3 Duds to Dodge; Bitcoin Breaks $28K
Great Stuff’s List ‘O Shame
It’s that time of year again! The time of year when everyone and their mother tells you what stocks to buy for the new year.
Seriously, my own mother had some ideas on what I should buy… Thanks, Mom! (What else can I say? She’s my mom.)
However, no one’s telling you what stocks to avoid — information that’s arguably just as important. Maybe even more important!
Note: I originally wrote this as “stocks to avoid like the plague,” but after this past year, we all know people don’t do that. It seems plague isn’t quite the deterrent it used to be.
Anywho, there are literally hundreds of stocks you shouldn’t invest in right now … but with hard work and due diligence, I’ve narrowed that list down to the three most important stocks to avoid … like that fruitcake you got as a white elephant gift from Aunt Gertrude.
So if you’re looking for holiday deals to spend that gift card cash on … you could do much, much better than any of these stocks:
GameStop (NYSE: GME)
I’ve said it before, and I’ll say it again: GameStop’s business model is dead.
Aside from a few diehards who still like to own physical copies of games, almost all new video game purchases are online and digital now.
Because of this, the video game resale market is also dead … no matter how many PlayStation 2 discs show up on Facebook Marketplace.
The company proved that selling pop culture themed items doesn’t make up the difference in revenue and earnings.
Just look at GameStop’s last quarterly report if you don’t believe me.
Still, activist investor Ryan Cohen continues to snap up GME shares in the hopes of pressuring the company to change into an Amazon competitor.
Those are some sky-high dreams. Many companies have tried and failed. Heck, even Walmart — the world’s biggest retailer — has trouble competing with Amazon. What makes anyone think that GameStop could pull it off?
Even if the company does cave to Cohen’s still-hazy turnaround demands — and that’s a big if — it’ll be a long time before investors see any returns on those changes. Only gobs of money will turn this company into Ryan’s fever dream … money that GameStop doesn’t have. Hello, write-downs and losses galore!
The bottom line: GME is a speculator’s stock, not an investor’s stock. Avoid it.
Nikola (Nasdaq: NKLA)
This one hurts. Earlier this year, Great Stuff was fully on board team Nikola.
The company had promise. It had vision.
It had a deal with General Motors (NYSE: GM) to produce commercial pickup trucks.
All of that’s gone now … and not just because former CEO Trevor Milton may or may not have done some shady things.
Everything would be fine for Nikola if it had a proven working concept of its hydrogen fuel cell system. That was the real reason Great Stuff invested in Nikola.
But the early terms of the GM deal undermined that. Nikola’s Badger pickup truck would be produced using GM technology, not Nikola’s.
This was plausible, as fuel cell tech takes time to develop. Eventually, Nikola would start to make Badgers with its own fuel cells.
Besides, the company was always focused on semitrucks anyway … and GM was supposed to take a $2 billion stake. NKLA investors had time.
The agreement Nikola and GM reached, however, was the deal-breaker for NKLA bulls. It turned out that Nikola abandoned the much-hyped Badger — which supposedly had thousands of orders already.
Instead, the GM deal is a glorified supply contract to use GM’s Hydrotec fuel cell system for Nikola semitrucks. That’s it. That’s the deal.
So, as I asked at the time: “Is the Nikola-GM supply deal a sign that Nikola’s fuel cell tech just isn’t ready for prime time yet? Or is it a signal that this fuel cell tech is basically vaporware?”
As of this writing, I see nothing to convince me that Nikola has a working model of its proprietary fuel cell tech — the one thing that made Nikola worth investing in. Without this tech, Nikola is just another company making trucks using someone else’s products.
In fact, the barrier to entry here is so low that literally anyone else could do the same thing.
The bottom line: NKLA is just another manufacturing company posing as a hydrogen tech firm. Avoid it.
FuelCell Energy (Nasdaq: FCEL)
This one may be a bit of a shock to you, as I’m a big proponent of hydrogen energy.
But hydrogen companies — much like Wonder Woman films (Anyone seen the new one yet? Oof.) — are not created equal.
FuelCell may make me eat my words here one day. But as of right now, the company’s far from red-carpet-ready.
Unlike Plug Power’s (Nasdaq: PLUG) tech, which runs the gamut of mobile or stationary hydrogen power applications, FuelCell solely makes stationary fuel cell power plants.
That fact alone severely limits the company’s growth capabilities.
I mean, no electric vehicles. No portable battery cells. No hydrogen distribution channels. Just boring old fuel cells sitting in the corner.
And it shows in FuelCell’s third-quarter report. Revenue declined 17.6% year over year at a time when other hydrogen and alternative energy companies made bank. The company posted losses for the past four quarters and doesn’t expect to be profitable in 2021 either.
What’s more, FuelCell sold some 34.5 million shares at $6.50 each back on December 2, despite the stock trading near $10. The stock went on to shake off the share dilution and rally to a peak near $13.50 on December 24. That’s not investment. That’s speculation.
The one caveat to FCEL is, of course, the incoming Biden administration.
If Biden is able to push through massive support for alternative energy, it could greatly benefit FuelCell’s business. But even so, more companies would benefit more from this influx of alt-energy spending than just FuelCell … like, say, Plug Power, Cummins (NYSE: CMI) or NextEra Energy (NYSE: NEE).
In fact, when it comes to stationary hydrogen fuel cell power plants, NextEra is a much better investment than FCEL since it’s already at the stage of running full-scale, region-wide power.
The bottom line: Don’t waste your money chasing FCEL’s hydrogen hype. Avoid it and invest in a better alternative … better ingredients, better batteries. That’s new energy!
Click here for the Greater way in on the alternative energy race. (Hint: It’s not Tesla … pssh, c’mon, that’s pedestrian!)
Can you believe it? Almost two weeks ago, we stared, eyes twinkling, at crypto’s dazzling headlines. Bitcoin broke $20,000! Now it’s $23,000! New all-time high! BTC to the moon!
Even if you bought into the bitcoin rally at that mid-December top — and went against what ol’ man Great Stuff usually tells you about market timing and temperance — you’re still in good shape as of right now.
Why? Well, bitcoin went and got itself another all-time high last night — this time at $28,365. It’s the market that never sleeps or takes a holiday — especially during last week’s tryptophan-jiving celebrations.
Since October, BTC has had a bang-up quarter, shooting up over 150% in the longest streak of monthly gains since early 2019. But who’s counting?
Check out Bloomberg’s representation of the bitcoin boom in our new Chart of the Week below:
Now, before we get too carried away here … we’re but three months into this monthly gain streak, compared to the five straight months that propelled BTC in 2019. Whether there’s juice left in the bitcoin chamber (to mix metaphors) after these new highs is beside the point.
The chart above is no mere price chart. Instead, we’re looking at the drasticness of the moves BTC made on the month. Both 2017 and 2019 had wild, heady booms and busts that show here in wild variations on both sides of zero.
But this year’s BTC streak is much more measured — seeming more calculated and deliberate. BTC’s pullbacks have become less exuberant than past crashes, with both individual and institutional demand lining up as buying support in the dips.
Granted, there’s always those traders who just want to watch the world burn … or at least get volatile as all heck. You can already trade options on BTC — which should send your risky-risky Spidey senses tingling — with strike prices as high as $120,000 and $140,000.
$140,000 bitcoin! Speculator? Never heard of ‘er.
So, what’s this all mean for you? What’s a doe-eyed virtual gold holder to do?
Crypto, and its broad acceptance, is here for good. This much is true. The striking amount of demand in every slight BTC pullback tells you that.
But bitcoin is but one shiny chocolate coin in a sea of other crypto opportunities and non-opportunities. And the prices of various coins — like literally any other financial asset you’re used to trading — remain in flux, often trading on hype and newsworthiness that’s hard to predict in the new-ish space.
That’s why the best way in on crypto is with temperance. With a no-B.S., no-hype approach. With “King of Cryptos” himself! Ian King was an early investor in bitcoin in 2013 — years before most people had even heard the word cryptocurrency.
And he says the “next great crypto bull market has already started.” Click here to see why!
While you’re checking that out, don’t forget: If you’ve never shared your hot takes, rants or raves with us here at Great Stuff, don’t put it off till next year! Drop me a line at GreatStuffToday@BanyanHill.com.
We’d love to hear what you think about bitcoin’s latest high, the give-and-take tussle with stimulus, the ongoing vaccine rollout, why GameStop is (or isn’t) set for the landfill like E.T. Atari cartridges — anything goes around here!
Until next time, stay Great!
Editor, Great Stuff