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Louis Navellier just issued a shocking election prediction for 2024.
“I believe Donald J. Trump will go down as America’s last Republican president.
But NOT for the reasons you may think…
Click here to see my 2024 election prediction.
If I’m right, the soul of this country will change forever…”
–Louis Navellier
Get the details here.
Do you believe that oil selling for a negative value is irrational?
Might it suggest that the market is inefficient?
If so, you’re in good company. Warren Buffett once slammed the concept of the Efficient Market Hypothesis in his typical folksy way, saying:
I'd be a bum in the street with a tin cup if the markets were efficient.
(If you’re not as familiar with it, the Efficient Market Hypothesis argues that share prices reflect all known information. So, consistent, excess profits above market returns is impossible.)
Consider if you’d been able to maintain a level head during this oil panic, seeing this market inefficiency as an opportunity. Recognizing that the world would eventually recover and need oil, you decided to invest.
And forget about trading futures contracts. Let’s just assume you bought shares of Exxon (XOM).
Well, congrats.
As you can see below, your ability to remain rational enabled you to make 242% on your money, which more than 3X’d the S&P’s return, and nearly 2X’d what technology stocks have done (as represented by XLK, which is the Technology Select Sector ETF).
How do we use this concept of market inefficiency to make money today?
Well, oil will likely head higher as we approach the summer months. And we still like our oil trade which we put on back on February 9th. We’re up 17% in our trade on the SPDR Oil & Gas Exploration ETF, XOP, and 14% in the Energy Select Sector ETF, XLE.
But let’s switch gears to another commodity (and related stock) that’s surging right now as the market wakes up to its inefficient pricing. And the upside here could be far greater than that of oil.
Hopefully, you’re already in this trade. We highlighted it in the Digest last November thanks to research from our macro expert Eric Fry, editor of Investment Report.
From our November 28, 2023, Digest:
You think demand for electric vehicles will be around in a decade? What about green energy solutions?
Let’s go even more basic – do you think we’ll be using computers in a few years?
If so, then you’re bullish by proxy on aluminum. And that means you need to look at the U.S.’s largest aluminum producer, Alcoa (AA)…
Due to widespread anxiety about a global recession, aluminum’s price has tanked. And that’s weighed heavily on Alcoa’s price.
After diving into Eric’s research about the aluminum market and Alcoa, here was his takeaway:
Despite the strong supply-demand dynamics in the aluminum market, the Alcoa share price is reflecting all doom and no boom. The stock changes hands for less than four times earnings.
From this low valuation, Alcoa offers substantial upside potential – both over the next few months and over the next few years.
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If you jumped into Alcoa based on Eric’s suggestion after that Digest, you’re up 39%
If you missed it, don’t worry. Eric believes there’s plenty more inefficiency in AA’s price that’s suggestive of more gains to come.
Here’s Eric from earlier this week:
Aluminum futures prices recently shifted into “backwardation” for the first time in nearly a year.
The typical pricing structure in commodity markets is called “contango.” That’s when the closest-dated futures contract is cheaper than the contracts that are further out in time. But when contango pricing flip-flops, or goes backward, the market is in backwardation…
This relatively rare backwardation phenomenon is a sign that buyers want their metal right now – not two or three months from now.
Not surprisingly, periods of backwardation tend to coincide with periods of rising aluminum prices.
Perhaps that’s part of the reason why shares of Alcoa have jumped 50% during the last four months. They might be “sniffing out” a major aluminum rally.
If so, then Alcoa could very well be on the verge of outperforming the market.
For some quick context, AA trades at about $36. As you can see below, it would need to nearly 2X from here to reach where it traded in March 2022.
As for aluminum and the case for greater demand pushing prices higher, I’ll add that countless industries and sectors can’t operate without it.
You have consumer goods (think aluminum foil) … restaurants… hospitality… construction… shipping/trucking… video/audio technologies… industrial/municipal LED lighting… military/defense… agriculture… the list is near-endless.
And, of course, all things tech. So, if you’re bullish on tech this decade, you’re bullish on aluminum.
Despite this, aluminum trades at $2,670 as I write, which is about 40% below its 2022 peak of $3,732.
Now, there’s a different profit opportunity happening today with yet another commodity – lithium. We’re not going to get into that one right now, but for a free research video that Eric has put together about it, click here.
Let’s highlight another “inefficient” profit opportunity, this one from legendary investor, Louis Navellier
It might surprise you…
Buy Nvidia.
If you’re like me, that raises an eyebrow. After all, the AI chip leader has surged 206% over the last 12 months alone. That’s nearly 10X the S&P’s return.
If this price is “inefficient,” as is our theme today, wouldn’t it be inefficiently high?
Well, NVDA’s price has pulled back as much as 10% over the last two weeks, and Louis offered a simple suggestion: “Pounce on the pullback.”
From Louis and his research team in Market 360:
The sell-off may continue in the immediate-term, given the current direction of investor sentiment. Still, it may not be long before the recovery begins…
Based on recent results from one of Nvidia’s chip manufacturing partners, AI chip demand remained robust during Q1 2024, and is poised to stay robust during Q2 2024. This further calls into question recent “AI slowdown” worries.
Despite rising competition, numerous analysts remain confident that Nvidia will continue to dominate the AI chip market. For instance, B of A still argues that, even once rivals catch up, Nvidia will still have a 75% market share in AI accelerators, which could eventually become a $90 billion per year industry.
At just 30.6 times forward earnings, NVDA is definitely in growth-at-a-reasonable-price territory.
Put it altogether and here’s Louis’ takeaway:
The verdict: feel more-than-free to buy.
Louis recommended Nvidia to his Growth Investor subscribers back in 2019. They’re up 1,882% in their Nvidia position yet its Growth Grade still clocks in at an “A.”
And as for buying more shares at today’s price, Louis has a “Buy Below” limit price of $1,029. That’s 24% higher than NVDA’s price as I write Wednesday morning, so you still have plenty of breathing room to get in.
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The so-called experts are at it again, calling crypto investors “idiots” and Bitcoin a “hyped-up fraud.” But crypto pioneer Charlie Shrem says to ignore these people. In 2018 alone, over 100 media sources proclaimed the death of Bitcoin. It’s up 1,825% since.
Now, Charlie’s found five altcoins he thinks will soar
Where Louis is looking for the next “Nvidia” growth story
If Louis is right, Nvidia will treat investors well this decade as the chip leader helps power artificial intelligence.
But at a share price of $829, mathematics suggests it’s all but certain that Nvidia won’t be repeating its jaw-dropping market performance from the last decade – a return of 18,000%.
To generate this type of lifechanging return over the coming decade, Louis is looking elsewhere…
Quantum computing.
Here’s Louis:
Right now, artificial intelligence is all the rage in the market. This is understandable, of course, since AI is set to change the world as we know it…
Right before our eyes, companies like NVIDIA Corporation (NVDA), which makes the chips necessary for companies looking to implement generative AI, are making money hand over fist, enriching investors in the process.
We’ve certainly benefited from the rise of AI here in Growth Investor. But I am here to tell you today that you should always keep an eye out for the next technological revolution on the horizon. Because by the time the mainstream public hears about it, the “easy” money will have already been made.
That’s why I predict the next wave of innovation is going to come from quantum computing.
We’re running long in today’s issue, so we won’t tackle this new topic in detail right now. However, if you want an overview of what quantum computing is, as well as a preview of the under-the-radar company that’s on Louis’ radar, check out this free research video that Louis put together.
If Louis is right, in five to 10 years, we’ll look back at today’s prices for top quantum computing stocks and – as we did with oil today – realize just how inefficient they were.
Wrapping up, the oil trade likely has more gains to come… Eric believes aluminum and AA stock are poised for even bigger profits… Louis thinks NVDA is a good “buy” today… and if you’re looking for the next multi-thousand percent growth story, you’re going to want to beat the crowd into quantum computing.
Have a good evening,
Jeff Remsburg
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