Macroeconomic Conditions Remain Healthy for Our Stocks  | | Luke Lango | Wall Street traded largely flat today, but our stocks produced some alpha as the macroeconomic environment continues to provide tailwinds for early-stage growth stocks. Long story short, the data continues to corroborate the thesis that we are entering a Goldilocks Economy wherein economic expansion remains healthy, but not robust enough to get the Fed to move (thereby resulting in higher rates, higher yields, lower valuations, and lower growth). Specifically, the Chicago PMI came in today well below expectations, and fell sharply month-over-month. The two big drivers of the deceleration were supply chain disruptions and labor shortages. The businesses surveyed in that report said they expect supply chain disruptions to peak in 2022, but see labor shortages persisting even after extra unemployment benefits expire in September. We agree with this, and believe it’s great news for our portfolio. Inflation is transitory. Labor shortages are not. A large portion of the employment population has found good entrepreneurial work via the internet – YouTube, TikTok, Patreon, etc. – and therefore, while ending stimulus payments will ease labor shortages, it will not fix the problem entirely. Many of these folks will continue to make YouTube content as opposed to serving wings at Chili’s. Now, this is good news for our stocks because the Fed has a dual mandate – stable prices and full employment. They won’t move until both mandates are met. We see neither being met by mid-2022, meaning we see the Fed staying on the sidelines for the next 12-plus months. Clearly, Wall Street is starting to agree with this thesis, hence the alpha being generated in our portfolio. Meanwhile, The Conference Board’s Consumer Confidence Index for August also came in today, and it, too, both missed expectations by a mile and fell sharply from July. The Delta variant was the big driver of drawdown in consumer expectations. This data simply goes to show that, yes, consumer demand is waning, and considering two-thirds of the U.S. economy is driven by consumer spending, this is a sign that the whole U.S. economy is slowing. Overall, the macroeconomic conditions continue to pivot toward a Goldilocks Economy, which is the exact type of economy in which our stocks will thrive. Near-term returns are nice. But remember: We’re in this game for the long haul. Our goal isn’t to get a 10% boost in August or September. It’s to score 2X, 5X, even 10X winners over the next 5-plus years. So long as you keep your focus on that long haul, you’ll be good. With that in mind, let’s dive into today’s Daily Notes: Innovation Investor - Jefferies launches coverage on Virgin Galactic (SPCE). Jefferies got bullish on Virgin Galactic stock today, and gave it a “Buy” rating with a $33 price target, causing the stock to pop nearly 9%. The reasoning behind the firm’s rating is the fact that Virgin will be launching as many as 660 flights per year and have a potential $120 billion addressable market by 2030. We agree with this assessment, and see Virgin Galactic’s long-term value creation opportunity as being enormous and stretching well beyond that of even space tourism, into things like propulsion technology and next-gen flight systems. We remain constructive on Virgin Galactic stock.
- FuboTV (FUBO) expands its market to include Iowa. The Iowa Racing and Gaming Commission (IRGC) approved fuboTV to offer its sports betting platform to Iowans, which is another huge step forward for fuboTV. With the company set to release its Fubo Sportsbook towards the end of 2021, we expect to see fuboTV gain additional licenses and close new deals on the eve of that launch. That launch could be a complete game-changer for fuboTV, and send shares up towards $100 in 2022.
- Matterport (MTTR) expands its on-demand capture services to four cities in the U.K. and 22 new cities in the U.S. The company’s capture service enables anyone to hire a “Matterport Capture Technician” to capture any kind of property and convert it into a virtual space. Matterport has been making big moves to expand its platform and reach lately, and this latest geographic expansion is particularly nice. It marks Matterport’s first entry into the U.K. by means of London, Birmingham, Manchester, and Leeds. The long-term potential here is huge.
- Axon (AXON) supplies cameras to Six Flags security. Two recent incidents at a Six Flags in New Jersey have spurred the theme park company to partner with Axon, who will provide the Six Flags with 600 cameras nationwide. This partnership underscores that Axon’s security solutions are not just for police, but for all public spaces. The addressable market here is much bigger than what the market is pricing in – and that means Axon stock has a lot further to run.
- Digital Turbine (APPS) to hit the S&P MidCap 400 in early September. Digital Turbine will make its debut on Sept. 7, displacing a pharmaceuticals company. This is big news because it means mutual funds and exchange-traded funds (ETFs) that track the S&P MidCap 400 will have to buy the stock as a result of this inclusion. No wonder the stock soared today. The stock also benefitted from a big valuation-based upgrade from Canaccord today.
- Canopy Growth (CGC) has patented a vaporization device. The device utilizes a smart phone “vape app” to control a variety of aspects of the vape device. Since controlled via an app, the device can access and adjust a variety of parameters based on “user information, prescription information, location information, payload information, historical vape device usage information, and historical payload reservoir information.” We view this as yet another reason Canopy Growth stock is positioned for long-term success.
Exponential Growth Report - Spire Global (SPIR) inks a deal with NOAA, the National Oceanographic and Oceanic Administration. What’s more is that this is NOAA’s largest purchase by volume to date. And NOAA is a very big deal. The agency dates back to the 1800s and is responsible for monitoring, describing, and assessing Earth’s atmospheric, weather, and oceanic conditions — and explaining what it learns to the public. This is a very big deal for Spire and is a massive vote of confidence in the company. It also follows multiple other contract wins over the past few months, the sum of which broadly underscore that Spire’s business momentum is presently very robust. We see huge upside for this stock over the next 12 months.
Sincerely, 
Luke Lango
Editor, Innovation Investor & Exponential Growth Report New to Innovation Investor? Click here to access Innovation Investor's Special Report archive. Get more from your subscription by reading our owner's manual and watching our introductory video. Exponential Growth Report Disclaimer: Small-cap stocks that can rise 10X over the long run are often volatile. If you are interested in these stocks, understand the risks and buy them like a professional. Learn more about the risks of nano- to small-cap stocks and how to buy them here. |
Comments
Post a Comment