Howdy everybody. Today, let’s do a special edition of the chat focusing on individual stocks. Have you been looking at or already own a stock and want my opinion on it?
Q. I like most of your drone stocks but Cody you’re so negative everyday on the markets and say this bubble will pop next year. How are we going to make money on these stocks and why should we be buying them since this market will nose dive like you say next year. To me it doesn’t make any sense. Can we be nimble enough to get in and get out then back in again?
A. Great question. I don’t know when the ongoing bubble-blowing bull market will pop or what will actually cause it to pop. I am doing my best to look out over the next year or two and get a feel for where the economy, earnings and stocks and other financial assets are headed, but when it comes to investing, I want to just slowly scale into the most revolutionary stocks on the planet and use tranche-trading to maximize my gains and minimize my risks over the next decade or two. If and when the markets do crash, which could be another 3 or 5 years out for all I know, I expect I will have navigated it by having lots of cash on the sides to continue building my favorite revolutionary stocks. Longer-term I think we’ll have another $GOOG and $AAPL kind of 10-100x gains in some of our stocks, and that’s the reason I risk my hard-earned capital to begin with.
Q. Cody, what do you think about this new virtual reality Samsung product that will supposedly wreck $AAPL like everyone is saying.
A. I think Marketwatch just did a great job of “Click-baiting” with that Samsung’s Apple Killer Product headline. It should be a very cool device, but it’s irrelevant to $AAPL’s actual earnings prospects, etc.
Q. Cody, what do you think of $NXPI?
A. I wrote this in 25 Stocks for the Wearables Revolution, which you get for free as a subscriber to TradingWithCody.com. “NXP has the small mission of trying to connect: Energy Efficiency, Connected Devices, Security and Health through their chipsets. Really, what that means for Wearables Revolutions investors is that they are one of the leading providers of secure connections for a car systems, the limited existing markets for wearables, and the Internet of Things. Industries that NXP sells into includes automotive, security, connected devices, lighting, industrial and infrastructure. The company’s ten largest customers: Apple, Bosch, Continental,Delphi, Gemalto, Giesecke & Devrient, Huawei, Nokia, Siemens Network, Samsung and ZTE. NXP’s got topline growth and expanding margins and if they can continue to develop leading edge connectivity chips, there’s still a lot of upside to come over the long-term.” https://tradingwithcody.com/wp-content/uploads/2014/08/25StocksfortheWearablesRevolution.pdf.
Q. Whats your thoughts on $SIMO Silicon Motion here?
A. Another one from the book! I wrote this in 25 Stocks for the Wearables Revolution, which you get for free as a subscriber to TradingWithCody.com. “It’s a fabless semi company in storage and communications, and Samsung accounts for 35% of revenues. The good news it that Samsung is probably the best customer in the tech world these days. The bad news is that I think Samsung is presently being knocked off that throne and that means SIMO would get hurt if Samsung’s growth starts to falter. Silicion Motion appears to be teed up for a big run. The company is a great play on mobile storage and 4g growth. Its controllers for ssd and embedded nand keep taking share inside a rapidly growing business. If you want to play growth in ssd biz, here’s a great play thats only 10x’s my estimate for next year. With a probable growth spurt of 15%+ on the top line and better growth in eps, the stock has major upside potential. The upside catalysts for Silicion Motion in the next couple years ahead include: 1) a probable return to the LTE transceiver biz with Samsung, 2) a big new eMMC customer for embedded business, 3) the SSD business mass production ramp with a $5-10 part which is getting excellent customer reviews, and 4)perhaps even a recovery in the card biz with more NAND flash making it to market. And of course there’s the strong growth in the existing eMMc business.”
Q. I bought $JRJC put options as you mentioned and so far the stock has dropped. However the options prices do not seem to be moving in synch with the stock. I assume they are not very liquid, but can you explain how we should manage these options? How is it that the stock is down almost $2 but the PUT’s have depreciated in value??
A. The premium that we paid for the put options on $JRJC has evaporated as the stock has crossed our strike prices. The lower the price falls now, the put options will basically go up dime for dime as the stock works its way down. If the stock pops back up above $10 (though I don’t expect it will pop back above $10) the premium in the puts would come back into play and the puts wouldn’t be down dime for dime down as the stock climbs. Make sense?
Q. Your idea for buying calls on $HMAX is doing well, so far. I have been tempted to take some profits, but in the past almost every time I do that for a play you talked about, I have regretted it. You seem to have the art of letting options ride for a while rather than pulling the trigger to early, so I am waiting to hear your next move. Do you think $HMAX will stay on course? Thanks!
A. I think $HIMX could run to $10 by the end of the year though it will be volatile along the way. Lots of catalysts and wearables/virtual reality headlines and hype coming in the next few months and years. HIMX should benefit from that.
Q. Oracle Cody…haha…play me out the $AAPL stock movements through 2015…I know you are near term bearish and the stock did pull back today…Walk me through what you think the stock might do up to and through the Sept 9 announcement and through end of year, then by April and October next year. I bought your Oct puts, BTW which has kept me $AAPL neutral during this pullback, but I do have January 98.50 and April 105 calls…wondering how to best play the near term bear into long term bull. Thanks.
A. Haha, would you like me to use my Magic 8 Ball or my Crystal Ball to answer your $AAPL movements question? I’d guess that $AAPL’s headed to $95 at some point around, before or after Sept 9, and that it will be at $120 sometime in 2015. That’s about the best I can guess for you. In ten years, I expect to see $AAPL at $200 or $300.
Q. Hi Cody, I have no position on $AAPL. I’d like to add first tranche into my portfolio. Just wonder when will be a good time to add $AAPL. Thank you.
A. You are on the right path asking about how to start buying your first tranche of $AAPL while it’s down 4% on the day instead of getting freaked out about it. I always suggest just jumping in and buying about 1/5 or 1/4 of a whole position in any stock you want to start scaling into and then using time to buy the next tranche or two. Saving 4% from yesterday’s prices isn’t a bad day to get started. Good luck!
Comment: Got it. Thank you so much for your insight.
Q. Hello Cody ~ Do you have any opinion on $ARRS?
A. $ARRS is a good play on the ongoing and currently accelerating build out of broadband next works. The stock’s been on fire and I’d want to see a few more quarters or actual organic growth personally, but the stock could go even higher before I’m convinced of the fundamentals themselves.
Q. Hi Cody–you had us buy Tesla puts some time ago with great results– any thoughts on doing that on Tesla or some other high fliers? Thank you for the great job you do for us–
A. I’m just not seeing enough catalyst for buying $TSLA or other highflying puts right now. JRJC was a recent highflyer that I did buy puts on, just last week. I am on the lookout for others. I will let you know when and if I do.
Q. Any interest in Robert Marcin’s pick $NUS?
A. I’ve looked at $NUS after seeing Marcin talk about it, but I don’t get the move from $40 to $140 back to $40. If the company grows topline 10% and bottom line 20% as analysts are modeling which would put earnings per share up at $4.80, I’d expect to see the stock at $80 next year. But I’m not in it.
Q. Cody: is the IPAD and tablets reached their peak? as smartphones get larger screens making tablets obsolete?
A. iPads are more likely to continue to take market share from PCs than they are likely to be hurt by larger smartphone screens. I have an 11″ Samsung Android tablet that is awesome and I still use my iPad mini, but I am not much of a fan of the actual current size of the iPad.
Q. Great googly moogly. Follow up question on $AAPL, am I correct that you would unload your Oct $AAPL puts down at around $95 then, whenever that happens as opposed to holding them on into October?
A. Probably would sell most of my $AAPL puts if the stock gets into the mid $90s in the near-term. I will take the pitches as they come though.
Q. Whats does the icloud accounts hack mean for mobile / cloud security and spending? Who is the leader and should we be invested?
A. I think we’ve been already preparing for the cloud and data security. I’ve got five stocks highlighted in the WRD Revolution books that are Security centric. $PANW and $FEYE are two, for example. $PANW is probably the best of breed.
Q. Are you adding or holding with this two day drop in $INVN?
A. No, not adding to my $INVN anytime soon, as I’ve built it up to where I want it to be for now. Again, if I were still building it in tranches, I’d probably look to scale into a little bit here today when it’s been down two days in a row and you can get it at a slight discount to where it was just a couple days ago.
Thanks all and rock on!