B (2:36)

Because none of them are profitable yet. But yeah, the market hasn't discovered this one. No slam dunk. It could go to zero. But I am very intrigued by the opportunity.

A (2:45)

One of the questions that I had when I saw this in the rundown is this is an area where these companies are not profitable. Usually I go to Lou for, you know, very sound, hey, these companies are industrials. This is how they make money. This is how it's going to be durable for the next 20, 30, 40 years. This is much more speculative. What's the risk reward here? Because it seems like this could be an area where we go through a 2021 or 2022 style drawdown where suddenly that, you know, space ETF is down 70% in 2026. So it could be up another 50%. Could be down 70%. Is that a fair way to look at the risk reward? I think it is.

B (3:22)

I mean, you're just setting it up so I have to take it. It's a moonshot baby, right? But no, here's what I'll say. There are a lot of space startups right now, most of them, and I've been following this area for a long time. Most of them to me, are uninvestable right now because of the risk. What I like about Redwire, and look, again, there's no guarantees here, but the edge autonomy deal that they did this big deal they did last year to move them into drones, that will also help cash flow. I think that they have joined Rocket Lab as companies that have enough there there to survive a winter. And you know, look, there's no guarantees if it's a bad winter.

A (4:01)

We went from crypto winters to potential space winters.

B (4:04)

Well, winter happens all over Travis. Right? So. So, no, I mean, I do think when you're looking at this as, as optimistic as I AM Heading into 2026, you do have to realize that none of these things are slam dunks. They all could go to zero. So I do try to look at which ones I think can kind of outrun the Grim Reaper in a bad market. And I'm not sure on red. You know, it's Hard to be sure of any equity. But I do like where they're set up. Even if things don't go as well.

A (4:32)

As I hope they will, this does seem like one of those areas. Even if you're not investing in this space to start 2026, definitely worth having it on your watch list. Lou I want to get an idea of what are we going to be thinking about with space five or ten years from now. It seems like a lot of these companies are related in some way to communications. So you have SpaceX with Starlink, AST. Space mobile is a company that's putting up its own, you know, direct to cell network. They're tying into other companies networks. But is that sort of the early use case? And what are we going to be looking at back going okay, this was kind of the killer app for space because you know, saying hey, we're going to launch a bunch of satellites is cool, but if those satellites aren't adding value, then it isn't a sustainable business model.

B (5:17)

Yeah, there's a lot of options here, right? I mean the problem with communications is latency. For terrestrial communications it can be second best. So it's just, it's an economics thing or a need thing. I'll give you two candidates. I don't know if I would putting my money on either one of them, but I think they're both out there. The whole quote unquote data centers in space, you do have the latency problem there too, but you have the solar power side of it. There is a lot of opportunity there. Jeff Bezos has talked about that. That's probably more than five years off, but that is intriguing. The other thing, Redwire has a small unit called Space md and what that is is pharmaceutical companies doing just experiments in space, seeing how low gravity, zero gravity, just seeing how things work. I think there potential there or at least some interest for revenue. I think once we're up there and established, then you start looking around and I think it's going to be some boring, mundane thing that we're not thinking about now that's probably less glamorous than anything I said, but just makes life better in some way.

C (6:17)

Lou this is a really fascinating space. In particular rocket lab. I know that they've had a lot of delays with the launches of their neutron rocket. They're looking to go ahead and launch that between Q1 and Q2, I think of next year. I think there's a lot of excitement in this space. What should we as investors kind of look for in terms of sort of the key hallmarks for these companies when evaluating space. It obviously is kind of a nascent industry in terms of investability, but what should we be looking for when we're looking at these companies?

B (6:46)

Rocket Lab specifically. You nailed it. The neutron has to get off. And Peter Beck, the CEO, told Tom Gardner, look, we want to get it right the first time. He didn't name SpaceX, but SpaceX has no problem just launching things that explode until they don't. Rocket Lab has a very good record and they claim the delays is just making sure they get it right the first time. That's great if it happens, but it will happen. More broadly. The way I think investors should think about this is there are two hurdles and we get focused on the first and we kind of lose track of the second. For one, all of these things are basically glorified science projects, right? Like we're just seeing if something works. We're trying technology that hasn't been tried before. And the first hurdle is to find out if it works. And we tend to over invest in that. If it's possible, we say, okay, good, and we rush in.

A (7:35)

This is the hype cycle.

B (7:36)

The hype cycle. The second hurdle is can I turn it into a long term profitable business? You know, just because it's a science project, can it be long term profitable? That is the hurdle I think is going to trip up a lot of these space based businesses I fear. And that's something that I am trying to filter out as I look at these.

A (7:55)

Definitely a space to watch in 2026 when we come back, we're going to move to the medical industry. You're listening to Motley Fool Money.

D (8:03)

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B (8:05)

Say, it's how you say it.

D (8:06)

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A (9:14)

Welcome back to Motley Fool Money. Rachel, you are up with your favorite stock going into 2026. What are you looking at?

C (9:21)

Well, you know, I had to pick something in the healthcare space. I think this is a very fascinating industry. I think it rece sort of varying attention from investors depending on the cycle that year and what investors are really looking at. One company I find really intriguing, it's a medical device company called Transmedics Group. So this is a commercial stage medtech company and they've essentially pioneered a new standard of care for organ transplantation. So really the kind of core of the business is their organ care system or their OCS as they call it. It is the only FDA approved portable multi organ platform for hearts, lungs and liver. And it really has changed the standard for how these organs are moved for transplantation. So you've sort of got those traditional older methods, you know, static cold storage or placing organs on ice if you will. But what the OCS does, what transmedics product does, is completely different. It essentially profuses organs with warm oxygenated blood. Hearts can continue to beat, lungs continue to breathe, livers produce bile. Basically what this means is that surgeons can better assess organ viability and optimize quality before transplantation. And the technology really extends the time and distance that organs can travel. One of the things that's really unique about this business is not just the fact that they have a sort of first to market advantage, particularly in the US but they've transitioned from being a sort of a pure play medical device seller to a fully integrated logistics and service provider. And this is largely because back in 2023 they acquired a company called Summit Aviation. So they now operate their own fleet aircraft. It's about 21 planes at last count that I saw. And so they're basically able to control the entire transportation chain when using their OCS system. They just expanded internationally in Italy through a partnership with Mercedes Benz. Their primary clients are transplant centers and hospitals across the US and now in their first key international target market, Italy, which is really I think the first part of their vision to expand more broadly internationally. And you know, there's a lot of catalysts for future growth here. Obviously there's the sort of revolutionary aspect of their technology. You know, this is a profitable business, this is a high revenue growth business. And they tend to generate very high margin recurring revenue, you know, not just from the transplant fees, but also from these single use plastic capsules and perfusion sets that are needed for every transplant. It's a really interesting business. Not one maybe is frequently talked about in the healthcare space. Really intriguing company to watch. I think as we get into the new year.

A (12:04)

If you look at the stock chart for Transmedics, this has been a really, really volatile ride over the past five years. Shares are actually up 560%, but man, you would have been up 500%, you know, and then down another 60% from there. So is this one of those where keep it on your radar. If we go through one of those huge drawdowns because it seems like the catalyst for both the higher movements and the lower movements are crazy from quarter to quarter. That's when you may want to start nibbling or just, you know, set it and forget it. Don't worry about valuation. In 20 years. This is going to be a revolutionary company. How do you think about that, Rachel?

C (12:42)

Yeah, I personally think it's, it's one worth nibbling on. And I think it's interesting to note, I mean, when you look at the healthcare space, you have sort of a smaller subset of these growth oriented businesses that tend to see these very wild price reactions. And again, as I noted, you know, Transmedics is profitable. They have a pretty favorable balance sheet overall. You know, they're not one of these early stage unprofitable biotechs. Sort of in the other lane in the health care space, you have a lot of those slower growing pharmaceutical companies that don't necessarily bring forth those wild price reactions but don't necessarily, you know, bring forward that growth either. And I think this is an interesting example of a growth play in the health care space. You know, I will note they are sort of the market leader within the U.S. i mean their portable systems hold more than half the market share. And a lot of this is because of their necessity in long distance, decentralized transplant networks. That vertically integrated business model has been really key. I would certainly expect more volatility ahead. You know, they're not the only player in this space, but they are the market leader. And there are a couple other things as well, you know, to note. They're right now focused on initiating two major clinical trials which are expected to really be the main catalyst for their future growth. Additional approvals for their organ care system. That's something that's really important to watch for. You know, the broader, the use cases and applications for their system, the more they extend that one way of growth for the business. One of the trials is expected to basically drive further adoption in the lung transplant market where they are a key player. But the other is the largest heart preservation for transplant trial ever. It's expected to enroll over 650 patients. So that's another key area to watch with this business.

B (14:22)

I'm glad you mentioned that to trials because I've looked at this a bunch of times and the thing that gets me is for one the core market, it's just not growing the way and part of that is just availability and just going to. There's only so many transplants out there with the transportation business that is hard to scale without cost. You just can't do that without cost. So you need that you couple it with. There was a short report I thought it was mostly not great. But the one thing that I think it was Scorpion Capital said there does seem to be some, some interest from the government to kind of overhaul the whole transplant market, including Medicare reimbursement. Considering how expensive transmedic is, I think that's at least something to watch. I mean a lot of it is just because this is a costly thing and it's life saving. So I can't find red flags. But the trials better work out, they better figure out how to scale and add more. Just kind of the infrastructure at cost and then with the government hanging over Europe seems intriguing, but with just the way payments work over there for healthcare versus Medicare, I don't know. I think this needs to be a US story and I think it's almost back to what we said about space. I love the science project. I love what they're able to do. But turning it into a scalable growing business is not an insurmountable problem. But it is going to be a bear.

A (15:46)

Well, definitely an interesting one to watch going into 2026. When we come back, I'm actually going to play. I'm going to bring to the table that I think will get some thoughts from Lou and Rachel. You're listening to motley fool money.

E (15:57)

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A (17:04)

Welcome back to Motley Fool Money. As the host today, I decided to bring a stock to the table as well. If you got our Spotify wrapped. If you're listening to this on Spotify, you may be familiar with this stock. I did a little AI video where I recorded myself doing my stock pick and then riding a rocket into space. So a little bit up Lou's alley there, but I wanted to bring hims and hers to the table. This is a healthcare company, but it's a little bit more like a wrecking ball than a traditional pharmaceutical or insurance company. They live outside of insurance. They have compounding facilities which are legal but controversial. The first place to really scale some of these aspects of weight loss, they started with ed. You have hair loss, hair treatments. They're moving into testosterone, perimenopause. Longevity is coming. But this is one of the real disruptors in the space. And I think they're thinking about healthcare very differently. It looks a lot more to me like Netflix or Amazon, where they're pulling all of the demand together. And this is one of the things that we've learned throughout the history of technologies. The companies that can pull demand together can then kind of bring supply to the table on their terms. This is exactly why you have companies like Paramount and Warner Brothers Discovery in a little bit of trouble, because people don't go to their apps, they go to Netflix. So that's where the power is in the market, is aggregating that demand. And they're bringing interesting solutions. They have this artificial intelligence play. I don't like investing in companies that are just, hey, they're going to use AI. But there is a case to be made that in the medical field, a single human can only understand or remember so many things. And given the complex system that is the human body, Nai could potentially absorb much more data, especially on a real time basis. I mean, I always think about I'm wearing a Garmin watch. If I take this data from my Garmin watch to my doctor, they're going to go, what in the world am I supposed to do with that? But that's the kind of thing that can plug into a platform like Kim's and hers. That said, I know that this is not the favorite. This is actually a huge short interest. The short interest is over 30% so that can be either good or bad depending on how you look at it. There could be a short squeeze, but the shorts could also be right. Rachel, I know this is one that you follow. What are your thoughts either positive or negative on him as and hers going into 2026?

C (19:27)

Yeah, I'm glad you brought this one up and I also glad you mentioned that short interest. It's kind of fascinating. I think a lot of the attention and also some of the sort of negative investor attention as well that, that, that Hims and Hers has received this year has been down to that GLP1 business. But I want to say I really like Hims and Hers as a platform. I think that the model is sticky well beyond any success they do or don't continue to have within the GLP1 space. And I want to emphasize that because there I think have been some very kind of justifiable concerns about how they have approached that. I mean we've talked in the past about that agreement they had with Novo Nordisk and then Novo Nordisk backed out. It's worth noting that Novo is still working with other telehealth companies like RO for example, because roe adher to their terms to only offer the, you know, authentic branded wegovy.

A (20:13)

Well, and you can still buy, I believe their products through Hims and Hers. But it's not at a discounted price. I think it's still pretty expensive. Part of it was they wanted to.

C (20:22)

The discounted offering.

A (20:23)

Yeah, it was a discounted offer and then it would be just funneling to Novo Nordisk's online system. I don't know. I wonder what the real battle was there because Novo did sue or Eli Lilly, one of those companies sued a whole bunch of compounders, did not sue Hims and Hers. I think that is an interesting, you know, piece of that picture because that was always the risk was this huge legal risk and that never materialized in 2025.

C (20:48)

Well, and of course there had also been some interactions between, you know, Eli Lilly and Hims and hers. And that sort of pre established relationship can also kind of create some legal hurdles when it comes to, you know, pursuing legal action. I think there has been some confusion about why there was this issue here. You know, bear in mind, under legal exemptions, you know, compounders, they can still prod a drug if it's significantly different from the branded version. Now, the semaglutide shortage ended almost a year ago, but there are these legal exemptions that allow compounders like Kims and hers to produce essentially individualized doses. So there might be minor tweaks because there's a particular allergy to a certain element. But in practice, it can also mean that, you know, you're basically selling compounded medications that are made in outsourcing facilities that do follow federal manufacturing standards, but they don't have the specific drug formulation verified by the fda. And so that's where some of that's concerned has come from. Now, we heard back in November that Hims and hers is maybe talking with Novo Nordisk again. Maybe they're, you know, re engaging. They're also selling a generic liraglutide, which is basically an older GLP one. It's not protected by patent, and so it could be legally compounded without a shortage. So we'll see where this goes. I think there's a lot of interest in this business because of GLP1. I understand that, but I think there are other tailwinds for the company that they're watching.

A (22:07)

Yeah. And to be clear, their GLP1s and weight loss is something like 20 of their business. It has been interesting to watch that.

C (22:13)

You know, it's moved the stock.

A (22:15)

It's moved the stock a ton, but it is not really the driver of the business. And now you move into things like labs. I mean, I just to test it, I got my labs done. Incredibly efficient. You go to a traditional labs facility. But I was Getting results within 24 hours and, you know, just come straight to your phone. Lou, did you have thoughts on that? I tried to pick one that, you know, both of you would at least have an opinion on whether it was good or bad.

B (22:36)

All I'd say on this is that this is a market that desperately needs disruption, so I'm rooting for them. But it's also between regulation and it is life or death. You got to get it right. With Hims and hers, I would just make sure the management team reads the story of Icarus, because there is a real risk of flying too close to the sun here. And I think we have seen that, and they've had growing pains as they've done that. I do think that there is a path towards success here, but there is a lot of risk if you're pushing the envelope with people's health. So I get both the skepticism and the excitement. And again, I wish them well because our health system is broken.

A (23:18)

It will definitely be another one to watch. So Rocket Lab, Transmedics and Hims and hers, if you're looking for some Ideas going into 2026, as always, people on the program may have interest in the socks they talk about. And the Motley fool may have formal recommendations for, for or against. So don't buy or sell stocks based solely on what you hear. All personal finance content follows the Motley Fool's editorial standards. It 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 for Lou Whiteman, Rachel Warren, Bart Shannon behind the Glass, I'm Travis Hoyam. We'll be back after the New Year on Friday. We'll see you then.

C (23:56)

It.