- During corrections we focus on quality because it’s rare that higher quality company stocks are cheap.
- Intel, Ford, Paypal, Block and several others are in our buy zone and merit attention.
- You should be buying the dips to build starter positions on all of these stocks or selling cash-secured puts on dips to build more exposure.
- Small caps are already cheap, but can get a bit cheaper, we will want to buy the dips on our favorites with the most upside. We’ll cover those again soon.+ add bullet
Welcome to Stocks Of The Week. Here I will cover several of our companies and what to look for as an investor. Make sure to read the past few SOTW to keep up to date. Please read “Using Plug & Play Stocks” if you haven’t already.
I’ll also refer you to our new Major Markets Risk On / Risk Off Report for context on the broader market.
Fintech Is The Next Internet
In this week’s webinar I focused on fintech from the crypto and NFT angle, but more broadly, fintech is changing how commerce is conducted globally. We are looking at a paradigm shift in how commerce is done.
Among the leaders in fintech are some of the old leaders in the pre-fintech era. Companies that established leadership in the first steps away from cash and are embracing technological change, especially blockchain, crypto and NFTs will be winners as this revolution is played out.
Those are still good options to sell if you didn’t already find a price that worked for you. Remember, ask for a bit more than the ask then work down over a few hours or days depending on your availability to monitor.
If there’s Russian volatility this week, we might get a chance to outright buy both of these stocks this week.
Paypal has a massive global network and is entrenched in internet commerce. They have also invested a lot into blockchain. They are well prepared for crypto regulations which are expected later this year or next year.
They are likely to have a stable coin, essentially a digital money market account, in the not too distant future. They are also likely to become a brokerage for cryptocurrency, ala, Coinbase (COIN). They might even buy a crypto brokerage to jump start with a base.
We have gotten the post Covid QE bull market correction on Paypal and it is now overshooting. I price near $100 would be a stock market gift to us. Keep very close track of this one, it’s a “must own” stock for the next decade.
Shooter sees a primary wave set-up from $110 on PayPal, so, we’re right on top of that. Again, close to my bottom fishing. Tough to see much more downside with PayPal.
Square is also embedded in internet commerce, but also has a very strong small business presence. It’s not just payments though with small business. They offer a software platform, financing and a lot of support for small business. They are entrenched there.
Square is also uniquely positioned in Bitcoin (BTC-USD) and crypto in general. They own about a half billion dollars of Bitcoin at current prices, mostly from 2020 cost basis.
They just placed an order with Intel for it’s new crypto mining chip which is scheduled to deliver by year-end. That chip will probably be the best mining chip out there as it is designed to run at lower energy specifically for Bitcoin mining. This makes good on Jack Dorsey’s idea from several months ago of building Bitcoin mining rigs.
So, with Block, you get an operating company with traction, growth and at least a shallow moat, plus a first row seat to the developments and value creation in crypto.
It’s important to know what the story is on Bitcoin. If it’s regulated like a commodity, which is where it is now and I think will stay in that space, then a rise to $250,000-$500,000 looks like the next big range in a few years as companies, family offices and institutions add.
If Bitcoin makes the jump to being used as currency, it’ll price in the millions someday. I don’t think that happens, but it might. Emerging markets are rebelling against the IMF, which is basically the U.S., so, we’ll see. International demand for Bitcoin is set to surge, it’s just a matter of how much and for why.
Square is a must own stock. It’s round tripped like PayPal and is in our buy zone. Can it go lower? Sure, but don’t let perfection be the enemy of good. Find room for a starter position soon and maybe sell puts like I talked about a couple weeks ago (linked above). Pretty easy to see Block at new all-time highs in the next few years.
Shooter sees the new primary wave set-up from around $80 per share, which roughly coincides with my bottom fishing. Again, that probably requires more market volatility that we think we’ll see once the Fed gets rolling on rate hikes.
4IR Is Here And It’s Also Huge
A subscriber called 4IR a dream to me recently. No, it’s a clear reality. We have been talking about this now for two years since I went to CES 2020 (Consumer Electronics Show, the biggest tech event in the world). We should have been talking about it a few years longer.
Per Salesforce (CRM)…
You know I have loved Ford since it was middle single digits in early 2020. Here’s the short story why:
- Will be a top EV company, which means higher margins. I think Ford will be the top EV company, passing Tesla (TSLA) by 2026-7 given their huge brand loyalty and their first two EVs being awesome: Mustang Mach E and top selling F-150.
- A great real estate portfolio that will be about 30-50% freed up since EVs take less floor space to build. This gives them huge optionality to sell, lease or redevelop as supply chains move back to America.
- 4IR tech is adaptable to almost any type of manufacturing. We saw it when they pivoted in 3 weeks to building ventilators. I expect joint ventures and new divisions for Ford.
- Finally, the car network is perfect for also selling solar. We just saw them cut a deal with SunRun (RUN) ala the deal SunRun has with Costco (COST). Imagine auto salesmen cross selling solar. It’s coming.
The stock has been holding up very well through the volatility. It has a buck or two of downside from here, but that shouldn’t stop you from at least finding a down day to take a starter. I plan to make Ford a double position if we actually get to bottom fishing again (which I doubt will happen, but maybe).
I’ve moved the bottom fishing up to $13 on Ford, though I think $16 might be as good as we get. It’s clearly got viable put selling available.
I think there’s very strong hands from around $10-13, so, that’s a very stable floor. To get Ford in that price range probably requires a big market dislocation. Look at the buying (left hand side of chart) that occurred after the Covid crash. Hard not to see a quick rebound if it would dip down in there.
Ford is a must own stock. Period. Not just for dividend investors, but for all investors. I think Ford has upside to around $200 per share.
Shooter is looking at about $16 too excluding a big market correction. Again, ford has held up well, so, it’ll take something to go below that $16 level. You can see that Shooter’s support line takes the price to about $13 on a broader market correction as well.
Intel has made some questionable acquisitions the past decade, but, that has added already deep IP giving them flexibility. New management has largely righted a lot of wrongs or, what more fairly were “mediocres” not necessarily wrongs.
Most importantly, Intel has doubled down on research and development, as well as, made the smart decision to bring chip fabrication to the U.S. Their fab development in Arizona and Ohio is a key turning point for the U.S. chip industry, bringing back supply chains and securing vital technology for America.
Intel just announced a new crypto mining chip that offers 1000x better performance per watt than existing chips (warning to Nvidia owners) and as mentioned above, is already on order from Block. With mining moving from China to the U.S. and there being a shortage of mining computers, this is chip is going to sell at a high rate for at least several years. I’m sure it’ll be adapted to other uses as well.
Intel is a fortress balance sheet and is a shareholder yield leader in addition to being about to embark on a new growth phase. Currently, their dividend growth rate is among the best at 3.8%, but I expect that to improve. Their also buying back shares at greater than 1% clip per year. I expect basic shareholder yield (dividend rate plus buyback rate) to climb from the current 4.3% to around 10% in once the fabs are all up and running in a couple years.
Intel is a must own stock. Period. Not just for dividend investors, but for all investors. I think INTC has upside to around $200 per share as well as it heads to trillion dollar status.
INTC is sniffing our buy zone now and has limited downside excluding a major market event. Find a starter position on dips and sell puts if you sell puts.
Shooter sees a primary wave set-up at about $43 per share. So, very close.