I first realized satellite imagery was going to be a hit when it came to the world of fishing. Thanks to innovative companies like Digital Globe, the same kind of technology the government uses to spy on its enemies helps guys like me catch more fish.

For just a few bucks each month, I have access to daily current reports, water temperature charts and some pretty crazy satellite maps. If the technology is loved by the sportfishing industry, image what the defense and oil explorations sectors think.

The reason I mention Digital Globe is the company is about to go public. In just the fifth American IPO this year, the Colorado-based company will look to raise $250 million during its debut on May 14. The firm expects to get between $16 and $18 for its 14.7 million shares.

A successful IPO will not only be a boost for Digital Globe and its operation of two (soon to be three) high-resolution satellites, but also for its publicly traded competitor GeoEye (NASDAQ:GEOY). Shares of the company are surging today as investors begin speculating about the sector’s hype potential created by an IPO.

Keep an eye on the spies

Digital Globe’s public debut will be worth watching. I am almost positive you have already seen the company’s products. Log into Google (NASDAQ:GOOG) Earth or Microsoft’s (NASDAQ:MSFT) Visual Earth program and you will get a glimpse at the company’s capability.

But the firm’s satellite capabilities go far behind what is basically an Internet novelty. Nearly half of the company’s revenues are received through government accounts, chiefly from the National Geospatial-Intelligence Agency, which divvies the images to other government agencies.

Private sales account for the other half of the company’s revenue stream. They will likely be the focus of growth initiatives as defense-sector spending is questionable and unpredictable over the next four, maybe eight years. Companies like oil explorers, utilities, miners, emergency planners, farmers and of course, anglers can benefit from Digital Globe’s product lineup.

This is a dicey time to be entering the IPO market, but success is achievable. Just ask Rosetta Stone (NYSE:RST), which hit Wall Street on April 16 and ended its first day of trading with a 40% surge in share price. It was the strongest initial run in over a year.

There is a good chance Digital Globe and its intriguing product lineup will challenge Rosetta for its crown.

There are three ways to play the situation. Grab shares of GeoEye on dips next week hoping they will tag along on the ride. Or hold onto your money and invest in Digital Globe on May 14.

As an options trader, I like the idea of buying moderate-term call options on GeoEye, say the company’s June 25 calls (QZYFE). If the industry takes off on speculation of a strong IPO, these options will be selling for a hefty premium.

Just watch how you spend your profits. Big Brother may be watching.

Source: Profit From A Satellite IPO