I like to talk about pick and shovel plays because they are often the best way for you to claim a lucrative stake in a wide swath of a high-growth tech sector.
And I like to talk about just how much tech serves as the driving engine of the modern economy.
So, you can just imagine my excitement when I learned that Levi Strauss & Co. is embarking on a massive new $210 million digital spending program.
What we have here is a pick and shovel play, dating all the way back to the original California Gold Rush, where we get the term. And that company has decided it needs to go high-tech.
That means digital offerings, AI, and data analytics needed to thrive in the modern retail world where mobile and online shopping rule.
It’s all part of a sector that MarketsandMarkets says will be worth $1 trillion by 2025 as thousands more companies engage in digital transformation from legacy computer programs or paper-based systems.
And I have uncovered a great supplier firm that can help firms like Levi’s make the journey smoothly.
Let me show you why this digital tech expert has such incredible potential for growth…
The Digital Gold Rush
Now then, I’ve been familiar with Levi’s for decades, having worn their jeans off and on since I was a teenager.
And shortly after I moved to Silicon Valley 37 years ago, I had them in mind when I valued tech investments.
See, I remembered the story of how Levi’s set up shop to serve gold and silver miners back in 1853.
It was one of the great examples of how companies that sold supplies like picks, shovels, and clothing made much more money than nearly all the miners trekking to the Golden State.
Now, Levi’s proves the importance of finding great tech supplies. There is simply no way the San Francisco firm can make all those inroads on its own.
That’s why today, we’ll talk about the pick-and-shovel play of this modern digital transformation gold rush.
And it really is something akin to a gold rush: according to MarketsandMarkets, the digital transformation market globally is set to soar from $469.8 billion last year to over $1 trillion by 2025.
That’s a compound annual growth rate of 16.5%.
And it’s where CDW Corp. (CDW) comes in. It’s a provider of all sorts of IT solutions to businesses, government agencies, educational institutions, and the healthcare space across the U.S., UK, Canada, and seven other countries.
Now, companies going digital and taking their operations online is just one facet of a much larger trend. Even money itself is transforming itself for the online space, and this new kind of money, cryptocurrency is creating an incredible profit opportunity.
This new sector is already offering three buying opportunities that could multiply your investment by as much as ten times by the end of the year. You can see what I’m talking about right here.
A Sector of Opportunities
It’s come a long way from its humble origins in 1984 when founder Michael Krasny sold his computer and printer under the name “Computer Discount Warehouse.”
Today, CDW employs around 10,000 people worldwide, with two-thirds working with CDW’s customers. Their job is to offer over 100,000 different IT products and services from over 1,000 brands, to CDW’s 250,000+ customers.
A quarter of a million customers may sound like a lot, but the truth is, that’s just a fraction of CDW’s total addressable market.
See, the IT reseller space is very fragmented, so much so that CDW and the next three largest software product and service resellers all together cover less than one-tenth of CDW’s $360 billion total addressable market.
Of course, with over 1,000 partners whose software and services CDW sells, the firm has a leg up over its competitors.
For anyone looking for an IT solution, CDW’s partnerships make it a one-stop IT shop for clients. It’s a global high-tech ecosystem.
And those partners – the 1,000 makers of “digital picks-and-shovels,” as it were – love working with CDW, because it puts them in front of over 250,000 customers.
So, it’s no wonder CDW’s stable of partners includes heavyweights such as Intel Corp. (INTC), Apple Inc. (AAPL), NVIDIA Corp. (NVDA), Microsoft Corp. (MSFT), and Alphabet Inc.’s (GOOGL) Google, just to name a few.
If it’s a tech company with any software or hardware offerings, chances are they work with CDW to get their products to customers.
And CDW know the huge demand coming for companies and governments looking to move from paper-based or legacy software processes over to modern, digital solutions.
Taking the World Online
The firm is working on Digital Transformation solutions for several sectors.
For example, in healthcare, CDW enables providers, clinics, and hospitals to reduce costs, give physicians and nurses more time with patients, while also improving patient care.
A key way to do this is to usher in the Internet of Things in the healthcare world. By putting wireless sensors on medical equipment such as infusion pumps, monitors, even wheelchairs, CDW allows hospital workers to instantly know where the closest medical device they’re looking for is.
That cuts down on time looking for devices, reduces the need for redundant gear, and improves outcomes for patients to boot.
Or take retail, where CDW helps companies to install RFID tags on products and smart sensors on shelves. That way the store always knows who’s interested in what, what products are on hand, and what needs to be reordered.
Combine that with employee alerts and mobile payment terminals, and CDW can even let stores know when a customer needs help deciding what to buy – and whether a personalized discount might help convince them into buying.
These are the kind of techniques that e-commerce has been using for years in our online shopping carts to great effect. Now CDW is bringing it to retail, leveling the playing field.
I have gone through CDW’s financials and now project per-share earnings growth of 22%. At that rate, they would roughly double in 3.25 years.
With growth like that, this play on the digital transformation gold rush can mine profits for you for many years to come.
Cheers and good investing,
Michael A. Robinson