Total Eclipse of the Chips
Once upon a time there was light in Intel Corp.’s (Nasdaq: INTC) life. Now it’s only falling apart.
There’s nothing we can say, CEO Lisa Su’s Advanced Micro Devices Inc. (Nasdaq: AMD) has all the heart.
On Tuesday, AMD released its latest line of Ryzen PC central processing units (CPUs) — and a new graphics processing unit (GPU) — during Su’s Computex keynote speech in Taiwan. For the first time in their decades-long rivalry, AMD has taken the lead in innovation away from Intel.
According to Su, the new AMD processors outperform comparable Intel processors by more than 16%. The kicker … the new Ryzen chips will sell for half the price of Intel’s.
The news left investors and techies crying: “I need you more tonight!”
Investors sent AMD stock soaring nearly 10%, while PC builders, gamers and techies worldwide will be clamoring for the new chips.
Analysts at ratings firm Stifel had this to say: “We expect AMD to accelerate its PC market share gains due to higher performance, lower power usage, lower cost and ease of upgrade (same CPU socket at past generation Ryzen).”
One thing is clear: For AMD, forever’s gonna start tonight.
For anyone who’s been following AMD for the past couple of years, this week’s big reveal was not surprising news. AMD’s been eating Intel’s lunch for some time with its new line of faster and cheaper processors. Furthermore, the stock has surged more than 110% in the past year.
If you’re looking for short-term gains … you just missed them. However, if you’re looking to invest for the long term in the company that is going to take Intel’s top spot, AMD is more than reasonably priced right now.
Bottom line: Buy Advanced Micro Devices.
The Good, the Bad and the Ugly
The Good: Beyond Impossible
Have you met the kings of meatless meat? Beyond Meat Inc. (Nasdaq: BYND) and Impossible Foods Inc. are tearing it up right now. Beyond is the undisputed king of this year’s IPO class — up more than 260% since its IPO. The meatless wonder also just announced a processing plant in the U.K. and garnered an outperform rating and $97 price target from JPMorgan.
It’d be impossible to top that, right? Right. Impossible Foods just boosted Burger King traffic by 18% with its Impossible Whopper. The company is also in talks with Little Caesars to put meatless sausage on its pizza offerings. Impossible just raised $300 million from venture capital, putting its valuation around $750 million. But — and here’s the kicker — the company is in no hurry to go public despite IPO hype.
“We believe in self-reliance. Being ready to go public is a priority for the company because we need to be operating at the highest level of rigor,” CFO David Lee told Reuters. “But we are not in a rush, nor are we announcing an IPO filing.”
Imagine that … a company working on building revenue and value before going public! Not losing billions and using an IPO to cover it up, like Uber Technologies Inc. (NYSE: UBER) and Lyft Inc. (Nasdaq: LYFT).
The Bad: 99 Retailers Left in the Mall…
Ninety-nine retailers left. Amazon comes ’round and closes one down, 98 retailers left in the mall.
The data is in for 2019, and we’re nearing 2017’s record high for retail store closures. Data from CoreSite Research indicates that more than 7,150 closures have been announced by U.S. retailers this year. This year’s list is a veritable who’s who of U.S. retail, including Bed Bath & Beyond, Pier 1 Imports, CVS, Gap, Family Dollar, Party City and Victoria’s Secret.
To be honest, though, once Victoria’s secret got out, it was just a matter of time.
The surprising thing isn’t brick-and-mortar closures, but that the world’s leading online retailers Amazon.com Inc. (Nasdaq: AMZN) and Alibaba Group Holding Ltd. (NYSE: BABA) are spending big on their own brick-and-mortar storefronts. If you’re a masochist and still looking to invest in retail, you can’t go wrong with AMZN and BABA.
The Ugly: Weaponized Rare Earth Elements
China appears to be readying the big guns in its trade war with the U.S. Rare earth elements are the lifeblood of the technology sector. AMD can’t make its fancy new Intel-thumping chips without key rare earth components. In fact, without these key rare earth metals, Internet of Things development grinds to a halt, batteries stop working, fighter jets stop being produced and *gasp!*there are no new smartphones!
Right now, China supplies a whopping 90% of the global production for rare earth metals. And the U.S. relies upon China for 80% of its own rare earth imports. Many economists have speculated that China would target Apple Inc. (Nasdaq: AAPL) in retaliation for President Trump’s banning of Huawei products. Now, however, rare earth elements appear to be on the chopping block.
Increasing tariffs on these elements could devastate aerospace and defense, American tech and manufacturing industries.
For investors, there are opportunities. Chinese President Xi Jinping’s recent visit to JL Mag Rare-Earth Co. sent the company’s stock skyrocketing. But not everyone can invest in Chinese companies (or wants to).
If you’re looking for investing opportunities in natural resources to profit from this ugly development, Matt Badiali, editor of Front Line Profits, has you covered [Note: link to FLP minerals promo].
Is it 2015 again already? I remember climbing that big market hill in 2017. I guess it’s time for the rest of the rollercoaster. Time to buckle up!
It’s Not Just About Being a Vegan
It’s time for a bit of a rant.
There’s a misconception in the financial media right now that I think needs to be cleared up.
There’s no doubt that Beyond Meat is the hottest IPO of 2019. The company’s competitor, Impossible Foods, may be the next most anticipated IPO. The media would have you believe that veganism is the sole cause of their rise to fame and profits. Even analysts are touting the rise and popularity of vegan diets as the big growth opportunity for both companies.
Now, I don’t want to disparage any vegans out there, but this is simply not true.
Sure, there was a significant unmet need for a growing and popular consumer diet choice. But I highly doubt that vegan fast food was high on the list of concerns. Nobody was clamoring for an Impossible Whopper or vegan sausage on their pizza. In fact, the very idea of “vegan fast food” itself sounds like an oxymoron.
The real reason that Beyond Meat and Impossible Foods have such market potential lies with the shift in public opinion toward dealing with climate change.
According to the Environmental Protection Agency (EPA), the agriculture industry was responsible for 9% of all U.S. greenhouse gas emissions. And that’s just in the U.S. Globally, agriculture, forestry and land usage account for 24% of total greenhouse gas emissions.
You won’t believe how much methane a single dairy farm puts out in a year. I’ve cleaned out cattle holding pens before … you don’t want to go there.
Unfortunately, consumers have very few options when it comes to making their voices heard on the issue. Speaking with their dollars is the best way to force the industry to change. Just look at the impact that Tesla Inc. (Nasdaq: TSLA) has had on the global auto industry.
So, while the financial headlines and talking heads in the analyst community continue to rave about the rise of veganism, know that the real impact is likely operating on a much bigger … global scale. On that note, it’s worth investing in Beyond Meat and Impossible Foods’ eventual IPO to profit from this planet-conscious movement alone. The health benefits are just icing on the cake.
Until next time, good trading!