This one is outside of the purview of the typical value investment, but take a gander.
This CRS discovery was made poking around SpaceX and RocketLab ($RKLB – Inverness has an interest in RKLB. And here is a route to investing in SpaceX – very appealing). In doing some digging, asking Grok SpaceX’s primary suppliers returned next to nothing – not really a surprise owing to the secrecy of rocket programs. The same question posed about RKLB for comparison returned Carpenter, a different result, and American, prompting deeper excavation.
Carpenter Technologies was founded in Pennsylvania in 1889 and IPO’d in 1937. Today, it is a global leader in high-performance specialty alloy-based materials and process solutions for the aerospace, transportation, defense, energy, industrial, medical, and consumer electronics markets.
In reviewing investments over the past year, Inverness has been operating under the thesis that owing to Elon Musk’s choice of stainless steel for Starship’s infrastructure, and his purported desire to accelerate the growth of humanity’s journey into the stars, this would increase the demand for steel generally beyond the typical government infrastructure projects we all know and love. The increased demand for steel would see steel companies – $ZEUS, US Steel’s partnership with the Japanese, $MT, for example – outperform in the coming years.
Delving deeper into that thesis, stainless steel costs ~$4/kilogram, compared to advanced carbon fibers or aluminum ($130/kilo and $4, respectively). SS has much better operating characteristics than either of the other two competing metals, including ease of welding, ability to withstand temperatures up to 800 Celsius, and not requiring paint. As such, a significant market disconnect in price exists. Now, SpaceX does make its own alloy, but even so, the expertise and specialization of American steel companies will surely see growth in this administration as rocket companies proliferate.
Looking through Carpenter’s fundamentals, Inverness calculates Price to Book Value at 8.2x, after netting out cash and intangibles. Market cap was ~$12.5 billion as of September 2025, 2024 Revenue was $2.8 billion and up 8% from 2023, driving estimated EBITDA of $345mm (13% margin – not bad at all). 57% of revenue is from the Aerospace and Defense industry. The recent run up in the stock price could be due to this last point on revenue.
Now, for reference, RKLB usage of the metal is much smaller than SpaceX’s – SpaceX is estimated to use at least 1500 metric tons compared to RKLB’s sub-10 tons. The explanation is RKLB uses carbon composites in their rockets and do not have nearly the same funding, goals, manufacturing production volume, breadth, or contracted connections as their much larger competitor. But with Starship launching four times in 2025 so far and scheduled again in October, and Blue Origin, Virgin, and others experimenting again with spaceflight, expect to see those global usage numbers increase and US manufacturing to kick back into gear.
Thanks to the high price to book, this is not in Inverness’s preferred strike zone. While it may be an established, red-blooded American business, the first strike against the value thesis here is that the stock is on a tear YTD, up over $80 to $241/share, thanks likely to the bevy of positive news for manufacturing coming out of the US: Trump’s tariffs clearing up, US manufacturing coming back, aging infrastructure and Aerospace exposure, yada yada. Price to book of 8.2x is well outside of the preferred zone of 1.0x, and drives estimated liquidation value negative at ($410mm), resulting in a margin of safety of at least ($13B) for the purchaser. Assuming stable operations, this would take over 35 years of 2024 EBITDA to repay. Not excellent for the impatient investor. All that said, CRS is riding a cyclical wave and benefits from being a supplier to the space industry. Otherwise, if you are not a value purist, and if you are interested in getting into aerospace investment, CRS would be a decent, risk-tolerant place to start.
And it pays a dividend.