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Why I love the setup on this stock

Feb 09, 2022

Good morning!

The markets appear to be in a good mood as I type which makes sense given the strong earnings season underway. Guidance is, of course, the challenge but don’t let that stop you from buying great companies especially if you can find ‘em on sale!

It’s tempting to hunker down but missing opportunity is always more expensive than trying to avoid risks you can’t control. Tactics!!

Here’s my playbook.

1 – Disney – I love the setup!

The path to profits is very clear. You identify great companies then pounce on ‘em when they’ve been kicked to the curb and are being ignored.

Disney certainly fits; it’s underperformed and badly trailed the S&P 500 for quite some time.

The company reports after the bell and all eyes will be on earnings, particularly as they relate to streaming. The fear is that streaming will be a drag because of the competition but anybody throwing Disney into the same camp as Netflix is making a mistake.

As I noted to the fabulous Maria Bartiromo earlier today on the Fox Business Network, Disney will invest $33 billion into content in 2022, is in the hunt for NFL rights AND can bring one of the most powerful brand portfolios ever assembled to bear with cross-marketing. Don't forget about the parks either; people are gonna make up for lost time and spend a boatload of money doing it. (Watch)

2 – I don’t like to invest in companies where I don’t trust the CEO

Many Wall Streeters are falling all over themselves to explain away big tech at the moment. It’s “inflation-sensitive” many charge. It’s “overvalued” others claim.

No, it’s not.

Big tech is sensitive to rates because the big traders who leverage themselves up to their eyeballs to buy it must sell in order to avoid a margin call and higher debt costs.

Do yourself a favour and think about this logically.

People are changing their spending habits as costs increase but I have not heard of anybody giving up their iPhone because of inflation. Big tech has unbelievable pricing power and is growing 5X-10X faster than inflation.

Not all tech is the same so you can’t lump it into one category. Apple and Microsoft, both of which I own, are very different from Meta which I don’t.

To a point I made earlier today with Maria, I don’t like to invest in stocks (like Meta) where I don’t trust the CEO. (Watch)

Mark my words … Wall Street is talking out of both sides of its mouth and quietly buying even as they’re telling retailers to sell. Always do what Wall Street does, not what it says.

3 – London’s done and why you should care

Arm (the semiconductor company that was recently in the news with Nvidia) is one of the undisputed leaders in British tech and it’s very likely that it’ll list in New York via the Nasdaq when it goes public rather than the London Stock Exchange. (Read)

London’s done.

Global capital flows are changing. The most valuable tech companies on the LSE are worth less than $50 billion. Microsoft, Apple, Amazon, and Alphabet all have values over $1 trillion.

20 years from now the choice may be Shanghai or Dubai.

Speaking of which …

4 – Xpeng jumps 7%

Love it or hate it, China’s key to global markets because of the amount of money pent up inside. We got a glimpse of that this morning when the company's Hong Kong shares jumped after being linked to Mainland Chinese markets via the Shenzhen-Hong Kong Connect program. The US-listed ADR went along for the ride, naturally. (Read)

That’s great to see, especially since Xpeng is one of two carmakers capable of giving Tesla a run for its money in European markets. I recommended both recently in One Bar Ahead™ and shares are starting to move along nicely. (Learn More)

5 – Nobody’s paying attention to this but they should

One of the cardinal rules when it comes to success in the markets is to learn how to follow the money. Right now, people are focused on big tech, EVs, medicine and more but they’re missing the real story.

It’s decidedly less glamourous but far more telling.

Aldi, a small-box grocery discounter, plans to open 150 additional stores nationwide along with a new distribution center. The company’s plans are coast to coast with the goal of becoming the 3rd largest.

Most people have never heard of the chain and if they have, they don’t know just how big it already is. The company operates 22,000 stores … some 2,000 of which are in the US where it plans to open another 2,500 stores by 2022. (Read)

It’s larger than Whole Foods and 90% of what it sells are private label brands. You pay $0.25 to “borrow” a cart and get it back when you return it. You pay for bags or bring your own which is SOP in Europe but just dawning on American retailers.

You cannot buy shares because it’s privately held but I will be first in line if there’s even a hint of an IPO.

The important takeaway is the millions of Americans are going to need to make every dollar count in the years ahead. Aldi couldn’t grow this fast if that wasn’t true.

Walmart and Costco are great proxies, meanwhile.

Bottom Line

Dreams don’t have expiration dates.

Explore the world around you and find out what makes it tick.

Invest accordingly.

I will be with you every step of the way.

You got this – I promise!

Let’s make it a FABULOUS day.



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