity investment firm that’s structured as a FTSE 100 investment trust.
So far, a couple of things have put me off investing. Firstly, the portfolio is dominated by Action, the low-priced European retailer which makes up roughly 73% of assets. So there’s significant concentration risk here.
Back in August, I wrote: “If anything negative happened to the discount retailer, then 3i shareholders would immediately feel it“. This happened in November when the share price crashed 18% in a day after Action’s like-for-like sales growth slowed.
In August, 3i was trading at a risky 50% premium to net asset value (NAV). However, while this has narrowed to 11%, I would prefer it to be more in line with NAV.
Perhaps I’m asking for too much, though, as 3i has a tremendous track record of value creation. Recently, for example, it exited two positions, delivering impressive 220% and 180% returns in just a few years.
If this high-quality stock falls further during a sell-off, I’ll start buying aggressively. But for now, I’m looking elsewhere.
