Is 5G really revolutionary, Bitcoin vs stellar, Bad college hoops coach, Sony and more
Here’s the transcript for this week’s Live Q&A Chat.
Subscriber: Regarding Verizon don’t really get how a Telco can be part of Cody revolution investment. I’m based in Spain and all European Telcos are considered commodities (all trying to extend their play in the broader digital world but most still in the “pipe” play) 5G, FTTH, … still in the pipe play with limited secular growth. Is this context somehow different in US? Is VZ 5G strategy different most other 5G network strategies. That is, a largely fixed wireless broadband strategy versus mobile. Seems VZ making a large non consensus bet. It will be terrific if they are right. The others seem skeptical of VZ’s in building penetration assumptions.
Cody: There are several reasons to own Verizon right now, including its 5G strategy being more aggressive and different than others around the world. First off, I am quite concerned about valuations being stretched in most of Wall Street’s favorite tech stocks including the ones we bought over the years long before their valuations were stretched. Verizon on the other hand is trading at the same levels it has been for many years and pays a 5% dividend and everyone on Wall Street hates it because it hasn’t moved in many years. I think the downside in Verizon is probably at most 20% or so from these levels even if its 5G bets don’t work out to dominate the US as I think they might. Meanwhile, if Verizon’s aggressive 5G bets play out such that it ends up the dominant player in US 5G, then Verizon’s revenue and earnings growth could go to a 10% or even 20% growth rate and the stock could triple or quadruple over the next five to ten years. So from a valuation, risk/reward and just a contrarian standpoint, I like Verizon quite a bit right now at $50 a share. As far as building penetration assumptions, I noted recently that the analysts and reports I’ve seen show that Verizon’s in-building penetration and range are much better than ever originally hoped for.
Subscriber: 5G and IoT still a pipe play IMHO…. consumers not willing to pay more for pure communications. Businesses I do agree, will pay more. Telcos have a growth to capture on IoT, however still to be seen if they keep playing the pipe role -limited revenues-or they are the service providers of the e2e Smart cities, connected car, etc. (The same applies for consumers connected wellness, etc. Media is the only service Telcos are playing a role today however not very strong positioning with new comers such as Netflix.
Cody: I think you are vastly underestimating what kind of applications, ideas, new platforms, games and data collection are going to be built on the 5G Revolution. 5G will change everything.
Subscriber: Cody, why do you think stellar lumens could be the Amazon of crypto rather than Bitcoin ? Can it be more explosive than Bitcoin 5 years from now ? Thanks.
Cody: To be clear, I’ve owned bitcoin since it was at $100 and I still own some (though I’ve sold most of it and haven’t bought any back yet) and I still expect it will be one of the survivors as I’ve long said. See there are inefficiencies and fundamental issues with bitcoin, but there’s also been tens of billions of dollars poured into companies and ideas and platforms built on top of bitcoin. So it certainly could and should be one of the very few cryptocurrencies of today that survives. But bitcoin is also the poster child and at the very epicenter of the current cryptocurrency mania and I do think it’s got much more room to fall before The Great Cryptocurrency Crash is over. Meanwhile, had you even heard of Stellar Lumens before I sent out that Trade Alert calling it the potential Amazon of Cryptos? Those in crypto might have, but the general public has no idea that Stellar even exists, and the general public certainly has not they piled into Stellar Lumens like they have bitcoin. I’ll be writing much more about Stellar and Stellar Lumens and cryptos and bitcoin and The Great Cryptocurrency Crash and how we can profit from it, so stay tuned!
Subscriber: Cody, Is buying stellar lumens ticker XLM on the open market OK?
Cody: Where else would you buy them? I’m not trying to be funny, but you can’t buy Stellar Lumens except on a market and on a market this is actually open, right? 🙂
Subscriber: Terminology I meant is it possible to buy Stellar Lumens through an investment company like Fidelity. Apparently you cannot.
Another subscriber: For the record, I think the Lumens-purchasing confusion is in the fact that there’s a “regular” equity stock with the symbol XLM on the (London) exchange (a media company) that has nothing to do with Stellar Lumens.
Cody: Ah, your questions makes more sense now. And you are both correct that you can’t buy Stellar Lumens at a stock broker and that the XLM symbol might be confusing people.
Subscriber: Hi Cody, Would you nimble more and more XLM every week or every 15days or every month?
Cody: I’ll be telling you whenever I nibble Stellar Lumens XLM. Certainly not every 15 days or every month or anything like that though. Patience and slow.
Subscriber: In the Feb. 20 listing of where you would nibble more shares, the price point for WDC was $80. Before I add shares in WDC now that it is trading below $80, just asking if there has been any change in your philosophy on this stock. Thx
Subscriber: I’m in the same boat. Just waiting for the A-OK from Cody to buy another tranche of WDC. Looks like a good price to me today.
Cody: Okay, let’s hit on $WDC. As the indefatigable Spek noted in the chat room this week:
Stellar earnings from WDC. Most importantly NAND prices are in the stabilisation mode. Also, Samsung commented last week they will prefer greater profits instead of sales in the NAND market, so they will keep an eye on the balance of NAND market instead of oversupplying it. At such strong FCF cash flow WDC is quickly deleveraging its balance sheet and have more power for buybacks. At such low valuation expect soon some decent buybacks from the company. Even thought WDC goes 2x, it would trade at just 11-12 P/E, cheaper than its direct competitor, STX.
So yes, I’ll be sending out a Trading Alert today or tomorrow as I’m going to start nibbling some more $WDC, at least a small second tranche.
Subscriber: Cody, Dave Bliss was my freshman hoops coach at Cornell back in 1967. Dave was getting his MBA at the time after being All Ivy in hoops and baseball at Cornell. I was wondering if Dave was the coach at New Mexico when you were playing? Dave certainly made some bad decisions but he certainly was an effective coach.
Cody: I played for Dave Bliss at UNM, and he was one of the worst people, influences and teachers I have ever been around. He helped cover up a murder at Baylor. I’ve been amazed and saddened that he has been able to keep positions of power and influence over young people. Sorry, but Bliss has already had a second and third chance and he’s not been a stand up guy that I can ever tell.
Subscriber follow-up: Don’t misunderstand I agree Bliss did awful things in his career. But he was a grad assistant when I played for him at Cornell. Probably 22 or 23 years old and in his infancy of coaching. Probably over 20 years prior to NM! He was pretty much a college student then. But I agree with you, he should have been permanently banned from coaching at any level and probably should be in jail.
Cody: Maybe I’m bitter, but I honestly can’t wrap my head around all the things I’ve learned about Dave Bliss since I left UNM. I didn’t like Bliss when I played for him but it’s not like he was involved with covering up a murder while I played for him (not that I know of anyway). And that recent Showtime documentary about Bliss and the Baylor murder didn’t exactly shine positive on Bliss either.
Subscriber: Hi Cody. SNE got hit pretty good. Had it early on (not enough) sold it way too early. Now have some around price it is at now. Any concern over last quarters numbers?
Cody: It was the first time that Sony’s reported a disappointing earnings and guidance in a long time. But I’m not running for the hills or anything. We bought SNE when it was truly hated and left for dead and quite cheap on a valuation-basis back around $15 years ago and I’ve taken some nice profits on part of it and am just holding onto my SNE core position for now. Another disappointing quarter or two and I might change my mind.
Subscriber: Is it good timing for a first tranche into $SNE? I do not hold any.
Cody: I usually tell people that if they don’t own any of one of our stocks that they think they do want to own — to just go ahead and nibble the first tranche and get started but give yourself room. I still own it because I think there’s good upside potential.
Subscriber: At what price does MU become a buy?
Cody: The fact that so many Trading With Cody subscribers ask me all the time when is MU a buy and why aren’t we buying MU and why isn’t MU my favorite stock of all-time — makes me want to short this stock someday soon! I don’t like MU and I don’t like their management or their balance sheet or anything else about it.
