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Time to focus on stocks with the strongest case for ownership

Jul 25, 2023

Good morning! 👋

The Dow has now chalked up an 11-day rally.

Could there be more on tap?

S&P 500 and Nasdaq futures seem to think so—they’re both green as I type. However, the US 10-year yield is also up a skosh at +0.039 to 3.898%.

That makes me suspicious.

Whenever that happens, it’s time to keep things stupid simple.

The best way to do that is to focus on the biggest, best stocks with the strongest case for ownership.

Here’s my playbook.

🕵️ Psst, sign here if you want to work on Apple’s Vision Pro

Apple is well known for keeping things close to the vest, particularly when it comes to new technology like the Vision Pro.

I can’t say I’m surprised.

It’s secret-agent stuff.

According to Apple (Read), developers will be loaned Vision Pro hardware that must be kept in a locked Pelican case when it is not being used, remain at the address to which it is shipped, cannot be shown, accessed, viewed, or handled by friends, family, roommates, or household employees, is not to be discussed in public or on social media, and cannot be shown, used, or discussed in public.

Priority will be given to developers who intend to create new applications, rather than simply porting over existing applications from iPhones, iPad, and even other platforms.

And on top of all that, Apple has the right to see who is authorized to work on the device. Developers presumably have “staff,” right?

Personally, I love it because it means Apple is super serious.

MyPOV: I maintain that the Vision Pro is another iPhone moment that goes way beyond how others are thinking about VR glasses, reality headsets, and the like. Anybody who thinks otherwise would be wise to watch this Steve Jobs interview and how he answered the question about whether or not BlackBerry should be worried about the iPhone shortly after it launched. (Watch)

Go Mary: $GM

GM CEO Mary Barra raised the company’s outlook for the 2nd time after reporting strong results. There was a caveat, and it was a big one: “It assumes that we successfully negotiate new labor agreements without a work stoppage” (Read)

No matter.

Investing Takeaway: This is yet more proof that the narrative we’ve been talking about since last October is real. The economy is gathering strength, which means the markets can track a lot higher over time as money flows in and velocity accelerates.

If this is an interesting thought, and you’d like to learn more about which stocks could benefit most, you might enjoy a subscription to my paid research journal, One Bar Ahead®.

If you’ve got this covered, cool beans.

Thanks for reading along right here in the 5 with Fitz!!

Have I underestimated Rivian?

The thought crossed my mind recently.

My bride and I were picking up fresh berries at our favourite farm stand when I came face to face with an incredibly good-looking truck driven by a new owner with a massive grin on his face. He told me he had to wait 18 months for his rig but couldn’t be happier.

Hmmm, I thought to myself.

Rivian has seriously ramped up production and increased deliveries by 50% over last quarter’s numbers while also apparently selling 80% of what they make. Plans are to double production in the years ahead. Then double it again.

That’s a very Tesla-like thought.

Mizuho analyst Vijay Rakesh recently upped his price target to $30 from $27, which doesn’t sound like much but could be if he’s off base or, as might be the case, low.

Time to break out the scratch pad and do a little homework.

Rivian, BTW, reports on August 8.

Mon dieu! Thales buys Imperva for $3.6 billion

French aerospace and defense group Thales announced it would buy US-based cybersecurity firm Imperva for $3.6 billion as the company steps up its digital identity and security division. (Read)

Three key takeaways here.

First. Digitalization is one of the 5 Ds used in the OBA framework. 90% of all the data created in recorded human history has been created within the past few years, and that genie is never going back in the proverbial bottle.

Second. The acquisition is 17X the operating earnings forecast, which tells me that the company is willing to “pay up” because it sees value that may double or triple soon.

Third, it’s also proof positive that France’s cyber initiative could have legs and, if so, that would bring more money running into US cybersecurity stocks as competition heats up.

Time to bet against Amazon

I kicked Amazon off my buy list a while back and have urged investors to skip it or tread lightly because a) the business faces serious headwinds and b) CEO Andy Jassy is no Bezos.

Now I’m taking another look.

At putskies.

Amazon’s stock appears to be rolling over, and I can make the argument that $120 is the next stop, according to my back-of-the-envelope calculations. Then $103.

Long butterflies and a few speculative puts could be an interesting, defined-risk way to play the scenario.

Bottom Line

It’s always better to play offense, even if you have to think defensively to do it.

As always, let’s MAKE it a great day!

Keith 😊

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