2 stocks ready to regain momentum

Good morning!

The markets are poised for a drop following a super-hot CPI report which shows consumer prices have jumped 6.2% in October. It’s the biggest jump in more than 30 years yet another proof point highlighting the delusional nature of the Fed’s ongoing transitory narrative.

Here’s my playbook.

1 – Tesla shareholders knew what they signed up for

Brutal day yesterday when shares dropped ~12% in a session after CEO Elon Musk said he’d sell if the Twitteratti said so. People are pointing fingers saying it’s irresponsible, improper, etc. Others are simply angry that the shares could drop again.

A little perspective is in order.

First, seems to me that nobody was complaining when Tesla jumped 10% in a day or three because of a tweet.

Second, it’s not like shareholders didn’t know what they signed up for when they bought in.

Third, stocks rise and fall all the time. Tesla is up more than 3,000% in the past 5 years. A 12% drop is nothing more than a speed bump in the scheme of things.

My target remains $2500 a share 24-36 months from now for reasons I laid out with the fantastic Dagen McDowell this morning on the Fox Business Network. (Watch)

I’ll be “laddering in,” a pro-grade technique I shared with the One Bar Ahead™ Family yesterday in my weekly update. (Get access immediately).

2 – How I see Rivian

The hot Amazon-backed EV company is scheduled to go public at a jaw-dropping $66.5 billion valuation, which is about the size of Honda and BMW.

Should you buy?

I’m planning to.

First, Amazon is and will likely be the biggest customer for the foreseeable future with more than 100,000 vans ordered so far for their last-mile delivery fleet. Team Bezos also has another 50,000 trucks pre-ordered at roughly $75k a piece. That’s roughly $13bn in revenue over the next 8 years if my back of the envelope calcs are correct.

Second, critics including CNBC’s Jim Cramer charge that’s ridiculously low revenue for the valuation, but I think that’s off base because you can’t apply conventional thinking to breakthrough companies.

Third, EV’s will play a key role in our future whether people are ready for them or not. The best sellers and the best EV investments are NOT going to be companies that used to produce gas cars or which are converting to EV’s because it’s cool or politically expedient. The best – like Tesla and now Rivian – will build only EV’s from the start. They have better flexibility and scalability, with none of the legacy costs, tooling, manufacturing etc holding them back.

I think it’s worth a nibble then building a position over time, using proper position sizing to enjoy the ride – pun absolutely intended. (Read)

3 – China’s charm offensive continues

China now wants to work with the US on the condition of “mutual respect.” That’s code-speak for “Xi wants rules that benefit China, allow espionage, mandate technology transfer and which will create the appearance of working together.” I hope Western politicians are not stupid enough to fall for it (again) but I’m not holding my breath. (Read)

And yes … you DO want to own the digital Yuan when you can for reasons that I laid out in the June issue of One Bar Ahead™.

4 –This stock rose 3,025% after Wall Street analysts said it would crash

Palantir shares are down again after RBC downgraded the stock and has cut price targets to $19 from $25 citing slowing growth of “only” 35%. Before you pitch a fit, remember that Wall Street analysts are bought and paid for when it comes to targets, and are almost never held accountable and are regularly in firm command of the obvious. If they’re saying lower prices ahead it’s because there’s probably somebody in the wings who wants to buy. Either way, $19 is a gift if it gets that low. (Read)

BTW, the headlines were very similar back in 2018 when Tesla shares traded for around $300 and I said Tesla would hit $1,000 on stage during a testy debate with a billion-dollar asset manager. Not for nothing, but a mere $1,000 invested in Tesla just 5 years ago would be worth $31,286 a week ago after enjoying a staggering 3,025% return.

$50 a share for Palantir is coming.

5 – Apple isn’t getting into crypto … but will

CEO Tim Cook played down the possibility but mark my words, the move is coming. Last April/May, I told you about a job board posting I spotted for a business development manager with cryptocurrency expertise. Apple’s ecosphere continues to grow and including crypto is a logical development.

They’re just going to let others make the mistakes first and will swoop in when they know they can do it the right way. (Read)

Bottom Line

There’s a lot of grumbling this morning because the markets are pulling back a bit.

I get that.

It’s easy to get upset when the markets do not match your expectations or specific stocks go against you. But letting that happen is one of the biggest mistakes any investor can make.

Focus on the path forward, on winning, on getting the results you want!

You got this – I promise!


Keith