Portfolio Changes: None
The Market Gains Some Footing
Explorer stocks were all up this past week with the exception of Ford (F) as inflation numbers out this morning are expected to show consumer-price inflation picked up again in January, to an annual pace of 7.2%.
While the dominant force in financial markets these days is the increase in inflation and interest rates, after a bout of weakness tech stocks rebounded yesterday. While all three indexes are up this week so far, they are in negative territory year to date. We will likely see periods of volatility throughout this year, especially as the Fed rolls out its tightening cycle.
Somewhat encouraging is that JP Morgan strategists have identified what they say is a strong indicator that stock markets have gained their footing and may be poised to rally. The buy signal is triggered when the volatility index (VIX) rises by more than 50% of its 1-month moving average, which it last did January 25. Specifically, data shows that the VIX signal has been triggered 21 times since 1990, with the S&P 500 gaining an average of 9% in the six months afterwards.
Relative to stocks, the crypto market has been even rockier. Since the start of the year, Bitcoin has pulled back 10%, and is down roughly 35% from its all-time high of $67,734 in November 2021.
Some pundits describe Bitcoin as “digital gold” or an option on digital gold, as it could go to zero if the era of digital finance were to crash. Just for comparison, during the inflationary 1970s, the price of gold surged nearly tenfold from its 1970 low ($256) to a peak of $2,348 in February 1980. Keep in mind that thus far, Bitcoin is four times as volatile as gold.
We got some startling news on the China front this week. A quantum computer made by researchers in China has solved a calculation in 4.2 hours that would take a normal computer thousands of years. This “quantum computational advantage” was made using six more quantum bits (qubits) than the computer used by Google in 2019.
Portfolio Updates
Exscientia (EXAI) shares broke above 20 this week as three out of four Wall Street analysts rate the stock a buy or strong buy and the other a hold. Founded in 2012 and based in Oxford, England, Exscientia is using artificial intelligence to develop new medicines and the company is turning this into explosive revenue growth. Exscientia is a rapidly growing pipeline of more than 25 projects in motion with the goal of drug discovery in ovarian and hematological (blood) cancer. You still have an opportunity to get in on the ground floor with the stock still below its IPO price if you have not yet done so. BUY A HALF
Fisker (FSR) shares were up just short of 10% this past week as the company opened an office in Europe as a staging ground for introducing its Ocean SUV later this year—and Europe is far ahead of America in terms of EV sales. This remains a speculative stock but I confirm a buy rating on Fisker for new investors as the market looks forward to the Ocean going into production in the fourth quarter of 2022. If you are bullish on EVs, Fisker offers an intriguing play on the mass affluent EV market with its stylish, eco-friendly SUV and smart Apple-style manufacturing strategy. BUY A HALF
Ford (F) shares lost a little ground despite last week’s announcement that sales of its electric and hybrid vehicles rose 167% in January. The new all-electric Mustang Mach-E SUV made up 18% of the total. Ford’s overall U.S. sales have been relatively flat and the market is betting that the company’s all-electric version of its bestselling pickup truck, the F-150 Lightning that’s due to hit the market this spring, will be a big win. Ford remains a conservative way to play the ongoing EV surge so I encourage you to buy if you have not already done so. BUY A HALF
Marvell Technology Group (MRVL) shares had another good week, up five more points after picking up five points the previous week. Despite taking a hit in January, this is a growth stock that is demonstrating some relative strength in a tough tech market so this semiconductor stock is still a buy. BUY A HALF
Novonix (NVNXF, NVX) shares got back to 5 this week, up around 10% for the week as NVX began trading on the Nasdaq. Each ADR represents four (4) fully paid shares of Novonix so if you own the NVNXF shares, you don’t need to do anything since the shareholder rights are the same.
Based in Australia, this technology and advanced materials supplier is focused on synthetic graphite for the electric vehicle and storage battery industry – two growth markets. Novonix graphite gives America a key domestic source with the bonus of a higher quality than Chinese graphite. This is an aggressive idea but it remains undervalued and a buy. BUY A HALF
Oracle Corporation (ORCL) shares were up modestly this week. Oracle offers us cloud-computing high growth and margins coupled with a reasonable price. Oracle cloud services provide organizations with a single point of contact, faster computing speeds, plus lower overall costs. This allows clients to move critical workloads in weeks, or even days, instead of months. This stock is well suited to the current volatile tech markets so I encourage you to buy if you have not already done so. BUY A HALF
QuantumScape (QS) is the most recent Explorer recommendation and was up this week to reach 17.4. Quantum is developing a solid-state battery more efficient than their lithium-ion cousins. Even better, these batteries will be much cheaper than lithium-ion ones once production scales up because of fewer and cheaper materials.
Volkswagen has invested $300 million in QuantumScape and set up a joint venture to make solid-state batteries. A recent Fortune Business Insights report predicts that the global electric vehicle battery market could grow from about $27.3 billion in 2021 to more than $154.90 billion by 2028. The company has also branched into a much larger and fast-growing energy storage market representing a potential $385 billion global opportunity. QuantumScape’s stock price peaked in late December 2020 at an all-time-high of 133. The current price provides us with an attractive entry point into this speculative stock. BUY A HALF
Sea Limited (SE) shares had a great week, exploding from 143 to 174. This is a $100 billion company putting up triple-digit growth rates. Overall, revenue for the most recent quarter grew 122%. Orders on Shopee, which is their e-commerce platform, grew 123%. Gaming growth is also strong.
But Sea stock is trading at nearly 17 times Sea’s trailing 12-month revenue. That’s way down from last fall but it’s still a very high price to pay for the shares. That said, we have taken periodic partial profits along the way so I still shave this stock as a buy with Sea’s next earnings report expected on March 1. BUY A HALF
Veeco (VECO) shares inched up from 27 to 28 and will report financials on February 16. This quality company makes the equipment and technology essential for the chip fabrication game, a business with technological and high capital barriers to entry which leads to high margins and return on equity. Veeco has a high quality balance sheet and I recommend that you acquire shares up to a price of 30, if you have not already done so. BUY A HALF
| Stock | Price Bought | Date Bought | Price 2/10/22 | Profit | Rating |
| Exscientia (EXAI) | 22 | 1/20/22 | 22 | 1% | Buy a Half |
| Fisker (FSR) | 15 | 2/4/21 | 13 | -16% | Buy a Half |
| Ford (F) | 20 | 11/23/21 | 18 | -9% | Buy a Half |
| Marvell Technology Group (MRVL) | 50 | 4/1/21 | 78 | 56% | Buy a Half |
| Novonix (NVNXF) | 2.24 | 8/6/21 | 5 | 123% | Buy a Half |
| Oracle Corporation (ORCL) | 94 | 11/11/21 | 83 | -12% | Buy a Half |
| QuantumScape (QS) | 16 | 2/3/22 | 18 | 10% | Buy a Half |
| Sea Limited (SE) | 15 | 2/8/19 | 171 | 1049% | Buy a Half |
| Veeco Instruments Inc. (VECO) | 23 | 9/10/21 | 28 | 22% | Buy a Half |