Friday Four Play: Shiny Happy People Trading Stocks
It’s such a bright and fuzzy day on Wall Street, isn’t it?
We’ve got “warmer feelings” and “good things” happening with China. It’s just like “the Old Days,” according to President Trump.
I think we all need to take a moment, put some flowers in our hair, sit down in a drum circle and sing “Kumbaya.”
All of a sudden, I find myself in love with the world…
That, dear readers, is how I imagine Wall Street today. It also felt kind of icky to write. I need a shower now … ew.
I make fun, but there is some genuine hope in the market today. The Dow rallied more than 400 points early in the day, an indication of soaring bullish sentiment and hopes that a trade deal with China might actually happen this time.
Call me a cynic — a doubting Thomas, if you will — but I’ll reserve my overhyped bullishness for when a trade deal arrives and I can actually read through the details.
If a trade deal does arrive (hallelujah!), the one sector you want to invest in — you need to invest in — is tech. Specifically, the semiconductor-heavy Internet of Things (IOT) market.
Once the trade floodgates open, chip stocks struggling with tariffs due to Chinese supply chain woes are going to soar.
It just so happens that Banyan Hill expert Paul has an investment strategy designed to take advantage of just this scenario.
So, you have to ask yourselves, Great Stuff readers: Are you down with IOT?
If your answer is: “Yeah, you know me!” then you need to get into the market that will be more than seven times bigger than personal computers, tablets and smartphones … combined!
And now for something completely different … here’s your Friday Four Play:
No. 1: New Tricks
It seems you can teach an old dog new tricks.
Enterprise software firm SAP SE (NYSE: SAP) was founded way back in olden times — 1972, to be exact. I hear the first computer it wrote software for was an abacus!
(That’s not even possible, Great Stuff…)
Despite its age, SAP has quickly learned the modern software market’s tricks, including software as a service (SaaS), otherwise known as the cloud.
In fact, SAP just released preliminary third-quarter results that show its cloud revenue soared 37% in the past three months. That cloud growth underpinned a 28% jump in earnings to 1.04 euros per share and revenue of 1.79 billion euros. Both figures topped Wall Street’s expectations.
What’s more, SAP reaffirmed its full-year outlook. SAP’s shares are up roughly 10% on the news.
But good news sometimes comes with a darker lining. SAP CEO Bill McDermott is stepping down immediately. Bill will be replaced by co-CEOs Jennifer Morgan, head of SAP’s cloud division, and COO Christian Klein.
In a heartfelt statement, supervisory board chairman Hasso Plattner said: “SAP would not be what it is today without Bill McDermott.”
Great, now I’m verklempt. Talk amongst yourselves. I’ll give you a topic: Rhode Island is neither a road nor an island — discuss.
No. 2: Dyson Bites the Dust
Electric vehicle (EV) investors … are you ready? Hey, are you ready for this? Are you hanging on the edge of your seat?
Another EV maker bites the dust.
This morning, Dyson Ltd. scrapped its $2.5 billion EV project. Yes, that Dyson … the vacuum cleaner maker with the “wind tunnel technology.” Apparently, being good at sucking doesn’t translate well into making cars.
According to billionaire owner James Dyson, the company couldn’t find a way to make a commercially viable vehicle. Per my wife, they don’t make commercially viable vacuums either. (She’s a Kirby fan … but let’s not go down that rabbit hole today.)
Dyson marks the second struggling EV maker in as many months. You may remember back in September that Nio Inc. (NYSE: NIO) — the “Chinese Tesla” — reported an 80% surge in losses. The company even received $1.45 billion in aid from the Chinese government!
As it stands, Tesla Inc.’s (Nasdaq: TSLA) competitors are dropping like flies. It’s almost as if it’s hard to mass-produce cars or something.
It’s why, when Tesla does finally turn a profit, it will be a huge day for the company — and for investors who stuck out all the negative financial media and doubting analysts.
Hang in there, Tesla bulls, your time is coming.
No. 3: Economic Nuts and Bolts
If you were worried about an imminent U.S. recession, Fastenal Co.’s (Nasdaq: FAST) earnings report this morning should ease your fears a bit … but just a bit.
The nuts-and-bolts maker handily beat both top- and bottom-line third-quarter expectations this morning. The company posted earnings of $0.37 per share on revenue that rose 7.8% to $1.38 billion.
Fastenal’s results are often seen as an indicator for manufacturing strength. After all, without nuts and bolts, everything just falls apart.
But all was not rosy in Fastenal’s report. The company noted that it saw a “general slowing” in the second quarter that extended into the third.
However, investors have so far overlooked warnings of “general slowing,” sending FAST’s shares up more than 16% today. My advice is not to chase this rally right now. If you want in on FAST, wait for a pullback in the stock to the $35 region and look for a period of consolidation.
No. 4: Bang and Blame
Oil prices are almost never stable. There’s always someone with a drone or a rocket launcher looking to take out production and tankers in the Middle East.
Which is where we find ourselves today. The Iranian oil tanker Sabity was reportedly hit by missiles. Those missiles came from the Saudi Arabian port of Jeddah, according to Iranian state-run IRNA news.
Setting the reliability of Iranian media aside, someone hit an Iranian oil tanker and it sparked a surge in oil prices. The November oil contract has surged more than 1%, driven by fears of heightened Middle East tensions.
After last month’s drone attacks on key Saudi Arabian oil production facilities, those tensions are already running high. Traders fear that more supply disruptions could be on the way.
As Banyan Hill expert Matt Badiali puts it: “We got lucky. Saudi engineers restored the oil supply within days. We narrowly avoided catastrophe — this time.”
But what about next time? (And there will be a “next time,” as today’s missile attack shows.)
In the latest edition of Real Wealth Strategist, Matt shows you how you can prepare for the next spike in oil prices and the potential for gasoline rationing … and get paid for it!
Great Stuff: We’re All Fine Here. How Are you?
We’ve been kind of cooped up here at Great Stuff this past week. “All China, all the time” is kind of wearing thin.
So, we’re stepping out of our cubicles to see how you’re doing.
Maybe we can help. Maybe we can’t. Maybe we’ll just point and laugh.
Either way, we all need a breath of fresh air after this week of trade wars.
Drop us a line at GreatStuffToday@banyanhill.com and let us know how you are holding up in this crazy market.
Me? I’m off to Wisconsin this weekend for family, beer and cheese. If that’s not a wonderful trio, I don’t know what is.
Until next time, good trading!
Great Stuff Managing Editor, Banyan Hill Publishing