With the ongoing shortage, it’s been “chips this” and “semiconductors that.” Believe me, I understand if you’re burnt out, but we’re here to make money on this $430 billion industry.
Today, I’m going to tell you about a tech firm that’s virtually an ETF because of its wide-ranging services. And unlike the chip manufacturers we’ve discussed before, they’re fab-less, or factory-less. In other words, they operate on the highly lucrative theoretical side of the chip industry and save millions on overhead.
Think of electronics as like a great rock band. All the players have to play the right parts at the right time and this is what the company does. Keeping with this metaphor, SITM is basically Jerry Garcia. No flash. Just pure rock and roll.
Based on their own humbly conservative estimate, SiTime (nasdaq: SITM) has a total market worth of $8 billion. Their chips can be found in everything from smartphones to missiles. Their rather arcane solutions like network synchronizers, oscillators and clock generators have applications in platforms like Internet of Things, 5G, automated driving, high-end missiles and industrial applications. I’m talking about 250 distinct applications and they’re looking to expand that number to 500 and even 1,000.
Most recently, SITM saw a stunning 429% quarterly EPS growth and are projecting profit gains of 400% on the back of a 100% increase in sales. Again, that’s coming from the highly prudent analysts at SiTime.
This is the summer of big tech, and at this point, the broader market is starting to catch on to that. The irony is that big tech companies can beat formal expectations and not see much of a jump to their stock prices. They just get too much scrutiny to pull off an upset that really wows the market. To see a real sudden jump, the quarterly results need to be a surprise. To cash in on this kind of surprise, you have to be in the right place at the right time, and it takes a strong investment thesis to maximize your chances of being there. I talk about just that on Chuck Jaffe’s radio show.
The streaming wars are raging, and investors are starting to sense the opportunity behind this exciting trend.
Netflix Inc. (NFLX), Walt Disney Co.’s (DIS) Disney Plus, Hulu, Apple Inc.’s (AAPL) Apple TV Plus, Comcast Corp.’s (CMCSA) Peacock, and Viacom’s (VIAC) CBS All Access are just a few of the many connected TV (CTV) services vying for supremacy.
Will Disney Plus take away business from Netflix? Will Apple put more weight behind Apple TV Plus? Does Comcast go all-in on Peacock? I admit I would like to know the answer to these questions, but without a crystal ball, no one can tell the future. But one thing I do know is that CTV is here to stay. It has been made clear by the companies I’ve just listed.
One company that I see profiting no matter who wins the streaming war is Trade Desk Inc. (TTD).
See, almost every business in the world needs to advertise to sell their products. It’s everywhere, from billboards to our social media stream, and from newspapers to TV. Everywhere we turn, we are likely to see advertisements, so it’s no wonder $1.4 trillion was spent last year on advertising and marketing globally. In fact, every time you sit down to watch 30 minutes of TV, you get roughly six to seven minutes of commercials. That means 20% of your time is spent watching commercials that companies are paying a lot for and will continue to do so as a preferred way of advertising. Just imagine, during the Super Bowl, advertisers are spending an average of $5 million per ad.
This all adds up to an astounding $230 billion spent a year of TV advertising according to IDC.
That’s why it makes sense to target a company essential to that as streaming services grow.
This month, I’m back with the second installment of the Strategic Tech Investor Monthly Mailbag, where I’ll be taking a look at some of the most pressing questions I’ve received about the direction of the economy.
I talk about the post-COVID future of Shopify Inc. (SHOP), the new rise of retail investors, the massive competition for an effective vaccine, and the future of the entire tech sector.
You can click on the video image below to hear all about what I have to say. And, for next month, if you have any questions about tech investments and the tech-driven market, leave a comment on this video for a chance of having it featured on next month’s mailbag.
The leading names in tech are continuing their legacies out outstanding gains that drive the entire market along with them, but making the best possible return takes more than a play on the clear front runners. Instead, the savviest investors will look for high-growth potential within the unstoppable trends. Amazon.Com Inc. (AMZN) is facing strong prospects, but Shopify Inc. (SHOP) is where the real potential for market-crushing growth lies. Meanwhile, as tech continues to lead the economy, and more and more parts of everyday life go digital, the chip sector is still at the heart of practically everything, and prepared to make its own gains from nearly any high-tech development imaginable. The outlook for the tech sector as a whole remains good. Click here to watch
Without semiconductors, there is no American economy. That’s because the American economy is driven by tech, and tech is driven by semiconductors. After an outstanding jobs report, big media is finally coming around to my point of view that tech investors have lot of upside ahead, and very few reasons to be worried. In times like these, it’s important to look for the pick-and-shovel plays that will be supporting development in as many breakout sectors as possible. The right semiconductor plays will be able to profit from the rollout of 5g wireless, along with advances such as cobots, robots that cooperate with humans in the workplace. With new breakouts just around the corner in 2020, you’re not going to want to miss the firms that will be holding it all together. Click here to watch.