It’s Friday, I’m in Plug; Why Intel Fell; Fastly Flustered
Friday Four Play: The “Drought Has Ended” Edition
I have good news for you today, Great Ones!
The Great Stuff Picks drought has ended. The seal is broken, so to speak.
Aren’t you just dying to know what Great Stuff’s new recommendation is?
The company I recommend today is up roughly 300% this year, and for good reason. This company’s products are on course to rival Tesla Inc.’s (Nasdaq: TSLA) giga batteries and revolutionize the electric vehicle (EV) market.
But it’s not just EVs — practically every electric source known to man will benefit. This potential is why Bank of America, Goldman Sachs and Morgan Stanley believe this is a potential $11 trillion market in the next 30 years.
So, are you on the edge of your seat with antici … pation? (You long-time Great Ones probably already figured this one out.)
Today, Great Stuff Picks recommends Plug Power Inc. (Nasdaq: PLUG).
I’ve written about Plug Power quite often in Great Stuff. But, in case you missed an issue here or there (shame on you!) let’s recap.
The company specializes in hydrogen fuel cell technology for both mobile and in-place applications. Picture those massive batteries that Tesla makes … but charged with hydrogen and not your local power plant.
We’re talking very mobile. Plug Power’s key fuel cell technology is a proton-exchange membrane (PEM) fuel cell, which can be small enough to power cell phones.
Plug Power’s GenDrive system revolves around PEM fuel cells to power material-handling EVs, such as forklifts and loaders, while GenSure fuel cells provide power backup and grid support. They all run on hydrogen, and the only byproduct is water.
The company also provides hydrogen delivery systems (GenFuel), maintenance and service (GenCare), and fuel cell stack and engine technology (ProGen) for delivery vans and on-site power backup.
So, why now? Why buy PLUG now?
Take a look at the following chart:
Let’s get technical, shall we?
PLUG’s uptrend off the March bottom is clear. The shares are right above key support at their 50-day moving average, shown by the blue line. After peaking in early October, PLUG dipped 22%.
The media would have you believe that this is due to falling gasoline prices. This may be true, but it is very shortsighted. The days of lower gas prices making alternative energy less favorable are numbered.
Now, the side effect of this decline is that PLUG is perched on support at its 50-day moving average. The shares are headed toward oversold territory, with their relative-strength index (RSI) dipping below 50. (That’s the jiggly momentum-tracking line at the very top, if you’re following along at home.)
In the past, a pullback to the 50-day moving average and an RSI below 50 have been buy signals for PLUG. I highlighted these inflection points with yellow bars in the chart above.
Furthermore, the $14 to $15 area is home to PLUG’s August highs and should act as price support for the stock.
In short, we have three technical indicators pointing toward a near-term bottom for PLUG. This is the entry point we’ve waited for.
Plug Power is poised to be a major player in the $11 trillion hydrogen power market. The world is moving toward green energy, and hydrogen is the future.
The bottom line? Buy that future. Buy PLUG.
Finally, if you’re looking for more new power-generation investment ideas … but with a more managed approach than Great Stuff provides (more trade ideas, entry and exit prices, real-time trade alerts, portfolio updates — the works!), I’ve got you covered.
Remember, alternative energy will only be ‘alternative’ for so long. Click here to get in before this technology goes mainstream!
And now for something completely different … it’s time for your Friday Four Play.
No. 1: It’s All About the Pentiums, What?
What y’all wanna do? Wanna be hackers? Code Crackers? Slackers?
It’s no longer all about the Pentiums for Intel Corp. (Nasdaq: INTC). We’re talking Core i7 and i9 chips now. (What kinda chip you got in there, a Dorito?)
But even more than that, we’re talking data centers.
Intel released its third-quarter figures this morning, and Wall Street isn’t happy — though exactly why isn’t clear from the chip giant’s numbers.
Intel beat top-line revenue expectations and matched the consensus earnings-per-share figures. The company even guided above expectations for the fourth quarter.
Still, INTC shares plunged 11% following the report. What gives?
It’s all about the data centers, baby. Revenue at Intel’s Data Center Group plummeted 47% year over year to $5.9 billion, well below the $6.22 billion expected. Intel blamed this on COVID-19 and the accompanying weak economic conditions.
If Intel’s reasoning is true — that corporations are scaling back due to the pandemic — then this is a buying opportunity for INTC bulls. Intel will be back … it’s freaking Intel, after all. Its chips are everywhere.
However, if the company is losing ground in the data center market due to Advanced Micro Devices Inc. (Nasdaq: AMD), then Intel may not be back without a considerable fight. This is the crucial uncertainty that drove INTC’s loss today.
AMD steps into the earnings confessional Tuesday next week. If it reports the same data-center struggles, Intel could stem its losses. If AMD shows gains in data center revenue, well … we’ll know the real culprit for Intel’s struggles.
No. 2: Losses to the Max
Let’s get this out of the way first: I don’t like AT&T Inc. (NYSE: T).
The company represents the worst of the old “Ma Bell” monopoly and the dying cable TV cabal. Worse, it tries to bring that cable TV mentality to the streaming market. Just look at its failed negotiations with Roku Inc. (Nasdaq: ROKU) to get the Max app listed.
You may have noticed that T shares jumped nearly 6% yesterday. The gains came in reaction to AT&T’s third-quarter report, where profit fell 19% to $0.76 per share on revenue that dropped 5% from the prior year. But both figures beat Wall Street’s expectations, so all is good, right?
HBO Max subscribers only rose 4.7% to 38 million during a quarter where everyone was essentially locked at home. What’s more, 627,000 paid TV subscribers ditched AT&T last quarter. That’s 590,000 “Premium TV” subs and 37,000 from AT&T Now (formerly DirecTV Now).
And AT&T Now is a streaming service!
You can argue that HBO Max is the flagship streaming service, and some of those AT&T Now subs might have switched to Max. But I continue to argue that AT&T’s confusing streaming options are part of the problem.
The thing is, I want to like AT&T. The company has exceptional content following its Warner acquisition. It has massive wireless and wired networks and connectivity. There is no excuse for the company to struggle this much to retain subscribers and boost profits.
This is a management failure, plain and simple. The “Ma Bell” and cable TV eras are dead. AT&T needs to realize this and move into the 21st century. Until it does, T is a sell. Don’t let yesterday’s rally fool you.
No. 3: Lessons Learned Fastly
Today’s other case study in management missteps: Fastly Inc. (NYSE: FSLY)
What’s Fastly do? Cloud computing, simply.
In this case, Fastly’s services include a grab bag of cloud computing features, such as content delivery and image optimization — all that backend tech that makes apps like TikTok work.
Speaking of TikTok … that’s Fastly’s biggest customer. And the situation there hasn’t changed: TikTok is still in a legal beagle holding pattern, and recent disappointing guidance opened up a can of risky worms for investors and analysts alike.
Over the past week, Fastly saw three downgrades: Piper Sandler from neutral to underweight, Baird from outperform to neutral and Stifel from buy to hold.
This is off the back of Fastly lowering its third-quarter revenue outlook from a range of $73.5 million to $75.5 million down to a range of $70 million to $71 million. It seems like a small move, but what this doesn’t tell you is the potential uncertainty behind either of these ranges.
Potential uncertainty? Way to keep me on the edge of my seat, man.
See, if TikTok’s ban-or-sale dilemma isn’t rectified in the U.S in TikTok’s favor, Fastly loses its biggest breadwinner in one fell swoop, as if millions of lip-syncing videos suddenly cried out and were suddenly banned.
If that should happen, it’s up to Fastly to pick up the slack that TikTok would otherwise provide revenue-wise. Thus, potential uncertainty — the 2020 special. This is what happens when you have your revenue streams depend on one or two major whale customers.
So, what’d we learn today? Something, something … don’t put all your eggs in one Fastly.
No. 4: The Worst Thing at the Worst Time?
We’re playing catch-up here on the earnings ball today, but with Tesla, that often works in our favor for catching all the post-earnings news bites and reactions. First, the deets:
- Earnings per share hit $0.76 versus estimates of $0.57.
- Revenue reached $8.77 billion versus the $8.36 billion expected.
Tesla saw operating costs jump 33% on the quarter, with new factory buildouts now underway in Texas and Germany. The company also reiterated its estimates for next year’s delivery count: 500,000 flat.
You and I both know that’s a floating figure that Elon will hype up and downplay wherever fit, so no surprises there. What was notable was the launch of Tesla’s full self-driving (FSD) mode.
Or … kinda self-driving. Drivers are warned to stay vigilant and keep both hands on the wheel, with the update release warning that the system “may do the worst thing at the worst time.” The update is still in beta for a select group of Tesla beta-testers — a whole new level of Tesla-branded clout-chasing I didn’t even know about.
Semi-tested autonomous cars … open roads … regular drivers. Someone chose “trial by fire” as per usual.
“Public road testing is a serious responsibility, and using untrained consumers to validate beta-level software on public roads is dangerous and inconsistent with existing guidance and industry norms,” the Partners for Automated Vehicle Education stated.
To some, this feature might not even be considered as FSD as long as the driver still has to supervise the vehicle. Marketing? Misleading? Tell that to my self-cleaning oven.
Still, the risk here is evident enough that the National Highway Traffic Safety Administration will “monitor the new technology closely.”
Of course, with more functionality comes a price increase and ever-growing hype from the Tesla crowd. Though, you wouldn’t tell it by looking at TSLA — down about 5% since the earnings announcement.
You know that I’m overall bullish on the big red T. But not at these levels will you find us buying in. Besides, we’ve already got a better way in on the EV trend with PLUG!
Let us know in the inbox what you think of Tesla — and self-driving cars as a whole. Are you game with the whole autopilot shebang? Or is this a tech trend you’re sitting out for?
Great Stuff: Drive It on Home
Thank you one and all for joining our romp through the market madness this week!
What do you think about today’s new Great Stuff Pick? Have you been waiting for a way into hydrogen stocks? Or did Nikola’s Hindenburg disaster sour you on the next biggest alternative energy sector?
Drop us a line and let us know your hottest of hot takes.
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Until next time, stay Great!
Editor, Great Stuff