Presidential Election Drama
The U.S. presidential election remains undecided going into the weekend, as state officials continue to tally votes in battleground states including Pennsylvania, North Carolina, Georgia and Nevada.
More than 159 million Americans voted in the presidential election, but it looks likes recounts could happen in at least Pennsylvania, Michigan, Georgia and Wisconsin.
Hopefully a winner is called soon, but in the meantime, Wall Street doesn’t seem worried.
In fact, it’s been celebrating the prospect of gridlock in Washington D.C. as the Senate appears it will remain in Republican control. The Dow rose 6.2% this week through Thursday and is taking a breather today.
BABA IPO Falters
While the elections consumed most of the media’s bandwidth this week, China’s online and mobile commerce leader, Alibaba Group Holdings Ltd. (BABA) made headlines Tuesday when its potential subsidiary, the financial services company Ant Group, had its IPO on both the Shanghai and Hong Kong stock exchanges suspended two days before the planned public debut.
The IPO was set to become the biggest of all time, topping Saudi Amarco’s 2019 public offering that raised $29.4 billion.
Ant Group is widely known for operating China’s most used digital wallet, Alipay, which has over 900 million users in China alone. Alipay launched in 2004, and is also known for running one of the largest money market funds in the world. It’s more recently expanded into wealth management, micro loans and other financial technology services.
In 2011, Alibaba sold Alipay to a group owned by Alibaba co-founder, Jack Ma. In 2018, Alibaba then bought a 33% stake in Ant Financial, Ant Group’s earlier incarnation.
Ant Group’s impending IPO was scuttled shortly after Ma apparently made public statements criticizing China’s financial regulators and banks, which he claimed were holding back growth and are in need of reform.
China’s regulators didn’t take kindly to Ma’s public criticisms and suspended the IPO indefinitely. As a result, the stock dropped like a rock – falling over 8% the same day.
On Thursday, BABA released results for its second quarter in fiscal year 2021. Annual active consumers on Alibaba’s sites climbed to 757 million and mobile monthly users rose to 881 million, as the company’s “domestic core commerce business continues to grow steadily” in the wake of the pandemic in China.
The stock bounced back a bit today but is still down for the week.
Bitcoin Hits Multi-Year High
The world’s largest cryptocurrency by market cap, bitcoin (BTC), soared to its highest level since January 2018 on Thursday, piercing through $15,000. So far this year, bitcoin is up nearly 109%.
According to Coindesk, the number of accounts holding the cryptocurrency keeps rising with the price, which likely means more and more retail investors are dipping into the crypto market.
Indeed, digital payments and financial services company Square (SQ), which announced it beat analyst estimates for revenue and earnings in the third quarter Thursday, reported its popular Cash App generated $1.63 billion in bitcoin revenue and $32 million in bitcoin gross profit, up about 11X and 15X, year-over-year. That was almost 80% of the company’s total Cash App revenue for the third quarter.
The company is leading a trend of facilitating bitcoin purchases for everyday customers.
Square competitor, PayPal Holdings (PYPL), has also begun selling bitcoin. The company recently announced it will allow customers to buy, hold and sell bitcoin and a few other cryptocurrencies. The cryptocurrencies held in PayPal accounts can be used to pay for purchases at 28 million stores around the world.
Interestingly, companies have even begun storing some of their own cash reserves in bitcoin.
In October, Square joined firms like MicroStrategy Inc. (MSTR) and the Grayscale Bitcoin Trust by adding $50 million worth of bitcoin to its own treasury. Grayscale currently owns about $6.7 billion worth of bitcoin and has plans to keep ramping up its supply.
While that all appears to be great news for the sector, personally, I’m not a fan of bitcoin or cryptocurrencies.
Instead, I prefer fundamentally superior stocks that have outstanding earnings and revenue growth.
And with an absolutely stunning third-quarter earnings announcement season underway, my Growth Investor portfolio is teaming with opportunities in cutting edge technology sectors.
Take 5G wireless connectivity…
The Bigger 5G Picture
From artificial intelligence and virtual reality to smart factories and robotics, remote surgery, self-driving cars and connected cities, 5G is the keystone technology that supports and enhances the buildout of the others.
And the 5G rollout has already arrived. Currently, 100 mobile operators in 44 countries or territories have launched 5G services to some degree, according to the Global mobile Suppliers Association. And there are now 138 million 5G connections worldwide, representing a 116% increase from the first quarter of 2020.
This is big business. Nokia believes 5G-enabled industries are poised to generate $8 trillion worth of economic activity by 2030.
The bottom line: 5G is what’s helping keep us all connected in the modern economy. If you live somewhere without reliable broadband access, you might have trouble keeping up with shopping or even finances in the “new normal.” That is, until ultrafast 5G wireless changes all that for you.
Now that we’re all upgrading to 5G from coast to coast, and around the world, it’s mind boggling to consider all the technology involved. And, particularly, all the new hardware that will be required. This is where the best opportunity for investors comes in.
For my money, I’m not going to bet on any one application of 5G. Or even one provider of 5G. I want the companies who make all of it possible.
The King of 5G “Turbo Button” Technology
Mobile providers like AT&T (T) and Verizon Communications (VZ) need 5G to maintain their edge – and get people into new smartphone contracts. But the big profits will come from the companies that help create 5G.
One such company I like now is much lesser known than the Big Telecom companies but has excellent growth prospects.
This company is already one of the biggest semiconductor equipment manufacturers in the world. These days, its products for machine learning, optics, sensors and analytics are getting deployed for all sorts of next-generation technologies: the self-driving cars, robotics, cloud computing and the larger Internet of Things (IoT).
This is the kind of stock that can help you profit from all the 5G infrastructure that’s popping up everywhere.
The company released its third-quarter report last week and beat Wall Street’s expectations for the top- and bottom-line. It’s climbed 11.9% over the past month, and blew past its 52-week high this morning.
But there’s plenty more upside remaining.
Analysts are anticipating 9% sales growth and 19.5% earnings growth in the upcoming quarter.
So, if you’re looking to invest in this growing 5G company, your window to get in while the stock price is still low is closing quickly.
For all the details, simply watch my free briefing on 5G and join us at Growth Investor today. As soon as you do, I’ll send you a copy of my special report, The King of 5G “Turbo Button” Technology, that will tell you everything you need to know about this company and 5G.
Note: The Editor hereby discloses that as of the date of this email, the Editor, directly or indirectly, does not own the following securities that are the subject of the commentary, analysis, opinions, advice, or recommendations in, or which are otherwise mentioned in, the essay set forth below.
Alibaba Group Holdings Ltd. (BABA), PayPal Holdings (PYPL)