Chips Ahoy, Depot Of Debt & Dividend Digest
Ahoy, me hearties!
Today, we be sailin’ the stormy seas of Reader Feedback. If ye be savvy enough to man the sails, ye too can join me crew o’ miscreants and scurvy dogs.
That’s right ye too can join the fun o’ Great Stuff Reader Feedback.
We answer all kinds o’ market, stock ‘n investment riddles. We be also known t’ indulge in yer more questionable riddles … everythin’ be fair game. Jus’ try nah t’ curse too much, or ye’ll be takin’ a long walk off a short plank! Arrr!
All ye need do is raise a flag of parlay … err … umm, email us at GreatStuffToday@BanyanHill.com.
Sorry, it’s not “Talk Like a Pirate Day” yet. But a certain Great One — we’ll call them Cap’n Chips Ahoy since they didn’t leave a name — inadvertently got me rolling on a pirate theme with the following question:
Chip, chip, chip-ahoy! I hope you don’t mind my copying your style as I chip away with my question: With the shortage of semiconductors (chips), what is a good stock or ETF to buy so that one can profit from that situation?
Thanks, and keep chipping away.
Thanks for writing in, Cap’n! You get an “A” for effort. If it had been a sea shanty, I’d give you an “A+.” Roll the old chariot along…
So, ye want to plunder the ol’ chips shortage, do ye? It’s no secret that everyone from smartphone makers to electric vehicle (EV) manufacturers warned that a chip shortage might impact production this year. Fallout from the pandemic shutdowns has everyone scrambling for chips to avoid dips.
Luckily for you, Cap’n, there are more than a few ways to pillage the situation. First, if you want to take the safe, crow’s nest approach, there are broad semiconductor ETFs like the VanEck Vectors Semiconductor ETF (Nasdaq: SMH) or the iShares PHLX Semiconductor ETF (Nasdaq: SOXX).
Both of these ETFs are broadly traded with ample liquidity — i.e., they aren’t obscure niche ETFs that could leave you stranded in a storm. They also rank among the top semiconductor ETFs by ETFDatabase.com.
Given the current state of the market — which appears to be coming down the other side of a rather large swell — both SMH and SOXX are trading near technical support and 2021 lows.
Why? Because fear of rising interest rates has Wall Street a bit “skeert” right now, sending momentum and growth stocks spiraling. With demand soaring for chips across the board, this seems like a buying opportunity.
Meanwhile, if ETFs just ain’t your thang … the Great Stuff Picks portfolio currently recommends buying chip majors Intel (Nasdaq: INTC) and Advanced Micro Devices (Nasdaq: AMD). AMD’s rising dominance is unstoppable, while the global production shortage should give Intel plenty of time to catch up and reassert itself as a global leader.
Amkor specializes in chip testing and packaging, while Applied Materials makes the machines that make semiconductors. Both should see revenue spike this year as the Intels and AMDs of the world catch up with rising demand.
So, there you have it Cap’n: two chip ETFs and four different stock ideas. Incidentally, Great Stuff Picks readers are enjoying the following returns:
- Intel — Up 22% since December 2020.
- Applied Materials — Up 91% since December 2019.
- Amkor — Up 146% since August 2019.
- AMD — Up 177% since June 2019.
All of these stocks remain buyable given the semiconductor shortage plague. And, they all trade at a discount to their recent highs due to the broad-market freakout.
Again, thanks for writing in, Cap’n! Ya scurvy dog. Stay great! Arrrr…
For all ye other landlubbers wondering what the big deal is about chips to begin with … hoo, boy. Where do we even start? How about … literally every tech trend you’re already interested in?
Gaming, EVs, data centers, solar stuff, supercomputers, Big Data — even crypto uses more chips than a loaded craps table.
So, sure, cryptocurrencies are exploding and making millions for speculators. But what you may not have heard is what’s going on behind the scenes — that’s causing more than 80% of central banks to adopt the technology behind it. Click here to learn all about it.
Great Ones, y’all been quiet lately. How are you? Everything’s all right … I hope.
Wait … why are you laughing?
Anywho … if you haven’t joined the crew for a good ol’ Reader Feedback singalong before, you can always send us a quick message for next week. GreatStuffToday@BanyanHill.com is where you can ramble as much or as little as you like — pirate impressions or otherwise.
To start today’s roundup off, here’s a word from one of the original Great Ones:
Oh, Great Stuff. Your comments on ZOOM and NIO are right on. ZOOM is fastly growing into the new communications platform for all forms of business applications and even television broadcasts.
NIO had a commendable 2020 and a good 2021 forecast, and the stock went down 12% the day after it reported earnings. For those who understand business, we see what they are doing and know how a long-range plan is executed.
For the business illiterate who have a day trade mentality, all I can say is good luck cause you’re going to need it.
I’m with you on DCRB and look forward to good things in the future. I also enjoyed some Bourbon with my Grandson last weekend, but still prefer a good Scotch. 👍
— Dick K.
If you somehow missed it, Dick’s talking about Nio’s (NYSE: NIO) barnstormer of an earnings report earlier this week — and the buying op that followed. (Also, shame on you for missing Great Stuff. It’s not like we stop by your inbox every day for nothing…)
Personally, I find myself more and more enthralled by Nio with every quarter — hey, it only took a year for Nio to pique my interest, but I digress.
Nio’s long since emerged from the shadow of its “Tesla of China” comparison to become an EV powerhouse.
Plus, peep those revenue expectations! Nio predicts revenue will grow 451% this quarter, which admittedly is compared against 2020’s first-quarter pity party.
Anyway, I don’t blame any of you who eyed NIO’s drops this week as entry points for yourself. And if we hadn’t just added Decarbonization Plus Acquisition (Nasdaq: DCRB) like you mentioned, Nio might be right behind it…
Also, don’t worry, Dick, I won’t hold your Scotch sensibilities against you. I recently tried a bourbon-barrel-aged Glenlivet that was amazing. But, this is Great Stuff, not Scotch Stuff, so let’s carry on with the plundering.
1 Chip, 2 Chip, Red Chip, Blue Chip
I’m invested now in blue-chip dividend-paying stocks, mainly for the ability to trade options around them. Calls on good blue-chip companies like WMT, AAPL, MDT, etc. And on the other side, way out of the money puts.
Again, that same group of dividend-paying, well-valued companies like MSFT, COST, DIS, that I would like to own but can’t really afford, unless I had to, that is…
— John G.
Options on blue chips? Why you’ve stumbled upon Great Stuff’s special sauce right there, John, and my ever-enduring love affair with options is an open secret around here.
I have to say that strategy is something special. Collect dividends and supplement those by selling “out of the money” calls and puts. It’s not flashy, but it’s honest work … and a great source of income.
For all the other Great Ones looking to get a leg-up in the options market, we’ve even written an options 101 guide of sorts. It’s in classic Great Stuff style, with (hopefully) easy to understand explanations and humor … don’t forget the humor.
Go on and check it out — we’ve only been hyping up options trading for, what, exactly a year to the day?
One benefit we raise to trading options is the ease of navigating market volatility. Many investors are getting shaken out at record speed by the recent market swings.
But this is a huge mistake.
Right now, we’re seeing a perfect setup for some of the best stock moves of the year. And like last year, most Main Street investors will miss it.
My option-slinging fingers are tinglin’ already!
Don’t want to miss out? I don’t blame you. Here’s the skinny: My colleague, Paul Mampilly, has used a very special strategy to navigate the market’s ups, downs and doldrums. Since last March, this method has delivered a win rate of nearly 8 out of 10…
HOME DEPOT. Before anyone buys shares in this company, please take a look at the MOUNTAIN OF DEBT this company has on its balance sheet.
— Wendell C.
Good shout, Wendell, and good on you for doing your due diligence checking balance sheets and the like. Huh … fundamentals? Due diligence? In this meme market?
Now, here’s the thing with Home Depot (NYSE: HD) and the dos and don’ts of debt loads. Personally, I’d prefer to invest in companies that don’t have $35 billion in debt, but that’s me. However, when it comes to heavily leveraged companies, HD is among the more stable.
Home Depot’s business isn’t gasping for breath in a dead-end sector like fellow debt-hoarder AT&T (NYSE: T), for instance. And Home Depot’s money isn’t tied up in dinosaur tech, like … well … AT&T. (Sorry T. You bought it. You own it.)
Sure, this debt makes HD less nimble than, say, Lowe’s Cos. (NYSE: LOW), but it’s not really anything to worry about unless someone comes along and disrupts the home improvement market.
Fool Me Once…
Mr. Stuff, we recently cut the cord with Verizon after 21 years, going to anything streaming. The final straw after terrible customer service for a decade was our actual cable was cut by some sub-contractor out beyond the pole the Saturday of the SEC championship game, and I had just purchased a beautiful 65” inch flat-screen to watch my beloved Alabama… Went out and got another internet provider and the Roku stick on all our TV’s.
— James S.
Wait, you lost service right before an SEC championship game? Sacrilege! Also, I do not envy the customer service rep that answered your call. Holy cow…
But the good news is that you’re free now, brother! Roll Tide!
Great Ones, sometimes you cut the cord. Sometimes the cord cuts you.
So, what would you do when the Roku life chooses you?
Do you have a cord-cutting story like James here? Send it our way: GreatStuffToday@BanyanHill.com.
And for all those numerous readers writing in saying “Add me!” or “Sign me up!” … first off, how’d you receive this? Second, all you have to do to sign up for Great Stuff is click here: Just click here!
Once again: Just click here if you want to sign up for Great Stuff!
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Until next time, stay Great!
Editor, Great Stuff