Hey There Income Hunters,
Hats off to the Blue Origin — it was very cool to bring up mementos from the Wright brothers and Amelia Earhart.
It made me think of John F. Kennedy when he gave his “New Frontier” speech, and it’s appropriate to think of where America is today in the same vein …
We may be nearing the end of our reign as the sole global monetary leader — yet, spirit, courage and innovation will bring new beginnings.
The future of technology will bring advancements that will change our lives and transform industries.
I, for one, am truly fascinated by smarthomes and the internet of things (IoT).
In the not too distant future everything around us will be connected to the internet — and that is truly incredible.
Already, our smart watches work as our caretakers, telling us when our vital signs are off …
Our appliances automatically operate in the most energy efficient way — and the fridge can alert us when we need beer …
One day, cars will drive us around on smart roads, which have chips built into them that control traffic via connected lights. 5G will provide much of the fuel, and the chips will be the brains that drive the tech revolution.
In the meantime, check out a couple of stocks that are ripe for the taking and will be essential players in the IoT space.
NXP Semiconductors (Ticker: NXPI)
NXPI is a top supplier of semiconductors for the automotive market and major force in the analog and mixed signal chip market…
NXPI holds a barrier to entry or a moat around its business due to switching costs and intangible assets… This powerful position will allow NXPI to earn high Returns on Invested Capital (ROIC), which to me is fundamental to long-term success…
They will also be a major player in the IoT industry due to its strength in microcontrollers (MCUs), that serve as the brains in most electronic functions in cars…
There is real stickiness in the chip space because it is extremely hard to switch out once chips are designed into a device…
NXP Semiconductors (TICKER: NXPI)
NXPI offers a favorable technical setup, just above a rising 200-day moving average and near the lower end of its recent trading range.
Fair Value
NXPI at a discount to fair value is an attractive opportunity. The company’s barriers to entry are solid and they are all well positioned to capitalize on selling into multiple growth industries …
Ericsson ADR (Ticker: ERIC)
Ericsson is a leading provider of equipment to communication service providers. They are killing it in 5G buildouts and gaining market share…
ERIC recently got caught in a geopolitical battle between Sweden and China as Sweden banned Chinese network equipment for 5G buildouts.
Q2 earnings were lower than expected on this, providing a great opportunity to pick up shares at a discount.
Meanwhile organic sales were up 8% in Q2 as ERIC picked up market share in other geographies amid the 5G build-out cycle.
Overall, ERIC is well-positioned to capitalize on 5G demand for small-cell antenna sites, while also profit from 5G networks creating more product use cases such as the IoT
Chart Pattern for ERIC
Prior to the Q2 results ERIC was trading in a bullish pattern in the short-and long-term time frames. They are still holding on to a longer-term bullish trend, as the 200 DMA continues trending upward.
Fair Value
ERIC has been seeing the fruits of its labor since 2015, when the company slashed the cost of goods and operating expenses and renegotiated unfavorable contracts. They are now on an uptrend and investors have an opportunity to purchase shares at a discount to fair value.
Bring It Home
Here is a great example of full investment analysis by taking a top-down macro approach …
I started with describing the mega opportunities ahead and the main growth industries i.e. IoT and EV…
Then I identified two top companies well-positioned to thrive in the decade ahead…
Lastly, I analyzed their technicals and fundamentals, which align, and both present a compelling investment opportunity at this time.
Live and Trade With Passion My Friends,
Griff