Marcus' Friday big buys: why are we still talking about Nikola?
Trust me, there's more to today's big buys than a hydrogen vehicle maker embroiled in fraud investigations.
UPDATE: Please note that the following editorial was written prior to the announcement of President Donald Trump's COVID19 diagnosis.
I feel like every single week at the moment we get to Friday and we just have to let out an almighty sigh, as if to say damn, it's been a big week. One week it's because we're experiencing a market crash and the next it's because the American's realise they have two blithering idiots vying to have their thumb on the world's most powerful red button. I wanted to break a few things down about the week that's been and gone before we dive into my big buys.
For starters, last week's big buys. Let's analyse how you went if you followed me into the abyss last Friday. If you bought into Tesla (TSLA) last week you're looking at a healthy upside of 15% this week. Congratulations, you just outperformed what most of the major funds get in an entire year. Tesla benefitted from a range of factors this week not the least the continuing positive sentiment about their ambitious plan to bring a $25,000USD electric vehicle to the market. And that's good. It's also good that the company is churning out batteries quicker and with more quality than ever. Remember though I said to go long with this stock, be prepared to take any pain necessary short term because ni the event they pull that plan to become the more affordable luxury manufacturer? They'll take the entire market over.
Exxon Mobil (XOM) had another rough week but as I said this one isn't an instant buy. Exxon is a long play and it really is dependant on the politics of the coming month or so. Unsurprisingly this stock suffered from the presidential debate on Tuesday (mainly because neither candidate got enough airtime to actually outline a climate change plan for America's future let alone the road out of COVID19). I still have hope though, in fact, the way Exxon is priced right now makes it even more attractive to me. If you've bought here? The only thing you should be doing is looking at election polls.
The Coca Cola Company (KO) for the week pretty much stayed stable with a downturn of about 0.50%. It did experience a high though earlier in the week off the back end of PepsiCo's earning's call where they announced impressive year on year growth as a result fo the COVID19 economy. That combined with PepsiCo's huge 2.19% high just after earnings this week tells me that Coke are going to have a good quarter. Wait for the high earnings call here and dump the stock (buying on the low again). Fast food certainly doesn't look like it's slowing down anytime soon.
I'm going to quickly look at the environmental factors of the week before we have a chat about what I want to buy next week.
Let's talk about "that debate"
I honestly can't get my head around this one. I thought we in Australia had two incompetant pricks looking for power at the last Governmental election. But looking at America right now we're at chalk and cheese. Chris Wallace mentioned the US economy once during the disaster that was Tuesday's debate between Vice President Biden and President Trump. And guess what? No-one said anything. Ironically the whole lots of nothing said in the debate propped the US markets up. Well, maybe not. To be frank, the futures just after Tuesday's debate plummeted. But they then soared again to the high we have right now because of...
The COVID19 stimulus
Yeah I know I rambled about stimulus in my EV article earlier in the week. But on a more broader note, America is desperately in need of this stimulus right now. If they don't get it really soon financial stocks are going to start taking a hit and the reason for that is the benefits that this stimulus brings. Stimulus at it's core benefits the average American consumer but it also secondarily benefits small business. The Global Financial Crisis of 2007 was caused by a topple of credit backed swaps to do with mortgages but what we may see in 2020/2021 is a small business based credit crash. And it's scary because while small business doesn't really compete in volume with any bigger retailer or hospitality venue it still balances these sectors by providing collective competition.
Can we stop talking about Nikola (NKLA)?
I'm sick of this stock. They've been up again this week over 30%. The problem I have with Nikola is that it's not a good company. But we live in an age of Robinhood investors and the bulls of those investors don't care about whether a company is actually legitimate or not. They care about whether or not they're going to make them money. Nikola is currently up 135% over the past 12 months. At one point during June the stock was up over 600%. But the volatility here is problematic. It's not about foresight, it's about recognising that this company is not the next Tesla, that they're ex-founder and CEO is the subject of a fraud investigation and while they're promising huge product numbers (which drove this week's price hike) they haven't delivered squat yet. GM investors had better hope they tether themselves from this sinking ship.
Let's hop into this week's buys
Corsair Gaming (CRSR)
This company entered IPO about a week and a half ago and dropped from it's initial pricing of $17 to $14. It was one of the last in a long line of tech debuts on the US markets over September and it probably didn't get the attention that it should've. But it is now. Corsair is up 27% over the past 30 days and considering I bought it at $14? That makes me giddy.
In case you were wondering what Corsair does? They manufacture PCs, video gaming accessories and streaming hardware. But saying it like that doesn't really do the company justice. The way I should be shilling Corsair is that they're the biggest video gaming hardware manufacturer outside of the big console and PC makers. Corsair owns Elgato (all hardware in Australia of which is sold out), SCUF (major sponsor of the Call of Duty league and preferred controller of most PS4 e-sports athletes) and Origin PC (one of the biggest custom gaming PC makers on the planet with partnerships with most of the big Youtube streamers such as Pewdiepie and Jacksepticeye).
I haven't currently got shares in Sonos because a bunch of sledge studies scared me away initially. But looking back on it I don't know why I didn't buy the stock at the time. It was priced at $12 and we're now at $16. Those sledge articles claimed that Sonos' company structure just isn't quite right with the margins being way too low and the price of their products being too high to become a volume and profitable volume audio manufacturer.
What I forgot at the time is that Apple did just that about two decades ago. And now it annoys me. In the immortal words of Daniel Ricciardo last weekend at Sochi when he was told he had a 5 second time penalty for taking wheels over rumble strips and rejoining the track unsafely "that's my bad. I'll make up for it. I'll just drive faster." And the fact is Sonos will just have to sell more.
And will they? Well, they undercut the entire premium audio market and their products are best in class. I have them throughout my house and can't fault them. That makes me think? Maybe they'll pull it off. And if they don't? The brand's corporate identity, quality and pricing all fit with Apple's core market as well. A buyout was rumoured in July. It wouldn't surprise me if they pick the company up for penny's on the dollar and if that happens we'll all reap the rewards.
I talked about Ferrari earlier in the week in a full article where I described why I like the company. I'm now going to add it to my portfolio because I'm convinced the auto-maker is diversified between fuel and renewables enough to weather either a Biden or Trump automotive victory and I know for a fact that the rich have gotten richer during this pandemic. And with the absence of travel during COVID19? The rich need to spend their money somewhere. Ferrari have planted the seed for those purchases by spending the past 24 months refreshing their range and it's looking stronger than ever to take advantage of the COVID19 economy.
The company is up 21% over the past 12 months but down since the September market churn. I'd be buying these guys prior to their earnings call in November and prior to their inevitable upturn before the US election. Both are going to be positive news for the company who recorded record sales numbers in 2019 and are sure to do the same in 2021 once we've put the Coronavirus behind us.
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