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☕ Invest like Nvidia

Feb 16, 2024

Good morning! 👋

Like this is a surprise.

January PPI data shows inflation is still with us.

The 10YR US Treasury immediately jumped above 4.3% and S&P futures (which had been green) took a header. The markets opened to the downside and remain red as I type.

This is as predictable as it gets.

Every time I go to the store with my wife, I am blown away by how much stuff costs. Forget trying to get a car repaired or pay for insurance at anything even remotely resembling reasonable prices. Try buying medicines, paying for education, or having somebody fix the fridge.

Chances are your experience matches up.

Of course the PPI is going to go higher for longer!

I can’t imagine JPow and his band of merry mahemists will let that stand.

Admittedly, I have been a lone wolf on the possibility of another rate hike this quarter but that’s sounding increasingly less crazy by the moment.

If that thought bothers you – and I get that it might – take a deep breath.

Chaos always produces opportunity!

Here’s my playbook.

1 – Bravo Starbucks!

Starbucks has unveiled the first location incorporating new store metrics focused on accessibility and inclusion. (Read)

It’s about time.

I have loads of friends who for one reason or another have found existing Starbucks incredibly challenging for years... the order screens are not reachable, many of the counters are too high, there are too many tables and obstacles around which to navigate and more. Then there’s the shadows and hard surfaces which can make vision challenging and the noise outrageous at times.

What I would give for my favourite Pasticceria Bompiani right about now – but I digress.

I’ve avoided SBUX for years because there are bigger fish to fry and better investments with a far more immediate path to profits to my way of thinking.

Nonetheless, I will be watching this carefully.

I think the move sets up a reset, particularly as MCD gears up for a fight with its new CosMc spinoff.

2 – Shake Shack... I smell a rug pull

Shake Shack reported strong Q4 numbers reflecting a 20% revenue jump YoY. Management also said it hopes to open as many as 80 locations this year which, if they can pull it off, would be roughly double the company’s footprint 5 years ago. (Read)

Shares shot higher by 26%... in a day.

I smell a rug pull in the offing.

Putskies.

Keith’s Investing Tip: Fast movers often catch the public’s imagination because FOMO gets the better of ‘em. That causes volatility to rise and, in many cases, can be a significant signal that there’s a move looming in the opposite direction and a tradable opportunity at hand.

3 – Fly me the moon!

Intuitive Machines shot 34.5% higher yesterday after announcing that its IM-1 launch (on top of a SpaceX Falcon 9 rocket) was successful. If the company’s lander makes it to the moon as anticipated, it’ll be the first US lunar landing in 50+ years. (Read)

Most investors won’t give this a second thought but should.

Space could be a multi-trillion-dollar opportunity.

The path will definitely be challenging so buying stocks this early in the game is not for the faint of heart. But patient investors could be handsomely rewarded.

Case in point, one of my favourite choices is struggling but I’m not willing to let it go just yet given the unique competitive edge it enjoys. Another is starting to gain traction.

If you’ve got this covered, excellent. And if not, you know where to find me.

4 – You will fly on a Chinese aircraft within the decade

I’ve been warning investors about Chinese aspirations in the commercial aviation space for a long time but very predictably much of what I’ve had to say over the past decade has fallen on deaf ears.

Not for much longer.

China is going to show off its first home-grown airliner – the C919 - at the Singapore airshow next week. (Read)

It is a direct 737 challenger.

Critics are already so self-absorbed it’s astounding.

There are only four C919s in service says one. The plane is certified by Chinese regulators, not international authorities says another. And, the C919 relies on international suppliers.

They forget their history.

People thought Japan was capable of making nothing more than cheap tin toys after WWII only to watch it become a global hi-tech manufacturing powerhouse within the space of 30 years.

I think the C919 obtains European Union Aviation Safety Agency (EASA) certification relatively quickly. The FAA will begrudgingly follow.

Boeing, if it doesn’t have a pivotal “get it’s ___ together moment” shortly, will fade into irrelevance as buyers move on. I know anecdotally that they’re already taking a hard look.

There’s a better than average possibility that you and I will fly on Chinese long-haul aircraft within the decade. And highly likely in US and European fleets.

Btw, my bride – like many people who will undoubtedly react the way she did when I told her about this - has already pronounced that there is no way in heck she’s flying on Chinese aircraft any time soon. But, in a moment of irony, she’s perfectly willing to try Chinese EVs, electric bikes, and other stuff on the ground.

You?

5 – Invest like Nvidia

Nvidia’s latest 13F rocked markets when the public learned that it’s been buying up shares in Ai-related startups. (Read)

Including SoundHound AI.

Predictably, shares shot higher which makes ‘em a lot like Shake Shack.

Why?

The fact that NVDA has taken an interest does not guarantee the company will be successful even though the investing public seems to believe so. All the 13F tells you is that NVDA sees value in SOUN.

Trade Idea: I’d consider a LowBall under $2 when the company reports in early March. Or consider buying ITM calls like the April 19th $1.50s which last traded at $1.80 each as I type. Assuming you exercised, that’d bring you outta the starting gate with a cost basis of ~$3.30 or roughly $0.21 less than where shares are trading this morning at $3.51.

Prices will undoubtedly change by the time you read this so take that into consideration rather than jumping blindly.

The point I want to make is that there’s always a way into the game if you want one!