Here’s part 2 of 2 from last week’s Live Q&A Chat. I’ve got a couple names I want to add to the portfolio this week so stay tuned for that.
Q. Cody, are there any longs or shorts that you would say are a 9- or 10-rated stock right now?
A. You know what I’m actually thinking– which was spurred by a Trading With Cody conversation in the Trading With Cody chat room yesterday– that might be a great trade and I’m probably moving up to a nine rated right now, contrarian-wise– put on your contrarian hat for this one– gold! Gold, baby! I think gold might be about pop. It’s at three- or four-year lows right now. I’ve been talking about its potential for two or three years. The concept is that Bitcoin as an alternative to gold could actually create a lack of demand in gold for a while. It’s probably still a longer term trend that cryptocurrencies and gold will compete on some level as a store of currency outside of the fiat currency market. The idea is that everybody hates gold. Everybody’s gotten on to this concept that cryptocurrencies are an alternative to gold. You read it everywhere. And with Bitcoin going up 1300% or whatever in the last six months– What is it? Thirteen thousand percent since I’ve had some at $100? It looks hugely bubbled and this cycle has probably got to have at least some return to normalcy and I think gold right now might be a good trade, frankly– three to six months wise. In my lifetime, I do think the entire market of gold will be readjusted versus the fiat currencies of the world. It will retain value. It will be worth $5,000 to $10,000 an ounce before I’m dead– of course that’s hopefully another fifty to one hundred years.
At any rate, stock wise, I like Palo Alto right now. I like Intel right now. Verizon is a great 5G play. Some of my stocks are up 500% since we bought them. I’m not chasing. I don’t think they are very good buys right now and I would wait for another 5-10% pullback, and maybe some market panic at some point in the next few months. If and when that ever happens, I’d add some of those. If you don’t own any Trading With Cody stocks and you’re a Trading With Cody subscriber already, go to the latest positions, take a look at them. That leads me to the next question, Whether they are a 9- or 10-rated stock? I don’t love anything in my portfolio, but my analysis points out that there’s still some great buys. I would sell the stocks in my portfolio if I didn’t think they were still great positions to hold on to. I did let go of two stocks yesterday, by the way. I’m trying to reduce the number of my positions a little bit. We’ve had a heck of a long run.
Q. Cody, I am new here at Trading With Cody and just trying to get going with your investing ideas. I was looking at the email you sent on Nov. 17 on your positions and which positions you would buy, hold, or sell. If you were me, would you buy anything now or just wait until your new trade alerts as each one comes out to start building my Trading With Cody portfolio?
A. Thanks for joining and thanks for asking the question. I’m going to update at what point I would buy in the table this week for all of my subscribers; I tell them that. If you’re new to Trading With Cody or you’ve been a subscriber for a while and you haven’t actually acted on many of my strategies, but you’re sick of those incredibly low interest rates while the markets hit all-time highs, before you make any trade, you need to step back and catch your breath. Don’t move any money anywhere until you just stop. Don’t be in a rush. Don’t think that there is a get rich scheme. There isn’t a get rich scheme. You gotta work hard. You gotta be smart. Rate every position in your whole portfolio. Get an idea of how you’re balanced. Rate them on a scale from 1 to 10.
If you haven’t read Everything You Need To Know About Investing– a book I wrote that is available on Amazon but you can get for free– I’ll send you the pdf. Just email firstname.lastname@example.org. And anybody out there listening, I send that book for free to anybody. If you haven’t read it, read it. It’s a quick read, but if I do say so myself, it is chock-full of important ideas, concepts, and strategies that amateurs and pros alike should fully understand and know about and think about before they invest in stocks at all.
After that, take a look at my Trading With Cody Latest Positions and look at the highest rated ones. Maybe nibble a little bit of them. You don’t have to buy a full position. That’s what I’m trying to get to. If you have $100,000 or $10 million to put in the stock market because you had a great year– whatever that might mean for you– you don’t have to buy everything tomorrow. Put 10% to work while the stock markets are at all-time highs. Pick a couple Trading With Cody positions. Alright, I’ll give you guys who are not Trading With Cody subscribers a name– Under Armour. How about that one? They crashed. If you’re a long-term investor in Under Armour, it might be a nice time to build a little bit in that one. You don’t have to just chase stocks that are at all-time highs. Diversify yourself. I mentioned Verizon. It’s not a high flyer. It pays a 5% dividend. Put a little bit in that. Put a little bit in some of the highest-rated stocks in the Trading With Cody portfolio that you don’t own yet, but don’t think you have to do it all at once.
Here’s a question in the chat room and here’s the same guy who asked the question popping in here to the app. Good morning!
Q. Intel and Verizon and 5G, and I just want a little bit more of your thoughts about how that’s gonna roll out and monetize these companies and create a whole new bandwidth. I’ve bought some Intel and I’ve bought some Verizon.
A. There ya go! So, I added Intel and that’s probably why you bought it. I put it in the portfolio nine months ago when it was at $33 a share. We’ve had a great rally in it already, but I think the thing could double from here over the next 2-5 years in part because of 5G. Verizon we added maybe three months ago because it’s a great pure play on 5G.
5G is revolutionary. Take the bandwidth we are using right now in this live stream and multiply it by 10. Think of the apps, and the applications inside of apps, and virtual reality, and the chat room capabilities. We could have a holodeck in our living room that runs off of 5G– and not DSL or cable. There will be new apps, new creative ideas, new ways of talking to Amazon Echo and Google Home and Apple home devices. Our smartphones will be ever more connected to that cloud. The notion of downloading apps to a smartphone starts to fade away because it’s always connected at such high bandwidth, and the size of the device keeps shrinking. You could just walk into a room and tell the TV to pull up the channel on your smartphone, or grab the remote from the TV and watch a channel on your smartphone that’s being broadcast from the internet onto the old tuner of that TV. Revolutionary stuff happening with and around 5G.
I just wrote a report about how Europe isn’t going nearly as aggressive in 5G as Verizon itself is. Verizon in the United States is much more aggressive than any other U.S. carrier and no one in Europe is doing this right now. Verizon, though, is really investing in 5G and putting 5G modules on existing towers, and they are getting so much better performance and distance and bandwidth and reach on these 5G solutions they are putting up. They think the return on investment is going to be much more than what they expected and this is still very early on. The cost of 5G will drop. It will be a very different world with 5G five years from now, and Verizon and Intel are both very good ways of betting on that.
Q. Keeping up with this talk about Verizon 5G, I have maybe a naive question. Obviously Verizon is extraordinarily capital extensive. So, will that affect profit margins? Do you see anybody else, let’s say a smaller company, being a play here? I won’t even mention Qualcomm.
A. Carl, great question. I speak to Qualcomm, but let me first talk about capex and the capital intensiveness of 5G. Verizon’s not going to spend more to do 5G, instead they’re shifting spending to 5G much more aggressively than anyone else. And, their network is already so well built out in the LTE 4G kind of the world that it’s right for them to go ahead and sort of overlay their existing network with new 5G cells. And so, as those costs come down and as the reach of each individual cell gets better than what they expected, they’re not going to have to spend as much. They’re not having to put three cells every two hundred yards, it’s actually three cells every six hundred yards. Those numbers are made up, but that’s the concept, right? Even in urban areas they are getting much more bandwidth, many more people on it, and it’s going much further in distance than they expected. So, it might be cheaper than they expect and that would be huge for us as Verizon investors if they actually can build this 5G network cheaply.
As far as other names, I’ve been talking to my favorite value investor and the best value investor I’ve ever known and a mentor friend buddy of mine for many years– Robert Marcin– and I’ve been talking to him about 5G a little bit and he sent me a name, a small cap name that I’m working on right now. When I buy a smaller cap company, I always like to talk to the CEO. That’s being set up, but I do have a potential small cap play on 5G. Stay tuned. As a Trading With Cody subscriber, you’ll be the first and only to know.
Q. (Subscriber displays his porch in Western Massachusetts.) It’s beautiful. There’s Amherst, Northampton and the five colleges. It’s gorgeous today. Nice and warm. If you don’t want me to ask a question, that’s okay.
A. No, please do!
Q. I’m just kidding! I’d giving you the heads-up from Robert Marcin about some small plays, but he wouldn’t talk to me. He wouldn’t really talk to me, so I said tell me more about CALX. He had a few small plays. I wasn’t trying to get something for nothing, but I couldn’t understand. He said, “What are your leads? You got to do your own homework.” I said ok, alright. I’ll look into these things.
A. Look, I love the question. Robert’s not running a subscription service, right? I mean, he might be running other people’s money right now, but I think he might just be running his own money right now. Robert Marcin is a legendary Barron’s magazine cover kind of guy, so the fact that he even talks to you at all frankly is pretty cool. He answers questions on Scutify. If you go to scutify.com or download the Scutify app, he’s on there and he’ll respond to people when you ask him questions on there. He’s great. He’s just gonna sort of throw out some of the names after he’s bought them most of the time, and some of the time he just doesn’t put the name out there at all and whatever, he doesn’t tell everything. I’ve got fifteen years of an old boys network with this guy. I’m kidding about the old boy network thing, but Marcin’s a good buddy of mine. He’s an irascible guy. So again, if he was friendly to you then you should be thankful. I’ve seen him make grown men cry.
I’m doing a meta thing here. I’m going to Youtube/clwillard to see if this livestream from my app is indeed feeding into my YouTube channel and sure enough, it is. I’m watching myself live now. Sorry, I got distracted while you were talking. I just thought it was sort of fascinating. Let’s watch and see what the delay is. Cody’s voice coming from the internet in the background about meta things. See, that’s the YouTube channel right now. That’s crazy! I sort of blew my own mind on that one. What if you could watch yourself talk with someone else on a phone from an app to a YouTube channel? You know people are thinking that like smoking pot in downtown San Francisco and coming up with broadcast dot-com ideas in 1996. Here we are today twenty-two years later, living the dream.
Q. Okay, what is the prime driver for Intel? Is it the automobile??
A. Number one, i think processing power and Intel chips, the old computer chip business– nobody’s going to be buying computers anymore. We’re all tablets and it is a secularly declining market for what is considered a PC. But devices like Alexa– (speaking to Alexa) Alexa, play. Let’s see what I was listening too. (Alexa responds) “No messages today.” Alexa, stop! That part’s going to get better partly because they’re going to put many more Intel chips inside of it. Intel supplies the Amazon Alexa Echo. That is one of the reasons I bought it, because you’re TV is going to be an Amazon Alexa essentially. It will just be a much bigger version of the Amazon Alexa Show and the TV itself will have the best Intel chips in them. Same for your projector set in your living room, your car when your riding around in a driverless car. They’re going to have a lot of processing power to get all of these new apps and features and cool things from 5G.
Not only that, Intel spent 20% of their market cap buying Internet of Things competitors, rolling up competing semiconductor companies that specialize in IoT and that looks like it could pay off for them and that might have turned out to be a great bet. Driverless cars is a kicker because I don’t know that Intel is gonna win or be big in driverless cars, frankly. That’s the last reason I own the stock, ironically enough, since that’s what your lead-in question was. Much more important too is just the general trend of everywhere having so much more processing power on standby that Intel is probably a good play. And it’s cheap, you got a nice dividend, the stock hasn’t moved in fifteen or twenty years and they might actually be back on a growth cycle because of the stuff. Driverless cars would be a kicker– gravy, with a cherry on top.
Q. Well, do you think Nvidia has any play in that market?
A. Absolutely. Though Nvidia is winning and displacing Intel in the servers on the back end where these home devices are communicating into the cloud and Nvidia has clearly set themselves up as the de facto standard for driverless systems. So, exactly the opposite of Intel. Any penetration and meaningful revenue for Nvidia that is a result of their chips being in TV sets and home devices and car entertainment systems and things would be gravy for them.
Q. What’s the timeframe? Two or three years? It must be fast.
A. Frankly, if Intel does it all right and becomes like they were in PC’s– if they’ve got 50% of the market in IoT and then a much higher margin kind of processing power in home devices– it could be a 5- or 10-year thing. They could do 10-30% market growth at some point and do a few years run on that. It would only happen if there’s a strong enough broader economy, obviously– and any crashes or tech panics and stuff in the meantime might even be a blip on that cycle– but over the next 5-10 years I expect that there is sort of a secular growth phase for Intel if they play it out right now.
Q. Sorry, are you saying that they have no competitors?
A. No, I’m not saying that at all. Nvidia and AMD and even just homemade chips– home design chips from Apple or Amazon or Facebook. There’s a million competitors. It’s a very competitive market. I’m saying that the best-case scenario is that Intel has a 5- or 10-year growth phase, secular growth cycle, long term thing happening here that sets them up for 20 years of at least bigger higher magnitude of revenues than what we’re talking about for them right now– five times bigger than what they are right now; that would be best-case scenario.
There is also the scenario where they fail– where they lose to Nvidia; where Amazon goes on it’s own with chips and Facebook cuts out Intel entirely and there’s no Intel chips in Apple because someone gave it a better chip for cheaper and the next thing you know Intel is cutting dividend and it’s the GE of 2022.
I’ve got a few questions about individual stocks. Let’s just do it….
A. I don’t know the company, so let me do a quick Cody Willard revolution investing overview analysis of YEXT stock. The name of the company must be Yext also. Let’s just take a look at the balance sheet. Well, first market cap is a billion dollar market cap which is a smallish cap these days but not a tiny cap. Most of the time being a small cap is a huge red flag to me– unless I meet the CEO or something. Financials here, must be a new IPO because I have no financials. Let’s see when it became public. It’s obviously a new IPO so I’ll check it out. 40% revenue growth last quarter. That’s not shabby. Alright, here we go. We got a quarter that just reported: $44 million in revenue last quarter which is 40% year-over-year growth. Let’s multiply that times four, a hundred and sixty million dollar market cap, it’s revenues said a billion dollar market cap, eight times sales, gross margin is 74% up from 70%, clearly a software based some kind of recurring revenue model system. Great, I love 75% margins. It has guidance of $47 million for the next quarter. So, sequential growth. Who knows if it’s a Christmas bonus fourth quarter stronger than the third quarter kind of thing, but there’s sequential growth in addition to last quarter being up 40% year-over-year. Let me take a look at it. It’s interesting enough, I’ll take a look at it and do some work. Trading With Cody subscribers, stay tuned. I’ll send out some analysis on it.
Q: What about CALX?
A: I’ve looked at it. That’s a Robert Marcin name. I’m working on it. It’s interesting enough. I’m working on it. Robert, anytime he suggests a name I take a look at it. So, there ya go. Trading With Cody subscribers will also get an update on that one.
I’ll take a look at these other names that people are asking about, a couple of small cap biotech names that they’ve been asking me to check out and I’ve got calls in to meet the management on one of them. On the other one I wasn’t impressed with, and other than that I think I’m hitting a wall. Fifty minutes commercial-free without a co-anchor.
Actually, speaking of which, Facebook memories today had a picture of me and Rebecca Gomez Diamond hugging from the last show of Happy Hour, which means I do believe seven years ago today was the last show of Happy Hour, the last time I was a full-time anchor on TV. It sort of seems like a lot longer ago than that, frankly. I don’t think I miss it very much. It was a great experience, but you gotta be wired to be on Fox as an anchor. When I spoke to a class at Eastern New Mexico University in Portales yesterday over Skype, and politics and channels came up. And I said, Look, cable news is propaganda. You’ve got the Democrat side of the Republican-Democrat regime propaganda, and you’ve got Republican propaganda from the other channel, and anyone who’s tuned in knows obviously which ones I’m referring to is which.
But, I do remember in 2008 being at the Boston Tea Party, the original Boston Tea Party when that thing was started and Fox sent me down there, and I actually did a thing where I asked a ten year old kid, “When you watch news do you have any idea if the channel is Republican or Democrat? Which kind of propaganda do your parents watch at home?” I used to talk about how unfair it is. Even on Fox, I would mock that Fox was Republican and they would want me to be Republican and I would have had a much more fun time if I had just drank some Republican Kool-aid, but I am neither a Republican or a Democrat and I never will be because I think the system’s busted. I think the only way we can fix it is for all of us to band together and stop the partisanship. I think we have to write in candidates. I think voters should be educated enough to learn how to spell their candidates name and voting shouldn’t be as simple as pulling a lever and gerrymandering the concept wouldn’t even exist, and it would be a very different world. I think it would be a much better world. Most people disagree with me I know at this stage, but I bet in fifty years more people agree with me than don’t.