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☕ A speculative turn around stock under $3 if you fancy one

Jan 09, 2024

Good morning! 👋

That didn’t last long.

Yesterday’s rally lit up the charts but the 10YR is back above 4% which means all that vig just got more expensive. So, and not surprisingly, the big leveraged traders who borrow huge sums of money to ply their trade are unloading.

Time to go shopping!

Here’s my playbook.

1 – AI = a new Super Cycle

I told you several years ago that AI would change world history, that it was on par with the introduction of electricity, penicillin, and the Internet itself. I have also told you repeatedly that AI represents what just may be the single largest investment opportunity in recorded human history. (Watch)

My colleague tech-ace Dan Ives of Wedbush told you 6 months ago that he thinks, “this is the fourth industrial revolution playing out.” Dan called it a 1995 moment, not a hype cycle. (Read)

Now along comes Peter Oppenheimer, chief global equity strategist and head of Macro Research in Europe, who says the world is moving into a new super cycle because of … ta da… AI. (Read)

If you are not investing, you are not paying attention.

Simple as that.

I recommend a trifecta of chip makers, software, and security players, all of whom are at the top of the proverbial food chain. This year I’ve also got a slew of companies expected to leverage AI in the crosshairs. If you’ve got this covered, excellent and, if you’d like some help, you know where to find me. (Upgrade to Paid)

2 – Microsoft OpenAI: Of course, the EU wants to investigate

Microsoft caught the world by surprise when it unleashed ChatGPT and Europe was left without a competitive product. Of course, they want to take a look. (Read)

Pay it no heed.

MSFT is still best positioned in the AI space:

Every $50 in AI cloud spend could lead to $100+ in follow-on spending
The company will be fusing AI into everything it offers which is worth billions, particularly in the cloud at the enterprise level
Every 1% in search share gain could be $1.5B+ in top line revenue or more
And last but not least, NVDA’s guidance is a leading indicator for where MSFT goes next

I think it joins AAPL in the $3T Club this year.

VW, btw, just unveiled vehicles using the AI-driven technology behind ChatGPT at CES in Vegas yesterday. (Read)

Heilige Scheiße!

Wonder what the EU’ll say about that!

Keith’s Quick Tip: Regulators the world over are inevitably a day late and a few trillion dollars short when it comes to stuff like this because companies have already moved the needle. That’s why I constantly talk about the need to focus on visionary CEOs who know what they’re doing as part of the investing process.

3 – Uber/Lyft could get a flat tire

The Department of Labor just issued a ruling on so-called ‘gig’ work that could put the kibosh on companies like Lyft and Uber which rely on 3^rd party contractors who are economically dependent on ‘em. (Read)

It’s Econ 101.

Higher labor costs = lower profits.

Anecdotally, I’m not surprised. I’ve spoken with half a dozen Uber/Lyft drivers who are getting out of the business because it’s growing too competitive, and they aren’t making the money they once did.

Lyft under $10.

Uber under $50.

Putskies, short or avoid.

4 – Is WOOF a turnaround worth barking about?

Petco Health and Wellness – WOOF – is trading under $3 a share, having fallen 77.38% from a 52-week high of $12.58 a share.

I can’t see the physical stores being worth a hill of beans in today’s climate as consumers shift to more down-market brands and value-oriented choices, but the subscription model could work.

Maybe.

It’s a speculative flyer at best but that’s about it imho.

5 – SHOP for (another) double

Shopify has been a favourite of mine several times over.

Now, I think it could be time to revisit the online e-commerce merchant engine maker.

Management recently abandoned the logistics strategy and is getting back to the core digital payments business that made it in the first place. (Read)

Technically speaking, shares are scraping along in the upper $70s, having climbed out of the $30 range twice over the past few years. Once in 2019 and again starting in late 2022.

Hmmm.