Summary
- More earnings notes.
- New bottoms or retest followed by Presidential Cycle rally?
- Thoughts on the Fed, SPY, China and potential higher energy prices.
Continuing to cover earnings season with notes, charts and trades below the main Plug & Play tables.
S&P 500 Growth Stocks
A combination of growth and value with strong intermediate term runways. Of note, there are not many “growth” companies on the S&P 500 as few have growth rates over 20% because they are already large. Most of the S&P 500 companies worth owning pay a dividend and appear in the S&P 500 Dividend Stocks below. I’m only including stocks here with a dividend below 1%.
| Company | Bottom Fishing | Earnings Date | Long-term Thesis & Catalysts |
| Berkshire Hathaway(BRK.B) | 270 | 2/24 | One of the safest stocks due to balance sheet and cash flows. Diversified across dozens of companies, much like an ETF or mutual fund. Roughly 20-25% of value is Apple holdings. |
| Alphabet(GOOG) | 75 | 2/2 | Still a dominant search and ad company, but moving more to cloud, entertainment and baby googles. Some pushback on content moderation, but very fixable. |
| Amazon(AMZN) | 66 | 1/31 | Preeminent retail, tech, services and cloud company. Recent buildout leaves them with excess capacity and lower capex going forward. Expect earnings to grow by 2024. |
| Nvidia(NVDA) | 90 | 2/22 | Top AI platform plus leader in other smart chips. Unique products make it a leader during next tech expansion. |
| Warner Bros Discovery(WBD) | 13 | 2/23 | Expense and debt cutting is ahead of schedule, DCU reboot looks smart and promising, multiple new potential hit shows, great library, great franchises. Dramatically undervalued versus future cash flows. |
| Freeport McMoran(FCX) | 13 | 1/23 | Copper and other metals are heading towards shortages in coming years, but new supply has driven up smelting costs, i.e. similar to too much oil for refineries. Time and a recession might give us a lower price later. |
| Generac(GNRC) | 78 | 2/10 | Generac has positioned themselves well for the energy transition by using their generator business to make them into energy storage and monitoring. Very well managed. I like the combination of the clean energy ETFs on our Global Trends ETF lists + Generac. |
| Tesla(TSLA) | 50 | 1/25 | The entire EV industry is going to make money as EVs replace oil based cars though the 2030s. With the fleet age so old due to supply chain issues the past couple years, growth will be higher than normal. In addition, the tie in with solar and energy management sales will be big too. Musk is Musk which means so many things. From a market cap in the $200 billions, Tesla has a lot of upside. |
Notes, Charts And Trades
A lot of earnings coming soon…
Tesla (TSLA) reported on the 25th and I think it is setting up for a disappointment soon on margin fears as companies cut prices to qualify for the Inflation Reduction Act tax credits. The bigger takeaway should be that the IRA is working. It’s created a bit of downward price pressure on EVs, which will only spur adoption of electric vehicles and home solar to power those cars. Tax credits on wider adoption are good for Tesla, and Ford (F) and GM (GM) long-term. I still like buying Tesla shares outright if we can get a market cap price in the $200 billions.
And, here’s a repeat of Freeport McMoran (FCX) with new notes.
Remember, 4 new copper mines are in the process of ramping up production. While we need a lot of copper long-term, the short-term could see a glut, just like semiconductors did. We should be looking for a corrective price to buy in the next year or two or three. There’s no hurry. Let it come to us.
Mid Cap Growth Stocks
$3b to $20b, or $20b+ but not on the S&P 500. Higher growth potential than the large caps in most cases.
| Company | Bottom Fishing | Earnings Date | Long-term Thesis & Catalysts |
| Square/Block(SQ) | 61 | 2/23 | Small business leader and I want the Bitcoin exposure. High safety ratings, but was overvalued. A winner out of slow down and as Bitcoin adoption happens globally. |
| Unity(U) | 30 | 2/22 | Unity is a leader in almost everything AI, AR, VR and the metaverse. The go to platform for many developers. |
| SunPower(SPWR) | 14 | 2/15 | Backed and majority owned by Total (TTE) gives it financial strength in volatile, but high growth, solar and energy management sector. |
| Shopify(SHOP) | 20 | 2/13 | A global ecommerce platform that rivals Amazon. It was a Covid darling and has now deeply corrected. It is as the point where capex can fall and revenues can start to pile up into profits. Global ecommerce still has a lot of growth. |
| Palantir(PLTR) | 7 | 2/15 | Two businesses in one. Their software platforms are growth engines and the investment holdings in small caps offer upside the market assigns no value to currently. |
| MP Materials(MP) | 18 | 2/23 | The base of creating a rare earth metals supply chain in the U.S. Very tied to EVs, defense and advanced tech. Their emerging magnet business is high margin and high demand. Currently in the capex heavy buildout, but close to finishing. |
| Uber(UBER) | 22 | 2/8 | Just becoming profitable which is criteria for S&P 500 inclusion. Deals with cab companies globally is new money. About to become transportation and delivery “platform app.” Bumpy ride with government negotiations, but should earn around $3/share a few years out. |
Notes, Charts And Trades
Coming soon as earnings hit in February.
Small Cap Growth Stocks
Under $3b or not regularly profitable yet. Here’s where you will find a bit more “high risk” in our lists. Not all small cap stocks are high risk though. Some are just more volatile. There is a difference. Many of these are market risk, though some are indeed high risk. See the VSL for risk ratings.
| Company | Bottom Fishing | Earnings Date | Long-term Thesis & Catalysts |
| Aemetis(AMTX) | 5 | 3/10 | The government has said “YES” to biofuels and carbon capture. Their biofuel process is carbon NEGATIVE in many cases, not just carbon neutral. The tax incentives in the U.S. will likely make it the highest margin company in America for biofuels. The company blew by their 5-year $5 billion estimate for contracted biofuels and hit $7 billion, largely for jet fuel at San Francisco airport. The company’s biofuel plant in India is paid for and can generate 50 million gallons of biofuel per year – I believe it could be sold if need be, i.e. provides a margin of safety. The stock is under short-selling pressure, I believe likely because of perceived risk in 2024 debt maturities. Institutional investors continue to accumulate. It seems inevitable there will be a short squeeze.Aemetis Is My Top Growth Stock Of 2023 (NASDAQ:AMTX) |
| Ginko Bioworks(DNA) | 3 | 3/27 | Long-term outlook for becoming biotech platform is enhanced by barriers to new entries. Huge TAM. Recent scientific announcements regarding proteins and antibiotics has expanded their market potential again. Generating revenues via multiple partnerships and streams of income. A true platform company in its infancy imo. |
| Enovix(ENVX) | 9 | 3/3 | A significant performance and safety upgrade vs current lithium ion batteries will give it a 3-5 year runway to build its business before new tech comes. Great management I would expect will continue to evolve the company. |
| Heron Therapeutics(HRTX) | 3 | 2/27 | TAM to replace up to half of opiate usage is massive. ZYNRELEF for pain is currently discounted due to slow uptake as Covid reduced operations. Rest of the company is unvalued by market, but does have value. |
| AST SpaceMobile*(ASTS) | 5 | 3/2 | Millennial fav due to the massive upside in space based 5G. American Tower (AMT) owns 5%. Deployment hurdles of constellation are being overcome, including hardware, software, launches and government rules. Recent agreement with NASA. Rare high risk/super high reward. |
| Rocket Lab*(RKLB) | 5 | 2/28 | Is a leader in rocket launches, but the unsung business is its solar panels for space which NASA recently contracted. With the thousands of expected launches the balance of this decade and next, whether Rocket Lab is carrying the payload or simply has solar panels on the ride give it two revenue sources. A leader in the developing multi trillion space industry. |
| Planet Labs*(PL) | 5 | 3/31 | Geospatial imaging leader. Similar to Maxar which was bought for over $4 billion recently. Crossed $100m in annual recurring revs in 2022. Planet has deep and meaningful relationship with Google. Takeover target imo. |
| BlackSky*(BKSY) | 2 | 2/21 | Thrives on government and defense contracts. The new “spy satellite” company. In bed with Palantir AI on data analytics. Takeover or merger (SATL makes sense to me which I’ll cover in an article) target from these prices. |
| Satellogic*(SATL) | 4 | May? | Satellogic might have the best satellite tech for imaging. Already stacking revenues. Also working with Palantir AI on data analytics. Can build satellites for private companies who want their own constellations. |
| Spire Global*(SPIR) | 2 | 3/8 | Global leader in maritime surveillance and data services. Already crossed $100m in annual recurring revenues. Has cash to outlast capex period of additional launches. Clear takeover target. |
| Stone Capital(STNE) | 8 | 3/14 | Brazil is an ecommerce growth leader and expanding rapidly toward fintech for consumers. EM exposure. Just turned profitable again after a failed attempt to get into more lending as Covid hit. Berkshire Hathaway holding. |
| Jumia(JMIA) | 4 | 2/22 | Massive upside in Africa. EM Exposure to fast growing India. Deal with UPS is harbinger of growth, but expect volatility. Already on Amazon AWS platform and a takeover target by Amazon which has stated it wants more Africa exposure. |
* Space basket. Own them all as a group in 1-3% increments imo.
Notes, Charts And Trades
Satellogic did a business update in December, read it here. They are growing at 35%, but should soon see a surge in growth that lasts a few years. Debt free with about $90m on the balance sheet and anticipating breakeven in 2024, which I think they’ll meet. They’re ability to build satellites for other companies is a big deal. I think a natural merger partner for another satellite company or takeover target by private equity.
S&P 500 Dividend Stocks
Looking for strong dividend growers and hidden value. Value usually comes from hidden future growth, ability to pay down debt quickly or something the public is overlooking.
| Company | Bottom Fishing | Earnings Date | Long-term Thesis & Catalysts |
| Microsoft(MSFT) | 142 | 1/24 | Small dividend, big cloud. Both will grow. About as rock solid financially as your find. Maybe the safest operating company on the planet. |
| Apple(AAPL) | 80 | 2/2 | Rock solid, everything you look for in a franchise, but I’m looking for a bottom fishing price as I have exposure via (BRK.B) and (QQQ). I worry a bit Google Pixel, regulation and app store pressure slows Apple down. |
| Ford(F) | 11 | 2/2 | Getting a great opportunity to buy, especially if you missed it before. EV leader, massive freed up real estate due to EVs taking less floor space and amazing 4IR tech. |
| Intel(INTC) | 28 | 1/26 | Chips for EVs and not from China. Massive growth potential and government help. Will converge market caps with Taiwan Semi (TSX). Absurdly cheap here. Insider buying which rarely happens at such big companies. |
| Pfizer(PFE) | 38 | 1/31 | Their legacy business is funding dynamic research using mRNA and protein based therapies which were just mapped by AI. Hard not to see it be a trillion dollar company a decade out as Boomers age. |
| American Tower(AMT) | 156 | Global leader in 5G communications and broad exposure to emerging markets where most future growth is. Owns 5% of ASTS Spacemobile as solution to gaps in global systems. | |
| Kinder Morgan(KMI) | 15 | 1/18 | Super valuable and irreplacable natural gas pipeline network. First in carbon transport. Backdoor on future hydrogen. I get it, some folks “got dey dividend takeneraway” but it’s a new day and now, Richard Kinder is buying as much KMI as he can. I think a clear takeover target at some point. Maybe by an Omaha company or Chevron. |
| Paramount Global(PARA) | 18 | 2/10 | Fast growth, expanding margins and M&A likely. Like Warner, is cutting expenses and adding recurring revenues. I think ad revenue won’t collapse long-term. Pays 5%+ from absurdly low prices now. I really think Apple and Google makes sense as potential acquirers. |
| AT&T(T) | 17 | 1/25 | Capex slowly coming down as recurring revenues slowly go up equals debt slowly decreasing as well. Wildcards in space based 5G which could take company global, and an on-the-wire competitor to Roku (ROKU) is very possible. Little downside, some fairly big potential upside, fat dividend. |
| Digital Realty Trust(DLR) | 73 | 2/16 | Rock solid data center business that should see another growth phase as 5G continues to proliferate. A value & growth play from 2022 lows. |
Notes, Charts And Trades
Microsoft’s earnings were a bit soft on overall 2% growth as Azure (cloud) growth fell into the middle 30%s. But, their capex is also falling for cloud, so, that’s an interesting development. It means that as capex falls, but revenues increase, there’s more money to the bottom line to distribute via dividend or buy back shares.
Microsoft 365 grew 12% and I think will hold that pace a long time. For anyone in small business it’s the number one option unless they choose Google’s business suite. “Teams” is growing and even I’m tempted to use it if they make it easy for me.
Where Microsoft has massive upside is with AI. Their OpenAI is adding corporate users fast. That will be sticky revenue. And, they could jump into a higher advertising revenue level with ChatGPT if they can make it work with Bing somehow – I think they will.
A strong dollar hurt Microsoft a bit, a slowly falling dollar for a period will help the bottom line.
Intel’s earnings got a lot of breathy words by people who don’t understand what is going on with them. They are going to form a duopoly with Taiwan Semiconductor (TSM) in the next few years. Intel’s market cap is $116b. Taiwan Semi is $431b.
While Intel won’t capture a lot of the Asian market, it’ll do very well in North America and Europe. They are part of the necessary redundancy for security. They will make billions from governments and multinational corporations. It’s only a matter of time. Build a long-term position, trade it around the edges if you like, and collect the strong dividend. Remember, follow the money. Governments are giving them billions.
AT&T once again showed they are excellent at their core competencies. Fiber is a game changer as it spreads. Businesses will continue switch to it as it becomes available versus cable internet access.
Earnings topped estimates and I expect that to continue. I believe they are on pace to start to buyback shares ahead of their 2024-5 stated time frame. Dividends will hold steady and rise a penny or two per year, but the focus is going to shift to share buybacks.
The wildcard upsides are going global via space based 5G with ASTS SpaceMobile, further monetization of their underseas cables and fiber adoption by business. Frankly, there’s not many downside risks and completely unvalued upside surprises.
Debt continues to fall for Kinder Morgan.
Post Warner split seems to have put a floor under revenues. Meaning negative surprises are likely out of the way and future surprises will be positive.
With less strong dollar and EM growth, including India and Middle East, I think earnings revisions turn up in the next year, which typically pulls price up from corrections.
Non S&P 500 Dividend Stocks
A lot of special stories here that could yield large gains, including special dividend payouts.
| Company | Bottom Fishing | Earnings Date | Long-term Thesis & Catalysts |
| New Fortress Energy(NFE) | 33 | 3/1 | Unique on the water technology for FAST processing and loading LNG onto ships. Profitable, paying down debt, huge demand for what they are doing now and a backdoor play on hydrogen. |
| Permian Resources(PR) | 7 | 2/23 | Excellent cost of Permian oil and gas assets. Company is result of merger between Colgate and Centennial. Merger synergies lowering costs over 1/2 billion dollars over next several years. Fixed plus variable dividend targeting 50% of free cash flow. |
| BlackStone(BX) | 60 | 1/26 | They own so much real estate, energy, clean energy and other valuable, but illiquid, assets that they are a buy on pullbacks. Leader in energy transition, including fossil fuel runoff. Also, a real estate vulture investor. |
| KKR(KKR) | 31 | 2/7 | They own so much real estate, energy, clean energy and other valuable, but illiquid, assets that they are a buy on pullbacks. Leader in energy transition, including fossil fuel runoff. Also, a real estate vulture investor. |
| VICI(VICI) | 25 | 2/23 | Casinos among only firms that paid their rent during Covid. About as recession proof as it gets. As debt falls, dividends and buybacks will rise. We have to monitor debt. |
| Innovative Industrial Properties(IIPR) | 78 | February | The weed growth leader. If you don’t want YOLO or MSOS, this is a good one to pluck from the weeds. Surprises in marijuana industry, i.e. banking, are likely to be positive going forward. IIPR has secondary opportunities, i.e. margin of safety in food growing. |
| STAG Industrial(STAG) | 24 | 2/15 | Top industrial REIT benefiting from supply chains moving back towards America. Great management. Can conceivably buy a few industrial REITs similar to STAG to build a basket. |
Notes, Charts And Trades
Innovative Industrial Properties dropped around 25% in the past two weeks and is fast approaching the $78 bottom fishing price I set that many said was unreachable (familiar song).
The company is having a hard time collecting 8-10% of its rents and is in the process of fixing that. Think of that as similar to what happens to rents in a recession. The cannabis industry is facing a similar retrenchment now. We should expect another negative announcement or two, but I think those will be big buying opportunities, here’s why…
I have long said the “margin of safety” with Innovative was they can pivot to other uses for their greenhouses. Well… per the Innovative press release that really scared retail narrative traders…
San Bernardino property (approximately 192,000 rentable square feet): IIP is actively evaluating alternative non-cannabis uses for the property due to market conditions in California and changes in the zoning of the property. – IIPR
What looks super interesting there? At least at this facility, they are making a pivot. I presume some sort of organic produce, but we’ll find out.
With climate change making produce harder to farm, there is a massive expansion of indoor growing coming. It’ll take time, but I have no doubts, that with a few percent of arable land disappearing every year, and grains, soy and corn set to use a larger percentage of acreage, indoor produce is the future. Innovative is set to be the leader in my opinion. It’s a business I considered getting into when I explored buying acreage last summer and I’m sure I’ll revisit soon.
And, let’s not forget, the cannabis business is awaiting legislation that has been put forth several times already to allow them to particiate in the banking system. That’s coming. And, when that comes, at a minimum, marijuana will be decriminalized so long as it is grown and distributed with appropriate state licenses. We have already seen major moves in that direction:
Marijuana Law, Policy & Reform – Law Professor Blogs
I am super close to buying Innovative for the long run. I’ll collect the fat dividend while I wait for a rebound in the share price on the back of future growth and a return to 98% plus paid rents.
For those who want more income and less equity risk, here’s a rare bond from me to you. (The last bond I invested in was Chesapeake Energy a few years back and it tripled for us.)
Innovative has a bond maturing in 2026. It is a $300m issue and originally had a 5.5% coupon. However, this Senior Unsecured note is trading at about 85¢ on the dollar, yielding around 10%. I think you can expect this to get repaid at par in 2026. So, you’d make your 5.5% coupon until then and realize an additional 17% or so in capital gains. So, not a triple, but not bad for 3 years of bond which is far safer than stock. Here’s the Finra info:
Blackstone recently had its earnings. I have not listened to the call yet or read the report. I will before the KKR earnings on February 7th. I strongly recommend listening to their calls because their insights on the economy and markets are better than most as they play in all corners of the sandboxes.
Blackstone Fourth Quarter & Full Year 2022 Earnings
Closing Investment Quick Thoughts
The Federal Reserve meeting is this week. I find it hard to believe that Jerome Powell doesn’t go out of his way to be hawkish and concerned about international developments.
This is Jerome Powell’s chance to defy expectations and push the market down 10-20% to set up an end to the bear market. If he hikes 50 basis points while talking about backing off in the second half of the year, rather than first half which is what narrative makers are talking about, expect to see the S&P 500 index (SPY) head at least to last summer’s bottom of about 3700.
Here’s the monthly look which is easy to follow.
You’ll notice that RSI is thinking about running into oversold again on the monthly, which is never a good sign. Do we get there? If Powell is not hawkish enough, then we can see a continuation of this rally, which should be sold as RSI approaches 70.
From a trading standpoint, we can look at the weekly chart.
There is a case that the October bottom in SPY was “the bottom.” I’m pretty sure that is not the case, but that doesn’t mean the bear market can’t be interrupted and resumed later. In other words, if we don’t set a new low soon, we might not until 2025, for example, if Powell isn’t hawkish and the Presidential rally plays out first.
Higher energy prices…
Keep an eye on the Middle East and to a lesser extent Russia. That’s where the risks really are to creating a global recession on higher energy prices.
The known on higher energy prices is Russia’s continued aggression. The unknown is if Israel and Iran become more aggressive with each other. It is not unlikely that Israel forces the issue while Netanyahu is back in power.
China reopening will also put upward pressure on energy prices at some point.
China…
For the most part, I’ve been a bull on Chinese commie tech stocks since autumn. President Xi recently said “we can all make money again,” which is probably a pretty good signal. We should always remember, don’t trust him at his word though.
China tells the world that the Maoist madness is over – we can all make money again
Just like OPEC manipulates oil while betting on it, China manipulates markets while betting on them. China stocks are only good until China backs off on easing and stimulus.
Make sure to watch Monday’s Stocks Of The Week & Retirement Income Options webinar which I’ll cover several stocks and Thursday’s Macro Dashes & Global Trends ETF webinar where I’ll cover the Fed meeting, SPY and several other ETFs, including the China influenced ETFs we are in.
2023 “Investing 2020s” Webinar Details
Be nimble. Mind your asset allocation. Always respect your true risk tolerance.
