The word “catalyst” gets thrown around a lot in financial writing, but it’s an important word because recognizing what can be a boon for a company is the difference between average returns and market-crushing gains.
You can imagine my excitement then when I recently saw that a storied Silicon Valley leader I have recommended several times has not one, not two, not three, but four big catalysts.
The global chip giant I have in mind recently beat on earnings and raised guidance.
It also hiked the dividend andhired a new CEO.
And if that’s not enough, the company announced an ambitious turnaround plan and is investing $20 billion in its growth.
The effort comes a little more than 50 years after the firm introduced the first microprocessor that is the linchpin for today’s digital revolution.
In fact, this is one of the few companies that still both designs and manufacturers its own chips.
Over the last two weeks we have seen a lot of the euphoria in the SPAC market die down as the Nasdaq retreats from all time highs. This is completely understandable as several merger deals have looked lackluster or had valuations that were not very realistic. This lumped together with the over 300 blank-check companies currently trading has made this a much harder market to trade.
But I’m viewing this more as a major and needed reset giving us the ability to get in on hot companies that are being lumped in with the broader SPAC market. On average the SPAC market was trading at a 25% premium and that has been cut back to under 10%. While stock prices have dropped, more money is in this market than ever before and this just means we need to do our due diligence instead of going into deals blindly and waiting for a pop.
It seems more important right now than ever to let you all know that I still stand by the phrase that is the cornerstone of my investing philosophy; the road to wealth is paved with tech.
With some of the choppy moves we’ve seen across the broader market recently, things might look a bit uncertain, with the broader market falling over 3% between February 24 to 26.
But the thing is, the tech sector is the growth engine of the modern economy generating the new wealth that leads to economic expansion. And, if you want to capture your own share of that new wealth, investing in the high-tech sector is the way to do it.
To see what I mean, just look at things over a longer period. Since the market turnaround on March 16, the broader S&P 500 is up by around 70%, while the iShares Expanded Tech Sector ETF (IGM) has outdone it with gains of almost 93%.
With that in mind, today I want to share with you three tools that can help you ride out the short-term uncertainty, and make it to the outstanding gains that lie in the future, no matter what twists and turns the market might make tomorrow…
Last month I talked to you about my three favorite tech SPACs to watch and since then Altimeter Growth Corp(NASDAQ: AGC), AJAX 1 (NYSE: AJAX) and Reinvent Technology Partners (NYSE: RTP) are down 1%, up 8%, and up 30%. The good part is, we are not done yet.
Both Altimeter Growth and AJAX 1 have not identified an acquisition and their team is working diligently to find a great fit. What I want is what happened to Reinvent Technology Partners, where merger talks around Joby Aviation and Hippo send the stock flying.
I bet that this would happen as I dug into the management team and went with people who I was confident in to make a good deal. Fluctuation before a deal is made is normal and I never worry much about that given the amount of time management has to find a deal.
Outside of digging into management, I also look at another factor. I always ask myself, are there any big investors? Now I don’t have to see them, but it does help in some cases to push me to invest. They are not in it to lose money and the amount they are putting on the line gives me some confidence.
Stocks are off to a wild start this year as the GameStop Corp. (NYSE: GME) saga sent markets into a frenzy.
But this volatility knocked many excellent tech stocks are off their highs for no particular reason. That’s an opportunity for us. This means great stocks can be found at a discount and can make for a great entry point if you might have missed out on a big run up.
I’m looking at companies where the story hasn’t changed, only the share price. These companies are still leaders in the major themes I’ve looked at over the past year. I’m talking about e-commerce, connected TV, and the growth in digital data.
That’s giving you the perfect opportunity to buy these top tech stocks at a great discount…
Right now, seeing what’s going on in the market can make your head spin, but don’t’ worry, because it’s nothing that Strategic Tech Investor can’t handle.
Whenever I can, I like to point out just how important it is to avoid getting swept up in the big media hype that can push the market back and forth on temporary headlines. In fact, it’s my second rule of tech investing, “separate the signal from the noise.”
And wow, is that rule ever coming in handy right now, because we’re seeing headlines coming out now that could push the market any which way.
Let’s start with some good news. So far, three companies, Pfizer Inc. (PFE), Moderna Inc. (MRNA), and AstraZeneca PLC (AZN), have all announced this month that their COVID-19 vaccine candidates are demonstrating 90% efficacy rates in testing. However, it’s still unclear how long it will be until an effective vaccine is widely publicly available.
Not only that, but we are currently in a period of limbo between the Trump and Biden administrations, and the question of a new stimulus package isn’t settled.
We’re also seeing that state-level officials, like Governors Larry Hogan of Maryland and Kim Reynolds of Iowa, have announced new restrictions, with the possibility of more on the way.
With so much news, positive and negative, flooding onto the airwaves, it’s impossible to say for sure what will happen next. Luckily for us, it’s not going to matter.
This election is coming down to the wire, and right now, it could go either way. I wanted to take a break from keeping an eye on results as they continue to roll in to let you all know that, no matter how things shake out, there will be ways to play the outcome to make market-crushing profits.
Joseph Papa was hired to turn Bausch Health Cos. Inc. (BHC) around. Instead, he is breaking it up. But he’s not crazy. He’s caught on to the fact that bigger isn’t always better.
You see, Bausch Health Cos. Inc. (BHC) and its subsidiary, Bausch + Lomb eye care, are two great companies, but together, they aren’t exactly chocolate and peanut butter.
Papa has realized that the only thing worse than no partnership at all is a bad partnership, so he’s letting Bausch + Lomb become its own $3.1 billion business.
This means that both companies will be free to focus on their own business models, their own specialized products, and their own target markets. It’s a move that’s going to create billions in new shareholder value.
And while I applaud the move, I think that there’s a better way to cash in on corporate spinoffs like this one.