Motley Fool Hidden Gems Investing - Exciting (But Crowded) Opportunities

Episode Date: March 10, 2026

A rush of new competition is flooding into areas like space and nuclear. We take a look at what is real, and what is hype. Tyler Crowe, Matt Frankel, and Lou Whiteman discuss: - What space investments look exciting - Areas of the sector that are overcrowded - Why they are cautious about buying into the nuclear hype - Investing stories they are following right now Companies discussed: MOG.A, SES, OKLO, SMR, HHH, JOBY, ACHR Host: Tyler Crowe Guests: Lou Whiteman, Matt Frankel Engineer: Dan Boyd Disclosure: Advertisements are sponsored content and provided for informational purposes only. The Motley Fool and its affiliates (collectively, “TMF”) do not endorse, recommend, or verify the accuracy or completeness of the statements made within advertisements. TMF is not involved in the offer, sale, or solicitation of any securities advertised herein and makes no representations regarding the suitability, or risks associated with any investment opportunity presented. Investors should conduct their own due diligence and consult with legal, tax, and financial advisors before making any investment decisions. TMF assumes no responsibility for any losses or damages arising from this advertisement. We’re committed to transparency: All personal opinions in advertisements from Fools are their own. The product advertised in this episode was loaned to TMF and was returned after a test period or the product advertised in this episode was purchased by TMF. Advertiser has paid for the sponsorship of this episode. Learn more about your ad choices. Visit ⁠⁠⁠⁠⁠⁠⁠⁠megaphone.fm/adchoices⁠⁠ Learn more about your ad choices. Visit megaphone.fm/adchoices

Is it just us, or is it getting a little crowded in here? This is Motley Fool Money. Welcome to Motley Fool Money with the Hidden Gems team. I'm Tyler Crowe, and today I'm joined by longtime Fool contributors, Matt Frankel and Lou Whiteman. earnings are still trickling in at a much slower pace where you know they're still on their way but not a whole lot going on this week in that in that regard and much of the headlines out there today are about the conflict in the middle east but the monday crew touched on that on yesterday's show so we're going to do a little bit of a theme today that we're calling

hey this split space got pretty crowded awfully fast and the theme is basically industries that used to be devoid of competition that are now all of a sudden a hotbed of startups and IPOs and investing opportunities that clearly a lot of investors are interested in today. Now, this isn't a new phenomenon. We often go through periods where a new technology captures the hearts and minds of the market, and we see a rush of new companies into that space. One that comes to mind for me as an investor and somebody who's been writing about the markets for a while, was there was this period in the early 2010s where we thought natural gas was going to displace diesel engines in semi-trucks and trailers for transportation of goods because

diesel was so expensive, natural gas was so cheap because of the shale revolution, and that just kind of sputtered out over time. Guys, are there any other phenomenon like that that come to mind for you guys? 3D printing just a couple of years ago, maybe quantum computing now, the Bitcoin miners. Yeah, that's a weird one. But yeah, lots of times this happens. I'm going to go in a little bit of a different direction. I'll say ETFs. There are more ETFs now than there are individual stocks in the market, especially when it comes to these leveraged ETFs, these single-stock ETFs that you can get two times exposure to them. That's really blown up. How do you choose ETFs at this point? There's a lot to unpack there.

Yeah, it's much like more mutual funds in the 1990s than there were individual stocks as well. So one place in particular, and this is kind of where the concept of this idea came, was one industry in particular is space or investing in space. It's a place where we've seen things get crowded kind of fast. If we wind the clock back like 10 years ago, there were basically two companies doing rocket launches. There was United Launch Alliance, which is a joint venture between Boeing and Lockheed Martin. And in Europe, there was Arianespace, which is part of Airbus and and a bunch of other european companies and then there was this plucky startup it was called spacex and they were looking to break into the industry by like drastically reducing the cost

of putting stuff into space and 10 years into the future now we're seeing a new space race but instead of the u.s versus the ussr it's companies buying to build cheap rockets put a bunch of satellites into low earth orbit and space stations potentially to replace the international space station. And just this week, and this is part of the reason we're talking about it, there was a private company called Sierra Space, and it just did a funding round that would value it at $8 billion, which is on par with a lot of the publicly traded company valuations we're seeing today. So guys, as space becomes a more crowded industry with lots of players, how are you viewing the opportunities? Are there particular parts of the space business that look more attractive than

others? Or is this really like a company by company basis where you really have to turn over Well, yes, it is a company-by-company basis. There's a lot of potential here. Depending on the source that you're looking at, the space economy worldwide is set to roughly triple to about $2 trillion in size by 2035. There are a lot of different types of companies that will stand to benefit. For me, I'm looking at companies like Defense Stocks and other stocks that are going to benefit with the space revolution without completely focusing on it. Moog is one company in particular that comes to mind. Ticker symbol is MOG.A. It's a leader in precision motion systems that have a lot of potential applications, but

it also produces the flight controls for some of the most widely used aircrafts for both military and commercial use. Companies like that that really are going to be fine regardless of whether or not they actually benefit from the Space Race, but have a lot of opportunities for space applications as well. Yes. There's definitely a huge opportunity, but the capacity being thrown at it is wow. Tyler, to your point. What that tells me, there are going to be winners and losers. Not everyone is going to win here. Generally speaking, I think there's room for more Lyft specialists, even though we have seen so many companies that just want to light rockets. The logjam is the pads, the actual locations to launch from.

If what Matt's talking about, if this trillion-dollar economy is going to emerge, we've got to get a lot of things into space. We need more launch sites. We need more rockets. Even though we've seen a ton of startups here, demand will grow. We do need that capacity that bringing online. On the other hand, though, there are some areas where I do think that there are too many players for the market. Two of the most popular ones scare me, communications and imaging. In communications, we have legacy players like SES, we have a lot of newcomers, Starlink, Amazon, Leo, a whole range of others doing other things. There's also the national security stuff there too, but there's a lot of money, a lot of satellites chasing what

is still a pretty limited opportunity. I don't think all of those are going to make it. In imaging, there are some pretty good established companies that can do high-resolution imaging. There is a need for the product, but I don't think that product needs to be refreshed as often as their business models would like them to. I don't think the recurring revenue is going to be what they hope. The economics of the business, I think they're going to be a little challenged. There's a need there. There's definitely one company doing this, but is there enough volume demand for high-resolution images? I don't know if there's enough to sustain all these companies. It's interesting. I think there's going to be a lot of parts of the supply chain or part of the

value chain of space that's going to have very different economics than what we're seeing today. And then, obviously, space investing is going to attract a particular type of investor, perhaps the more cavalier, maybe a little more risk-on, somebody that's not afraid of backing a company where the track record and profitability isn't quite there yet. For both of you, absent profits, what are some of the things that you're looking for in the spaces you find most interesting that are going to be signs of success for companies in this industry? Yeah. It's literally rocket science. It's hard. So many of these, especially because of the SPAC boom, these companies came public very early. A lot of them, I've described them as science

projects funded by equity investors. I think you have to take a good look at two things here. A, will the science project work? Because that is a huge if for some of these. There's some really creative, amazing things that are being attempted. There is the question of, we are using equity money to fund this R&D to find out if this works. That's where people get excited when it works. Too often, the mistakes that are made is in that second question, which is, can you turn this into a viable, sustainable business? There are a lot of things that we can prove in the lab or prove that will work, but to turn that into a business that has a big enough audience that you can build a revenue base to support your research in the long term, that's really, really hard to do.

A lot of these total addressable markets look better in the PowerPoint than they do in the real world. That's the filter I'm trying to use. Really think through, even if this works out as planned, what is the actual market here? Who's going to spend money on this? Is it sustainable long-term? I don't have too much to add to what Lou just said. I look for companies with a lot of financial flexibility. That's one thing. Some startups have a lot more than others, especially those that don't have profits. You want several years of runway and some unique advantages in their product ramp and relationships with all the contracts and just government deals that they're getting with predictable revenue streams and things like that. That'll lead to

growth. And that's what I'm looking for. With this idea of crowded spaces, this is going to be the ending question for both of our segments today. On a scale of one to 10, where one means there is room for a lot more winners in this space, and 10 means we're going to see massive consolidation before anyone even makes any money here. How crowded is the space industry today? So overall, it's probably higher than this, but I'm going to go with a five simply because if you really look at it, there are some areas that are desperate for investment. There are some areas where there's just too crowded. All in, I do think there's consolidation, but I do think there's plenty of wiggle room. So I went right down the middle of five. Yeah, I said eight.

I think there are a lot of space startups that are not going to make money, and that's why I'd advise a little bit more caution when it comes to how crowded this is and to be very selective before investing in space companies. After the break, we're going to go from outer space to breaking down at the smallest level with uranium atoms. And what better way than with a delicious Pret Organic coffee, starting at just $1 all day, every day, now until December 31st. You gotta try breakfast at A&W. At participating A&W locations in Ontario. So of all of the industries that are getting more crowded these days, this is the one that confounds me more than others.

It's nuclear power. The Fukushima Daiichi disaster in 2011 looked like it was going to be the breaking point for nuclear power. New construction of plants was already low, and then we saw rapid shutdowns in Japan, and there was accelerated retirements across Europe and the U.S. to a lesser degree. And again, we hit the fast-forward button to the past 12 months, and I can't ever remember fielding so many questions or opinions on uranium miners and companies looking to bring about a nuclear renaissance with novel technologies, like small nuclear reactors. Companies like NuScale Power and Oklo are getting loads of attention these days. But there are lots of

other private companies and smaller entities in larger corporations that are looking to get a slice of this nuclear pie as well. And one of the other stories that was a flashpoint for this today was there was a French company that was a small modular reactor, and they're getting a fresh round of funding that values them at a quarter billion dollars for what is essentially, as Lou put in a previous segment, a science project. I'm a little puzzled by all the interest in nuclear power companies these days, but I want to get each of your takes. Is all this bluster and just kind of hype for growth of power in general, or are we going to really see this talk and this nuclear renaissance that's been kind of chattered about for a while, actually turn into facilities,

construction, like a real tangible push towards nuclear power? Yeah, I mean, I'm not really puzzled by it. There's a big need for power right now, and it's only going to grow. And it has to come from somewhere. I know you said that solar and wind, and we've had this discussion several times, are likely to be more of the near-term solution. And I agree, it's easier to ramp up and things like that. But it's not going to be the only solution, especially if AI infrastructure demand keeps growing, as we keep seeing in all the headlines. To be clear, I'm not going to go run out and invest in a bunch of nuclear startups. It's not in my wheelhouse. But it's a big opportunity for sure. About 5% of U.S.

power generation currently is consumed by data centers. And most experts expect that to more than double to about 12% by 2028, so pretty soon, and to continue to grow from there. There's really a need for sustainable round-the-clock power for data centers. While wind and solar, they have a lot of potential. There are things like battery storage systems to store the energy that they generate. There's a lot to like about nuclear. In practice, utility-scale solar only runs for about six hours per day on average. Nuclear power, it's reliable, it's energy-dense. Not only that, there's a lot of bipartisan support to develop these technologies, like you mentioned. There's also a lot of big commitments from the big tech companies who are

going to need this power. So, like I said, I'm not really surprised by the hype that we're seeing. Yeah, I think the attention makes sense. The need is real. And I do think that if they can get nuclear right, it will stomp all over some of these renewables. So, I mean, I do think the opportunity is there. The hard thing here, though, is the payback for investors. Nuclear is hard. Nuclear is expensive. I think, I'm a little hyperbole here, Tyler, but every project in history, it seems, has taken longer and cost more than expected. I am skeptical about SMRs and all of this until they actually get there. And you see what it costs and what it looks like. If anything, scale used to be your friend in nuclear to bring the cost down. I don't know if these

problems will ever get solved. And look, if anyone gets it right, there's a ton of money to be made. but I am skeptical enough about just how hard of a problem this is to solve that I am very content as an investor to sit this out until even like the fifth, sixth inning. I'll get on it eventually if it actually works, but I think there is a lot to prove here before it's really investable for me. One of the things that isn't quite discussed as much as, you know, we mentioned NuScale and Oklo, and there's a couple other publicly traded ones. But in addition, there is, As far as I know, there's at least seven to eight more private companies or companies like GE with their, I think it's actually now GE Vernova, you have Rolls Royce, companies

that are massive conglomerates that are also kind of have SMRs down like in the lab, they're working on them as well. And this is where I struggle a little bit with this whole thing is, what's the upside? And a little bit to Lou's point here, generating power isn't necessarily a high return endeavor. Most of the industry, at least in the United States, is regulated, where there are fixed rates of return if you're working with state-regulated utilities. And we've all seen the forecast for AI power demand, as you alluded to, Matt. And there's going to have to be power-generated assets to put electrons in the system.

But is lots of growth at relatively low margins, relatively low rates of return, maybe 10, maybe 15 years from now, really an appealing proposition? or am I underselling the opportunity here? I think, especially for the small modulars, the SMRs to work, I think that the game plan is to kind of bypass the grid and bypass the regulated utility side. Offer this on a case-by-case basis to data centers, big users, and kind of get by. Look, and again, if they work, I think there will be demand, and I think there will be some pricing power if you can deliver it, because I know there's a lot of competition here. I have a hard time imagining anybody figuring it out. I am not ready to say

that just across the board, there will be a dozen different competitors here. It's just a really hard problem. Look, a lot has to go right in that scenario. And I think your point is well made, but I think there's at least a story for investors to tell themselves of how this works out as a really profitable enterprise. There are a few different categories here. As Lou mentioned, bypassing the grid is one opportunity that could potentially lead to higher margins. There are some of these nuclear startups that are going to build plants and then sell them to third parties. That's like just investing in an infrastructure investment like Brookfield or Brookfield Infrastructure or things like that. There's a lot of different ways you can go,

and that's a really broad question. I don't think you're underselling the opportunity, but it's really worth paying attention to how each of these are planning on making money in two, three, five, 10 years once they really ramp up their scale. Same question as we had for space. On a scale of one to 10, how crowded is the nuclear industry today? So this one, I'll go all the way to an eight, because I just, again, I have a hard time believing that anyone really figures this out. And for a bunch of them to figure it out, wow, if it happens, but I'll believe it when I see it.

Yeah, we're on the same page. I gave it an eight. Even more so than space, there's a lot more pre-revenue nuclear startups that are dominating the headlines. They're not all going to make money, and those that do, they could run out of money before they start making money. There's a lot that we're going to see about that. So, yeah, I'd say about an eight. After the break, instead of stocks on our radar, we're going to do stories on our radar. And what better way than with a delicious Pratt Organic Coffee, starting at just $1 all day, every day, now until December 31st. You gotta try Pratt first at A&W.

At participating A&W locations in Ontario. As we finish up our last segment here, we're going to go around the horn and discuss an investing story that you're following right now. So Matt, why don't you go first? Yeah, there's been a lot of talk about IPOs this year that are really highly anticipated. We've all heard about SpaceX and OpenAI and things like that. But Bill Ackman had to grab some attention, and I'm bringing him up just because Tyler's probably tired of hearing me talking about what Ackman's doing with Howard Hughes and his various endeavors. But he just announced his new Pershing Square vehicle, which he tried to take public in 2024, but ended up

pulling the plug on it. He's giving it another try. This is the closed-end fund. He aims to raise $5 billion to $10 billion for it. He's going to sweeten the deal by giving everyone who participates in the IPO 20 shares of the Pershing Square hedge fund that already exists for every 100 shares they buy. He doesn't do anything easy. Everything's a very complicated deal. It's a closed-end fund. I'm interested to watch how it goes and if he actually can pull the trigger on this and actually get enough interest to raise $5 billion to $10 billion. Should Howard Hughes investors be worried about this? the Howard Hughes stake is owned by the Pershing Square hedge fund that already exists. This is a

closed-end fund that's designed to essentially do what he's doing with Howard Hughes and buy insurance companies and other businesses. That's what I mean. Way to take your eyes off the prize over at Howard Hughes. I don't know. It just seems like he's throwing spaghetti at the wall. That's fair. Yeah. I had the exact same thought as Lou. It's hard to turn Howard Hughes into the next Berkshire Hathaway when you're raising money at somewhere else to do the same thing. For my story, there's lots of headlines right now about the boogeyman that is private capital, whether it be something about seeing a couple private capital investments default on loans. We're also seeing high rates of redemptions at private capital funds and some of

the big players in this, the Blackstones, the KKRs, Blue Owl Capital, places like this. just stories abound of, oh, this could be bad. This could be bad. But I'm struggling to figure out if this is the thing today or if it's just more private capital boogeyman stories. Because I feel like we've been listening to the watch out for the private capital markets storyline for the past two to three years now. Once interest rates started to climb, there was all this concern because, oh, it's all floating rate debt and all their portfolio companies are going to get in real trouble here and yet we're now in 2026 and things still seem to be chugging along ever so slowly so one of the things i do want to follow in the next you know couple months or so is is all this

media chatter just a great way to put some headlines of watch out for the private capital and get the clicks and headlines or if there really is something behind uh all these stories lately that's a great one because perception is everything here too right even if everything's fine. If enough people decide it isn't fine and there's a run, it may not matter. I'll throw one more in here. Guys, it should be the best of times. It's the best of times and worst of times for this young, fledgling, evolutal industry. The battery-powered helicopter airplane hybrids that promise to zoom over rush hour and save us from traffic. Best of times as in the planes will be flying in the months to come. The White House just approved a pilot program to

begin service in select U.S. cities. But it's the worst of times because all the key companies are acting like middle schoolers on the playground. They're suing each other. They're yelling at each other. Last year, Joby Aviation sued Archer, claiming corporate espionage. Today, Archer is suing Joby, accusing Joby of deceiving regulators and hiding ties to China. It feels like middle school. The obvious question for me here as an investor is, why can't they just focus on the opportunity. My fear is that they're admitting that the total addressable market that they've been talking about isn't as big as some have hoped, and that snuffing out a competitor or at least downgrading a competitor might be as important as the land grab in establishing

your business. If so, then a lot of people might be in for an unwelcome surprise in terms of up the potential for these businesses. I hope I'm wrong here, but it's just a weird time for the infighting when they actually should be ready to get airborne. Unfortunately, that's all the time we have today. Matt, Lou, thanks for sharing your thoughts. As always, people on the program may have interests in the stocks they talk about, and The Motley Fool may have formal recommendations for or against, so don't buy or sell stocks based solely on what you hear. All personal finance content follows Motley Fool editorial standards and is not approved by advertisers. Advertisements are sponsored content and

provided for informational purposes only. To see our full advertising disclosure, please check out our show notes. Thanks to our producer, Dan Boyd, and the rest of the Motley Fool team. For Matt, Lou, and myself, thanks for listening, and we'll chat again soon.