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The World’s Best Stocks

July 1, 2021

The S&P 500 closed out the second quarter of 2021 at a record high advancing for a fifth consecutive quarter. Meanwhile the Dow and Nasdaq closed just below records and each of these indexes recorded more than 18 record closes during the first half of the year. Accelerating economic growth is the key to keeping things moving forward.

Clear

Profit From Livestreaming Trend
The S&P 500 closed out the second quarter of 2021 at a record high, advancing for a fifth consecutive quarter. Meanwhile the Dow and Nasdaq closed just below records and each of these indexes recorded more than 18 record closes during the first half of the year. Accelerating economic growth is the key to keeping things moving forward.

Younger Chinese people’s views of the American and the West’s brands are evolving. According to the Global Times, the share of young Chinese people that looked up to the West is down from 37% five years ago to only 8% today.

The share of young Chinese people that look down on the West has more than doubled over the same period, from 18% to 42%. Chinese consumers used to crave Western brands but increasingly, Chinese brands are rapidly gaining market share due to changing perceptions and more savvy social media marketing.

In mid-2021, local brand Babycare sales outpaced Procter & Gamble’s Pampers, and a Chinese beverage company, Genki Forest, eclipsed both Coke and Pepsi. Local cosmetics brand Perfect Diary jumped ahead of Maybelline and Estee Lauder.

Part of this shift is due to a sales technique called livestreaming. If you’ve ever watched the Home Shopping Network or QVC, you know what livestream shopping is about. It takes place online and interactively where consumers can post questions or comments in real time.

China’s livestreamed shopping segment is currently a more than $125 billion industry. It doubled in size from 2019 to 2020. And it’s going to get even bigger. In the U.S., shoppers are only beginning to go livestream shopping.

Last year, our livestream market was worth only $6 billion compared to
e-commerce sales of $861 billion last year. Walmart (WMT) has been hosting livestream shopping events on TikTok so this is clearly a power trend to keep an eye on and invest in early rather than later.

Please join me for the 9th Annual Smarter Investing, Greater Profits Online Conference, August 17-19. We have an incredible lineup of experts ready to share their best picks.

Portfolio Updates
Altimeter Growth Corp. (AGC) shares were unchanged again this week as this SPAC awaits a merger with Singapore’s Grab Holdings expected some time in the fourth quarter. Grab is Southeast Asia’s leading super-app platform over nine million users. Grab offers a wide range of on-demand services in the region, including mobility, food, package and grocery delivery services as well as mobile payments, and financial services in eight countries. I suggest you buy a half position here if you have not already done so. BUY A HALF

Cabot Corporation (CBT) shares haven’t done much for us lately, but we need to have a little patience as third-quarter earnings kick in for this specialty chemicals and materials company. While the company’s shares have surged around 25% over the past six months, the last couple of months have been quiet as we await earnings that are expected to increase 1,800% in the fiscal third quarter.

Cabot’s second-quarter earnings were up a record 79%, year over year. For fiscal 2021, Cabot projects earnings of around $5 a share meaning that the stock is trading at just over 12 times forward earnings with a return on equity of 19%. The stock is an effective hedge on inflation, a play on economic recovery with exposure to the lithium-ion battery sector. BUY A HALF

Cloudflare (NET) shares moved little this week but have made a major move from 66 to 106 since May. The company provides a broad range of network services to businesses in more than 200 cities and over 100 countries. It offers network security, performance and reliability to a growing portion of global web traffic.

The company ended the first quarter with almost 120,000 paying customers, up 34%. I’m going to keep this a hold though more aggressive investors can add to their position. HOLD A HALF

Fisker Inc. (FSR) shares have performed well over the last few months and this week announced the official opening of several Fisker-dedicated operational areas at Magna’s world-class manufacturing facility in Graz, Austria.

A key element to the Fisker story is that it won’t manufacture its own vehicles. Rather, it will use large contractors, such as Magna and Foxconn, to build Fisker’s vehicles. We have to accept that the company will have little or no sales revenue in 2021 and the company’s first product will be launched in 2022. This is an aggressive stock, but I believe the EV market has room for a limited number of custom EV players. BUY A HALF

International Business Machines (IBM) this week inked hybrid cloud deals with global telecommunication giants Verizon and Spain’s Telefonica, as the company that created the personal computer aims to build out 5G and edge networks. “Big Blue” as it is called is still trading just over 13 times forward earnings and 12 times free cash flows, with a 4.6% dividend yield. I encourage you to hold this stock as a long-term conservative play on key technology markets. BUY A HALF

Marvell Technology Group (MRVL) shares picked up another three points this week as this stock demonstrates clear relative strength. Marvell designs, develops and sells a wide variety of semiconductor products that are at the core of 5G-capabable networks.

Its networking business recorded 26% year-over-year growth during the quarter and accounted for 60% of the total revenue. Excluding a recent acquisition (Inphi) contribution, Marvell’s networking revenue was up 21% on the back of growth in the 5G and cloud networking markets. Marvell’s Q2 outlook is $1.06 billion in revenue, up 46% year over year. BUY A HALF

Palantir Technologies (PLTR) shares didn’t do much this week for this software company specializing in big data analytics. Its software is used by government agencies in a wide range of applications. In the recent first quarter report, management disclosed that U.S. government revenue had grown 83% year over year. In recent months Palantir signed various government contracts, such as:

  • $111 million from U.S. Special Operations Command
  • $7.4 million from the CDC
  • $90 million from the National Nuclear Safety Administration
  • $18.4 million from the FAA
  • $32.5 million from the U.S. Space Force Command

The company sees plenty of room to expand into the commercial sector. There is plenty of room to grow as the private sector currently represents just 44% of its business. I encourage you to buy shares if you have not already done so. BUY A HALF

Pinduoduo (PDD) share were up in its first week as an Explorer recommendation. Pinduoduo’s secret sauce in China’s discount marketplace is a platform that allows shoppers to team up for group discounts. This strategy relies on users sharing links across social networks in China. The company continues to post impressive growth. Pinduoduo’s revenue surged 97% in 2020, then jumped another 239% year over year in the first quarter of 2021 to reach $3.3 billion. Given Pinduoduo’s strong growth numbers, I suggest that investors comfortable with China risk begin with a half position. BUY A HALF

Sea Limited (SE) shares over the last month have gone from 255 to 275 and over the last six months have moved from 196 to 275. We have taken profits several times over the past two years with this impressive growth stock. It benefits greatly as a fintech leader in the fast growth markets of Southeast Asia. BUY A HALF

Taiwan Semiconductor (TSM) shares broke 120 this week, still short of the 2021 high of 138. The company’s strength and profits primarily come from high-end processors where it has pricing power due to its dominant position. Recently, the company announced it has started construction at a site in Arizona where it plans to spend $12 billion to build a computer chip plant. I encourage you buy this dominant, strategic semiconductor stock if you have not already done so. BUY A HALF

Virgin Galactic (SPCE) shares moved from 40 to 46 as Richard Branson’s Virgin Orbit delivered satellites from three countries into space on Wednesday, its second successful rocket launch from a plane. The space sector is becoming increasingly crowded so I’m keeping this stock a hold for now but depending on when you purchased the stock, feel free to take partial profits after this 2X move in one month. HOLD A HALF

XP Inc. (Nasdaq: XP) gave up three points this week. XP is a leading technology-driven platform providing investment and financial services in Brazil. In its last reported quarter, XP reported a more than doubling of adjusted first-quarter profit as the company added about one million active customers in the first three months of 2021, a 47% jump, while assets under custody surged 96%. Adjusted net income rose 104% to the equivalent of $155.6 million. This is an aggressive pick in a growth sector that is somewhat insulated from the political and economic turbulence in Brazil. I encourage you to begin a position if you have not already done so. BUY A HALF

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