Cody Kiss & Tell: Wearable Computing Plays, 2nd Half Tech and the Cocoon Trend
Here is the transcript to this week’s Live Q&A chat. Join me next Wednesday at 2pm EST at http://tradingwithcody.com/chat or send me an email with your question at support@tradingwithcody.com.
Howdy folks, let’s rock.
Q. I’m hearing a lot about wearable technology. What’s the best way to play it?
A. Read this: Wearable computing apps – There are hundreds of companies already developing new apps for Google Glasses. There are hundreds of new form factors from Android in particular that will be act as mini-server stations working off a primary base like a smartphone or tablet coming to market in the next decade. Each will provide opportunities for app developers to create new services and businesses. Google and Broadcom are probably the best plays on this trend for now but there will be dozens of other companies coming public in this sector in the next handful of years. Size of this market today? $0. Size ten years from now? $500 billion from this article. I’ve not found a publicly traded company that is a pureplay on wearables yet. But it’s coming and I’ll be there for you.
Q. Cody do you like ADBE and their new cloud product?
A. As I wrote here: “Adobe could have ended up a sleepy ol’ graphics company. But with their Macromedia acquisition bringing them into the video graphics industry.just as YouTube, built on Macromedia’s flash technology became a global de facto standard for Internet video, Adobe was thrust into the 21st century global consumer tech wars. And they’ve got the battles scars to prove it these days, what with their very public scrum with Apple and their subsequent absence from the iPhone and iPad. I bring all that up because so much of Adobe’s premium multiple over the last few years has come from it being accepted as having won the Internet video display wars. But it turns out they haven’t. Companies, especially new video content companies are quickly adopting either the Apple-friendly HTML4 exclusively or doing it along with Flash. Flash will still be a huge growth driver for Adobe, but it will likely never again demand a premium multiple. That said, at only 12x next year’s earnings and with more than a billion net cash on the balance sheet, this isn’t a bad bet on the cloud and video-from-the-cloud revolution that will only accelerate from here.”
Q. Do you have any opinion on ISRG?
A. What a crazy chart! I think ISRG is a great company and a great medical technology play on the Cloud Concept, but at $17 billion market cap, which is 50% more than even NFLX’s own outsized market cap, I’m not a buyer of ISRG.
Q. Tech seems to have found some legs here in LNKD, FB, AMZN, GOOG. Are you still looking for a strong 2nd half of the year for them?
A. I suppose I am looking for a strong second half of the year for those specific names you mention. But then again, maybe we should be buying the WORST charts out there rather than the charts with “legs”?
Q. I left out the laggards AAPL, and FB is just recently looking a bit more positive. INTC has pulled back 10%.
A. My ordering of the names you mentioned and how they will play out in the second half of the year – FB, INTC, AMZN, AAPL, GOOG, LNKD.
Q. How come Apple has not changed there iPhone screen so you can read your info in the sun?
A. Short answer: Blame Tim Cook! Longer answer is that the company is indeed working on some new technologies and improved speech recognition and other ways of interacting with your iPhone. But the BLAME TIM COOK answer is a lot easier.
Q. I’d say talk to John McCain, and have him talk to Tim Cook. It surely fixed the app update issue very quickly.
A. What I would do is have John McCain talk to Obama’s press dude, Jay Carney, and then have Jay talk to Jamie Dimon who could talk to Dennis Rodman who could tell Tim Cook how to fix Apple now that he’s messed it up so badly. Ha.
Q. What’s your take on this move up in OIL to 106.55 on the chart its moving parabolic? and these higher implications for the economy? I personally feel it just drives more usage, data, usage, shopping online to avoid ever increasing gas prices, tolls etc? thus helping FB, GOOG, AMZN etc what’s your take?
A. Great analysis there. Yes, higher gas prices (and terrorism and other things) can drive what we used to call the “Cocoon Trend” higher, meaning people spending more time and energy on their PCs/smarthphones/tablets than at the actual event/store/location. That said, the $106 oil is a HUGE drag on the economy and the spending power of the middle/lower classes of the economic scale. If oil keeps rallying and hits $120, I think we should probably be VERY worried about what that means for S&P 500 earnings next year. Finally, I’d note…Boy, GOOD thing we invaded Iraq to keep the price of oil and gas down (Ha).
Q. I’m a 2nd day subscriber. Any Nat Gas plays/thoughts?
A. Thanks for subscribing and please let us know what we can do to make you a better trader and investor. Natural gas, oil and coal are ONLY viable economically-speaking because they are so heavily subsidized by the governments around the world, from Venezuela to Abu Dhabi to the US and Norway. I think FSLR is the best play on energy for the next ten years.
Q. There’s a big Intersolar – Solar/Thermal conference in SF happening a block from my office. You think any new advances coming that could influence our FSLR play one way or another? What do they conference about anyway? Just caught my eye so thought I’d ask.
A. The big Solar/Themal companies waste shareholder money schmoozing the Goldman and JPM analysts at some swank resort in the name of “conferencing”. Nah I don’t expect anything meaningful from that waste of time and energy.
Q. Hi Cody, been awhile since I’ve been here. Thanks for all your email blasts. I wanted to find out what you think about NES, formerly HEK. I am in the oil and gas business and think this will be a home run, but it keeps getting hammered by short interest. Could you help decipher what is going on with this stock and shed some light on whether you think it is a good investment or bad? Thanks for all your hard work!
A. I’m not familiar with NES, a billion dollar market cap energy company. Can you send me some of your analysis on the company and the stock and I’ll take a look and hollar back at you.
Q. I am chomping on the bit to buy more silver. Last purchase cost basis 23 and change. I know of your Ebay recommendation, it just seems so tough to not get gouged. Also don’t you think going forward that the risk/reward ratio for being long stocks vs. PM’s is skewed toward PM’s?
A. How much are you looking to invest in physical silver over the next year? If more than even just say, $3000, then you should start with this 35 oz solid silver coin. If you want to own $30,000 in silver by the time you are done buying it, then buy 5 of those coins.
Q. Any opinion on TDC?
A. I like TDC now that’s it down about 40% from its highs earlier this year. The company should be able to grow the topline nearly 10% per year for the next few years and the bottom line even faster. With a $3.50 estimate for next year, that would mean earnings could be $5 in five years and that would likely put the stock close to $100.
Q. Hi Cody, on CCC, what do you think of the competition? Does it have a high barrier of entry? Would it be hard for potentially a player from China to flood the market? I’m thinking about what AA is facing right now on aluminum.
A. That is a great question and line of thinking. I do think there’s a lot of proprietary technology in the CCC water cleaning systems, but there are certainly companies in China and anywhere else around the globe who recognize the huge growth ahead in supply clear water technologies. I think CCC is as good a pure-play as there is out there on water demand in developed economies like the US and Europe and I think in five to ten years if it’s not already taken out by GE or some other conglomerate that CCC will be a $10 billion company up from less than $1 billion today.
Q. I would love to short some financials, just don’t trust all the ‘support'(?) the Gov. (a.k.a.~ we) handout. But as you said a bad business model eventually comes down. Is now a good time to step in or there will be better opportunities ahead, I’m thinking the latter.
A.I tend to think that the minute I throw in the towel on my JPM, MS and GS shorts will be the dang top in their stocks. (Sorta’ kiddin’, btw). You are right that these companies would already be bankrupt if the Republican/Democrat Regime didn’t spend trillions in welfare and fraud supporting these TBTF banks every year. When will that end? That will be the great time to short these suckers EVER. But until then, I suppose they each could continue to rally. Sigh.
What else folks? I’m at a Starbucks in Roswell because I couldn’t make it back to the office in Ruidoso in time to get to this Weekly Q&A Chat. So ask me anything and I’ll answer it.
Q. Don’t mean to dwell on the negative, but at this point is there any reason to think that XIDEQ will be anything but a loss? I asked previously about volume as an indicator but since I’m not the expert have deferred to you on using this to decide to exit. Volume and price have deteriorated dramatically. All of our other BK trades popped much earlier on big volume. I know these plays are risky but this one has been a real turd and I haven’t felt like I’ve had much guidance on what to look for to get out before this turned into a 37% loss, which is where it stands now. Thanks.
A. Well, you know you could focus on the CIEN, AMZN, GOOG, FF, XONE, or any of the WINNING trades/investments we’ve done. Alas, it’s well-documented that we focus on pain of losses much more than we ever enjoy the fruits of our profits as traders and investors. So be it. Yes, I am not happy about this horrible XIDEQ bankruptcy flip trade and I’m down on it too. There’s not really a technical indicator that I depend on in these BK trades, it’s just about letting the traders who were short this stock BEFORE the BK come in and cover and buy. It hasn’t happened with this trade. As I said Monday, I’m going to sell this thing by the end of this week, win or lose. Mea culpa thus far.
Q. Hi, Cody! First, a reversal –some advice for YOU: try the cinnamon-dolce flavor at SBUX: delightful. Best with soy. Next — back to BK plays (sorry): if, as I understand it and as you confirmed today, that the jump is primarily all the shorts covering once (i.e., after0 the bankruptcy news is announced, why would you/we hold on to the shares for, say 2-3 weeks? I know XIDE seems to be a recent anomaly, but is there anything in the past BK “record’ that shows you that something good or better happens, say, in week 2 or 3 after announcement? Why not always get out 2-3 days after announcement and not, as you’d say, try to find the high?
A. Ha. I’m a wannabe Italian at heart so I only “drink double shot espressos with a little bit of skim milk.” I love strong coffee. As far as the BK trade went, a few that we made last year actually played out even better over a two/three week period than a few days, so I was giving this one a chance. Mea culpa, as I said.
Q. Cody are you putting a link to this quarters earnings for each stock EPS and other data?
A. Heck yea! Bill called me this morning and said he was putting together the data for the earnings calendar and we will be sending it out sometime later today.
Ok folks, thank you! See you later!
