These Two Stocks Just Cashed In on the US Government’s $60M Lottery

The U.S. government lottery has two new winners… and surprise, surprise, the prize pool is funded by taxpayers (you’re welcome, BAE Systems and Rocket Lab). 

It’s starting to feel like the Biden administration is playing a game of “how much money can we give away” before Trump storms in and sets up shop. This time, the cash grab comes from the $52.7 billion “Chips and Science” program, aimed at beefing up domestic semiconductor production.

(Source: Reuters)

BAE hit the jackpot with a $35.5 million payout to supercharge semiconductor production in New Hampshire. The plan? Quadruple output of chips that are vital for F-35 fighter jets, F-15s, and commercial satellites.

The Pentagon has plans to spend $1.7 trillion on the F-35 program, including buying 2,500 jets over the next few decades. Talk about job security; these chips are crucial to keeping those jets zipping through the skies. According to the Commerce Department, the funding will cut BAE’s modernization timeline in half. 

Rocket Lab’s share of the pizza is $23.9 million, earmarked for its subsidiary, SolAero Technologies Corp. The goal? Increasing the production of space-grade solar cells by 50% over the next three years. We’re talking radiation-resistant tech that powers NASA’s Artemis lunar missions, the James Webb Space Telescope, and even the Mars Helicopter.

(Source: Long Beach Business Journal)

I guess you could say investors are paying attention considering that Rocket Lab shares are already up 14% in pre-market trading today. Oh, and they recently pulled off two successful rocket launches from different hemispheres within 24 hours. CEO Peter Beck called it “unprecedented capability.” Somewhere, Elon Musk probably muttered, “cute,” before resuming his plans for Mars domination.

This latest funding push is all part of America’s effort to curb its semiconductor addiction to foreign suppliers. It comes on the heels of a $6.6 billion subsidy for Taiwan Semiconductor Manufacturing Co. and a $1.5 billion deal with GlobalFoundries. The message is clear: the U.S. wants its chips and it wants to eat them too.

Commerce Secretary Gina Raimondo called the program “essential to national security.” And while we’re all for secure jets and cutting-edge satellites, it’s worth noting that this government-funded giveaway is also padding some stock portfolios (at least temporarily).

Rocket Lab’s stock is up 305% year-to-date, but analysts are warning it might be a little overheated. Historically, these kinds of epic runs are followed by a nap (or a full-blown hibernation). Still, with projects like the Neutron rocket in development, Wall Street is whispering comparisons to SpaceX. Not bad for a company that’s just getting started.

As for BAE, the stock’s currently only up 17% this year (a far cry from Rocket Lab’s parabolic rise) and analysts are saying it’s more of a “steady as she goes” play than a high-flying growth story. With a solid backlog of defense contracts, including the Pentagon’s $1.7 trillion F-35 program, BAE predictability that’s catnip for dividend investors. But don’t expect fireworks.

Some analysts argue the stock is fairly valued, trading at a P/E ratio in line with its defense-sector peers. Others worry it’s running a bit hot, considering its growth trajectory isn’t exactly breaking records. If you’re buying BAE, you’re probably not looking to flip it for a quick payday. You’re looking to park your money in a dependable, government-backed revenue stream (because who says no to Pentagon cash?).

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Stock.News does not have positions in companies mentioned.