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A dirt-cheap stock that could run sharply higher when the markets rally

Mar 08, 2023

Good morning! 👋

The markets are relatively flat following yet another Powell-induced shellacking yesterday.

A rational person in the real world would be asking questions like, “Why am I not getting the results I want?” Or, “What could we [the Fed] be doing differently?” My personal fav by far, though, is, “Do we need a rethink here?”

But nooooooo, the chairman doesn’t seem to want to go there.

Meanwhile, millions of hard-working people are watching their savings get eviscerated and struggling to keep a roof over their heads. I don’t know about you, but it makes my blood boil.

The Fed missed this crisis in formation, didn’t recognize it until too late, and now has no idea how to fix it. Still, and even so…

Chaos creates opportunity.

I submit there’s plenty of both at hand right now.

Here’s my playbook.

Powell’s worst nightmare

ADP employment numbers show 242,000 jobs added in February, a stronger print than the Fed expected. (Read)

Translation: Powell is getting his patootie kicked.

Here’s the deal.

Companies are hiring even though Fed policy makers have made it clear they want unemployment to climb as a result of higher rates that force consumers and businesses to cut back on spending.

Powell’s track record suggests he won’t back down. Whether he is ignoring the data or simply can’t let reality interfere with his perception of it doesn’t matter.

The Fed has no idea how high rates can go because it does not know what it is doing.

Blast shields up.

Now’s the time to think about bolstering the defenses using the specialized inverse funds I recommend. Putskies and bearish options spreads could also work nicely if you’ve got the chops.

OBAers: Be sure to check out Your 5-Minute Guide to Hedging (which is included in your subscription and available in the archives. Upgrade to Paid

Otherwise, you can click here to buy it.

CNBC says, "Current sweet spot in equities may come from picking up ‘quality’ stocks”

It would seem that somebody’s been reading the 5 with Fitz. 😊

CNBC reports that the current sweet spot in equities may come from quality stocks. (Read)

Here’s the thing.

You will never be able to control the markets, but you absolutely CAN:

Manage risk
Identify the world’s best companies and high-probability movers
Train your mind to accept data-driven decisions

Compare…

Bad: I am scared of the Fed’s next move, so I'll do nothing.

Better: I am scared of the Fed’s next move but have identified a world-class company growing earnings at 10% a year for the past 25 years that is priced 30% below fair value.

Better tells you…

What you’ll do: Buy a great company.

Why: Because it’s probably going to remain that way

Emotional eliminator: Growing earnings, strong history, on sale.

If you’re struggling, you’re not alone. Focus on what you CAN control. The sooner you get your emotions under control, the sooner you can begin making real, sustainable progress in the markets.

And yes, it really is that simple.

A dirt-cheap stock that could run sharply higher when the markets rally

Palantir continues to make great strides, this time by winning a State Department contract worth up to $99.6 million. (Read)

PLTR shares are 41.78% off their 52-week lows set on 12/27/22 but remain -44.28% below their 52-week high of $14.86.

Good!

The market still doesn’t understand the investing thesis here, which means that investors who are just now arriving at the same conclusion could enjoy a nice run when the market finally takes notice.

The average analyst target is $11–12, which suggests a 30.3% to 42.2% move from here.

I still think the ultimate destination is $50 a share, but admittedly, that’s probably a considerable way off at this point and, not for nothing, entirely Fed dependent. There’s a part of my brain that makes me think there could be a buyout lurking, too.

Patience, as they say, is a virtue.

Meanwhile, control risk using position sizing before you buy (if you decide to).

Yes, investing now is safer than you’d think

More than 77% of US adults are worried about market volatility, according to a new survey from Allianz while 62% are worried about a recession. Not surprisingly, two-thirds say they’d rather let their money sit in cash than deal with the volatility.

I get it.

But history suggests the markets are a lot safer than you’d think.

Not only that, but more profitable, too.

Let this sink in.

If you had invested in an S&P 500 Index fund at any time after 1900 and held that investment for 20 years, you would’ve earned positive total returns.

Again, I get it. The temptation to run for the hills is very powerful and hard to resist.

Just keep in mind that it’s one thing to hunker down because that makes you feel good or you must because you may need the cash, but entirely another to consciously ignore data like this.

If you had invested $1,000 in the S&P 500 ETF Trust (SPY) on January 1, 2000, you’d be sitting on $4,140.81 today, according to FinMasters and data from Alpha Vantage. That’s an annual rate of return of 6.32% and a total increase of 314.08%.

Companies like Apple have done considerably better.

In fact, if you had invested the same $1,000 in Apple on the same date, you’d be sitting on a cool $194,309.15—again, according to FinMasters and data from Alpha Vantage. That’s an annual return of 25.50% and a total increase of 19,330.92%.

My point is simple.

Volatility is a travelling companion, not something to fear.

Learn to recognize opportunity.

Missing opportunity is almost always more expensive than trying to avoid risks you can’t control!

Scottish Power admits 71 of its windmills are powered by diesel generators

This about sums it up.

Scottish Power admitted last month that 71 of its windmills were secretly hooked up to fossil fuels—yep… dinosaur juice—after faults developed with their power supply. (Read)

Doh! 🤦‍♂️

Not a surprise Buffett bought more Occidental Petroleum. (Read)

I prefer a different major energy provider because I think it’s got a better breakthrough energy portfolio, but that’s moot. Anybody still questioning why we need dino juice really ought to think seriously about stuff like this because it reinforces a point you’ve heard me make frequently… alternative energy just isn’t ready for prime time.