$952 million reasons to buy this stock (or add to it)

Good morning!

The markets have opened to the downside today on fears that the Fed will continue to tighten into a recession. Even so, I think there’s a case to be made for a strong finish this year.

We’re already on my year-end targets, so that’s a plus.

Here’s my playbook.

Traders cannot risk being caught flatfooted

I’ve long said that the market will take off if the Fed even hints at tapping the brakes, and we got a taste of that recently when Chairman Powell hinted at slowing down the pace of rate hikes.

Many people don’t think it’s possible, but what they’re missing is that big money traders don’t really have a choice. They’ll have to step on the gas for the simple reason that they cannot afford to get left behind if Powell does cut rates.

Do you have a plan?

I hope so!

The biggest, most liquid stocks in the world will lead the charge (again), which is why the One Bar Ahead® portfolio is chock full of ‘em. Upgrade to paid

REMEMBER: Always do what Wall Street does, not what it says!

Bitcoin $5,000 or $250,000? MyPOV

There are dueling projections this morning. Standard Charter says that Bitcoin could plummet to $5,000 (Read) while venture capitalist Tim Draper just told CNBC that $250,000 is “still [his] number,” despite a drop of more than 60%. (Read)

MyPOV: Bitcoin would have to have one helluva rally and jump 1,400% to hit Draper’s projection. I think that’s in the “when hell freezes over” category. Standard Charter’s scenario is far more likely, but that too strikes me as an extreme. I’m with Dr. Mark Mobius, one of the savviest, most experienced global investors I know… I expect prices to languish a bit, but they could easily fall to $10,000 a coin.

And, no—that’s not a buying opportunity, at least not yet anyway. The FTX situation still has a long way to play out, and until the big names get cleaned out, that’s a risk you don’t want to deal with. Unless you like that sort of thing, that is.

$952 million reasons to buy this stock

What’s happening. Primary defense contractor Lockheed Martin (LMT) just obtained a $431 million contract to replenish HIMARS stock that’s been sent to Ukraine. HIMARS is US Army speak for the M142 High Mobility Artillery Rocket System Launchers. This, mind you, is on top of the $521 million contract recently awarded to replenish stock for the Guided Multiple Launch Rocket Systems that have also been supplied to Ukraine. (Read)

LMT has tacked on 38.52% this year while the S&P 500 lost -15.34% over the same time period.

It’s no wonder One Bar Ahead® subscribers are following along! BTW, I also recommend another major defense contractor—and its shares are set for another big pop too. I’ll have a word about that in today’s paid update, in case you’re wondering. Upgrade to Paid

Hedge against inflation with specialized real estate

The federal government is within spitting distance of the congressionally mandated spending limit on how much money it can borrow… $31.381 Trillion with a “T.” (Read)

How many times are we gonna have this conversation?

Evidently, at least once more.

Three guesses what they’ll do, and the first two don’t count. 🤦‍♂️

Specialized real estate can help, especially when it comes to REITs that are less dependent on appreciation and rates than they are on annual contracts. Case in point, Blackstone is limiting redemptions on its $69 billion REIT, which I wrote to you about in last Friday’s 5 with Fitz; it’s #4: “Blackstone REIT investors beware.” (Read)

My favorite has at least a decade or more of rock-solid rent rolls ahead of it and is growing. And it pays a wonderful dividend that’s head and shoulders above conventional Class A/retail mall/apartment stuff that most investors are familiar with. Upgrade to Paid

Don't be a bag holder: BBBY

Beleaguered retailer Bed, Bath & Beyond is facing a class-action lawsuit alleging that investor Ryan Cohen artificially manipulated prices higher before walking away with a significant profit.

MyPOV: This sets up what could be the company’s last gasp. I don’t expect the retailer to make it another year without filing for bankruptcy. I think shares will decline as sentiment worsens and already crummy retail performance accelerates.

Shares are only $3.78, so there’s just not a lot of juice for puts. At a minimum, I think it’s still an “avoid like the plague” choice.

Bottom Line

Many people are prepared for the markets to fail, which means the question you ought to be asking is...

Do you have a plan in place if they take off?

As always, let’s MAKE it a great day!

Keith 😊