All posts by Matt Badiali

Technology

Nvidia Stock Is Far Too Cheap to Ignore Now

Semiconductor stocks are typically the forward indicators for technology stocks. So when Micron Technologies (NASDAQ: MU) confounded the markets with its consistent single-digit price-to-earnings ratio last year, investors should have exercised caution. The good news is that the patient investor may wait out the cyclical downturn in the chip sector. It will take another six to nine months before reaching a demand and supply equilibrium. Within the graphics chip space, Nvidia (NASDAQ: NVDA) has the clearest headwinds to work through. In knowing what inventory it needs to work through, NVDA stock could start recovering within one or two quarters.

Nvidia experienced excess inventory in the channels, which hurt its revenue forecasts. It blamed the crypto hangover for the excess supply imbalance. At significantly lower prices, cryptocurrency is not likely to recover any time soon. This is the bad news for anyone holding crypto. For NVDA and Advanced Micro Devices (NASDAQ:AMD) shareholders, chances are good that the excess GPUs on the market will clear.

The two firms likely benefited from an increase in sales during the holiday season, after retailers offered rebates and discounts on graphics cards. Once the last-generation card supplies are cleared, game developers will embrace Nvidia’s ray-tracing. RTX card sales slumped in the last quarter and will be weak again for the next two quarters due to cheaper models still on the market.

The fact that Electronic Arts (NASDAQ:EA) was the only big name embracing RTX through its Battlefield 5 title did not help RTX sales. Worsening Nvidia’s near-term prospects was the significant drop in sales of BF V.

Market Opportunity for Ray-Tracing

Nvidia’s Turing brought ray-tracing to games, but pushes its technology forward through the Pro Visualization business. For the last 10 years, the industry simulated such effects as the reflection of light and rays of light bouncing off objects. Ray-tracing processes these effects in real-time. In performance terms, it should bring a 25% – 30% improvement over the Pascal architecture. And at the top-end, performance is 10-fold better.

Within the enterprise space, such as TV, film and Photoshop work, RTX will speed up the development of special effects. Nvidia inserted its graphics technology in around 1.5 million servers, which is worth a few billion dollars in business revenue. As companies slowly embrace RTX, investors should expect the company maintaining and even growing its profit margin.

At a $133 share price, NVDA stock is trading at a more reasonable multiple of around 19 times earnings. With earnings-per-share growth of 15.5% over the next five years, the stock is valued at a PEG of 1.20 times and 19 times forward earnings. AMD, despite falling to $18, still trades at a 30 times P/E multiple.

Fair Value

Analysts did not yet lower their price target on Nvidia. At a $228.50 average price target, based on 30 analysts, the 76% upside (per Tipranks) appears out of touch.

Analyst Firm Position Price Target Date
Mitch Steves RBC Capital Buy $200.00 7 days ago
Timothy Arcuri UBS Hold $190.00 17 days ago
Vijay Rakesh Mizuho Securities Buy $230.00 20 days ago
Rick Schafer Oppenheimer Buy $250.00 21 days ago
Atif Malik Citigroup Buy $244.00 21 days ago
John Pitzer Credit Suisse Buy $225.00 Last month
Ivan Feinseth Tigress Financial Buy — Last month
Matt Ramsay Cowen & Co. Buy $265.00 Last month
Louis Miscioscia Daiwa Buy $203.00 Last month

Source: tipranks

As shown in the table above, only one analyst from RBC Capital posted a report on Nvidia stock. The other analysts did not change their view in the last month.

NVDA Is Too Cheap to Ignore

At a P/E now in the teens, markets severely punished Nvidia for failing to forecast GPU demand.

Nvidia Stock

The selloff, which started in October, is now over-done. When the company reports results in February, it will have a better idea on RTX sales for the year, along with the progress slimming down Polaris inventory.

Investors may consider starting a position in NVDA stock at these levels.

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Uncategorized

Here’s Why You Should Buy Gold Now

The remains of the Spanish galleon Nuestra Señora de Atocha sat on the bottom of the ocean for over 380 years. The famous treasure-laden ship sank in 1622. In 2005, Capt. Jack Jowers of the R/V Dare lifted a 4-foot-long golden chain from the sea floor.

The gold sparkled in the sunshine as if no time had passed.

It was a fantastic discovery that whetted the appetites of treasure seekers all over. There’s nothing more alluring than seeing a diver, still in the sea, holding up sparkling gold.

The fact that gold keeps its luster even in the ocean speaks to the secret of its longevity and desirability.

The Superman of Elements

There aren’t many substances that don’t break down in seawater. Most metals in seawater become something else. Silver, zinc, copper and iron all happily combine with oxygen and rust.

Gold, on the other hand, does not rust. It takes high temperatures and pressures to make gold form compounds with other elements. The reason is simple: It’s a happy element.

 Most elements are unhappy with themselves — they need to add or drop electrons to feel good. That means they turn into something else by combining with other elements. Most metals want to join with oxygen to get those extra electrons. The result is metal oxides — rust.

Gold isn’t like that. It’s happy all by itself, which makes it the Superman of elements. It’s so durable that nearly all the gold ever mined is still around today. That’s roughly 187,200 metric tons, according to the World Gold Council.

To put that in perspective, we produced about 3,100 metric tons of gold in 2015, a record volume. That means, on our best year ever, we added just over 1% to the total gold available.

For investors, that means we can’t rely on fundamentals such as supply and demand to give us hints on the direction of gold prices. The price of gold is much more about economic conditions around the world. To understand the price of gold, we have to understand money.

Scraps of Paper and Cloth

Money is actually just a fiction that we all agree upon. We say that this scrap of paper and cloth with writing on it has value, so it does. The price of gold, on the other hand, is set by people hedging their bets on that fiction.

Sometimes we feel less confident about the value of a currency. When that happens, we want to own fewer scraps of paper and more “stuff.” Gold is a good choice. It has a long history of being a store of value because of its appearance and utility.

The price of gold shows the long-term confidence of investors versus their faith in the dollar:

The price of gold is about economic conditions around the world. To understand the price of gold, we have to understand money.

As you can see, gold is more than four times more valuable today than it was in 2001.

The reason is simple: There is a finite pool of gold. The amount added to the total every year is minimal. On the other hand, the number of new dollars in circulation is unlimited. The stated goal of most governments today is to create inflation. They do that by flooding the world with currency.

Think of the volume of gold in the world as a big pie. There are only so many pieces of that pie. The more money we add, the smaller the slice of the pie you can afford becomes. On the other hand, if you already have a slice, it becomes worth more and more money.

That’s why owning some amount of gold is critical for every investor. It’s insurance against inflation. It doesn’t have to be bars or coins either. Jewelry makes a great investment … and it looks nice too.

Good investing,

Matt Badiali
Editor, Real Wealth Strategist

In this exciting NEW VIDEO, Wall Street legend and former multibillion hedge fund manager Paul Mampilly pulls back the curtain on the biggest investment opportunity in the market today. What insiders are calling “The Greatest Innovation in History,” this revolution will mint more millionaires and billions than any technology that came before it. Right now, the current market for this technology is just $235 billion, but given how fast this technology is moving experts predict it will soar to $19 trillion by 2020. But 8,000% growth is just the beginning—and now’s your chance to get in on the action. [CONTINUE TO VIDEO]

Source: Banyan Hill

Uncategorized

My Prediction for 2018 — This Forgotten Metal Will Soar

It was a brutal six years for the mining industry. While some metals saw their prices rebound in 2017, others didn’t.

There is a formula for rising prices — demand must exceed supply. In some cases, like zinc, a lack of investment meant supply fell below demand. Copper, whose price rose 27%since early 2016, is another metal that will struggle to meet demand.

In 2018, a different metal’s price will begin its rise…

Platinum’s New Trend

Here’s a six-year price chart of platinum:

Despite a 6-year decline in the price of platinum, it wouldn’t surprise me to see platinum prices rise 25% next year. Here's why it will happen.

You can see the steady decline from 2011 to 2016. The price fell by more than half to January 2016. There was a brief rebound that year. Then the price collapsed to its lowest price in two years earlier this month.

The question is: Why do I think this trend will change in 2018?

The answer is simple … supply can’t keep up with demand. In 2017, the supply/demand number was almost even. According to the World Platinum Investment Council, 2017 will end with a small deficit, around 15,000 ounces.

However, that same group expects the gap to expand. In 2018, demand for platinum will rise 2% to 8 million ounces. Supply will fall by 1% to 7.75 million ounces. That means the deficit will be 250,000 ounces.

An Extreme Low for Platinum Prices

In the past, this kind of deficit was enough to draw platinum sellers out. However, the platinum price is sitting at an extreme low. Without a significant increase in price, there won’t be an incentive for sellers. That’s one reason I expect platinum prices to rise in 2018.

But there’s another reason … sentiment.

One of the reasons that copper prices rose so rapidly in 2017 was the idea that electric vehicles would spur demand. That’s right, the price of copper rose because of expected demand. On the opposite side of the coin, platinum prices fell because of a lack of expected demand.

Platinum’s main commercial use is in diesel catalytic converters. In the wake of the Volkswagen scandal, where the company admitted to faking diesel efficiency, the perception of diesel cars fell. And so did the perception of platinum.

In other words, investors didn’t think demand for platinum would come, so they didn’t buy platinum. And so, the price fell.

From a supply perspective, platinum is far worse off than either zinc or copper. Platinum isn’t widespread. Most of the existing mines are deep, old and running out of metal. There aren’t many new platinum mines on the horizon.

Add that to low prices (which spur demand) and a stronger European economy (that prefers diesel cars). That will change platinum’s fortunes in 2018. It wouldn’t surprise me to see platinum prices rise 25% next year.

Good investing,

Matt Badiali

Editor, Real Wealth Strategist

It’s not silver or platinum. It’s not aluminum, nickel or lithium, either. But this “magic” METAL is found in everything from cars to airplanes, smartphones and computers, even batteries and cosmetics. It even has the power to fight diabetes, depression, weight loss and cancer. It’s worth billions, even trillions. But here’s the problem—this metal is disappearing. The world’s reserves are quickly being sucked dry. But a group of geologists have just struck the motherlode, and the one company behind it could earn investors an absolute fortune as they solve the greatest commodity crisis in human history. [FOR MORE INFORMATION CLICK HERE]

Source: Banyan Hill

Energy

This Hated Commodity Could Make Huge Gains in 2018

The forecast showed an extra 20 million pounds of uranium production for 2018 … with no buyers. As you can imagine, the uranium price plummeted.

It hit its lowest price in October 2016 at $18.75 per pound. That touched a 13-year low price.

The downtrend began back in 2011. The uranium price peaked at $72.50 per pound in January 2011. It fell steadily since then, down a total of 74%.

This is a shocking result for an energy source that many embraced as a “green” rescue from hydrocarbons just a few years ago. Nuclear power creates safe, carbon-free energy.

The problem is, it can cause huge disasters. That’s what we discovered when the Fukushima disaster struck Japan.

The Demise of Nuclear Power

An earthquake and tsunami damaged the Fukushima Daiichi nuclear power plant in March 2011. The earthquake damaged a reactor. Then the tsunami inundated the area, destroying vital backup generators.

Without the backup power, cooling water couldn’t get into the plant. That caused a runaway reaction, a meltdown — the greatest fear for all nuclear power plant operators.

A series of human errors compounded the damage. The operator, Tokyo Electric Power Company, was completely unprepared for the situation.

The result killed the nuclear power industry.

Fukushima turned the world against nuclear power. Germany shut down all its reactors in response. Demand for uranium fell, and the uranium price collapsed.

This finally led major uranium producer Cameco Corp. (NYSE: CCJ) to cut production in early November 2017. The company’s earnings fell and fell. It struggled to maintain profitability. It finally announced that it would suspend operations at its flagship McArthur River mine for 10 months.

Cameco’s decision cut the surplus to just 5 million pounds … and then the unthinkable happened: The world’s largest uranium producer followed suit. Kazakhstan’s state-owned uranium miner Kazatomprom cut production by 20% for the next three years.

The result could be a massive bull market in uranium.

The Uranium Price and A Windfall for Uranium Producers

Shares of Uranium Participation Corp. (Toronto: U), which hold physical uranium for investment, soared in response. As you can see from the chart below, shares are up 30% in just a month and a half.

Kazakhstan’s state-owned uranium miner Kazatomprom cut production by 20% for the next three years.The result could be a massive boom for the uranium price.

Shares of uranium companies surged too. However, this is just the beginning. Analysts that cover the uranium sector believe these cuts could add $30 per pound to the price of uranium. That’s more than double the current spot price.

For uranium producers, this will be a windfall. Companies like Cameco and Ur-Energy Inc. (Toronto: URE) will see revenue and earnings rocket higher.

This appears to be great news for the uranium sector. It’s a story we’ll continue to watch in 2018.

Good investing,

Matt Badiali

Editor, Real Wealth Strategist

Right now, an untapped ocean of energy—found underneath all 50 states—is about to transform the world’s energy industry. In fact, there’s enough of this energy in the first six miles of the earth’s crust to power the United States for the next 30,000 years. Wanna know this untapped energy source? Learn NOW! And as companies rush to extract this energy from the ground, they’ll need the help of one Midwestern company’s technology to make use of it. This is your chance to take advantage of John D. Rockefeller-type fortunes. Early Bird Gets The Worm...
Resources

Copper Is the One Metal You Can’t Ignore

The price of copper is at its highest point since 2014.

The red metal’s price rose from the latter part of 2016 and all of 2017. You can see what I mean from the chart below:

copper

The shift to electric vehicles will be a major driver of this trend going forward. According to Reuters, an industry report stated that the electric vehicle revolution will drive a “nine-fold increase in copper demand” from the automobile sector.

The number of electric vehicles (cars and buses) will rise from 3 million in 2017 to 27 million in 2027. That will drive demand for the metal from 185,000 metric tons per year to 1.74 million metric tons in 2027.

The car sector will go from using less than 1% of the world’s copper supply to 7% (assuming today’s production level).

We are going to need a lot more over the next 10 years to make up for that completely new demand.

The Next Phase in Copper’s Rally

What’s more, that demand will arrive just as the world’s economies come out of a long slumber. In 2016, the world’s GDP grew at 2.44%, the lowest rate since 2009.

However, there are signs that global growth is improving.

Oil demand is up which means copper demand should be too.

There’s an old saying about copper being the metal with a Ph.D. in economics. What that means is that copper is extremely sensitive to economic growth.

If the world is doing well, demand for copper goes up. As demand rises, so does the price. And demand has been surging this year, driving copper’s stellar rally.

However, in the near future, we see a brand-new source of demand on the horizon.

If you haven’t gotten into this  market yet, you need to. This metal’s run is only just beginning.

Good Investing,

Matt Badiali

Editor, Real Wealth Strategist

It’s not silver or platinum. It’s not aluminum, nickel or lithium, either. But this “magic” METAL is found in everything from cars to airplanes, smartphones and computers, even batteries and cosmetics. It even has the power to fight diabetes, depression, weight loss and cancer. It’s worth billions, even trillions. But here’s the problem—this metal is disappearing. The world’s reserves are quickly being sucked dry. But a group of geologists have just struck the motherlode, and the one company behind it could earn investors an absolute fortune as they solve the greatest commodity crisis in human history. [FOR MORE INFORMATION CLICK HERE]

Source: Banyan Hill 

Resources, Technology

Tesla Can’t Make Electric Cars Without Copper

Experts at copper giant Codelco, the Chilean state-owned mining company, believe the red metal could hit $10,000 per metric ton next year. That’s $4.55 per pound.

It would be a 46% increase from its current price. And that’s after copper prices rose 50% in the past year.

According to the giant mining company, supply and demand are out of balance. There won’t be enough copper to meet demand. And that means rising prices.

A Red Metal Bull Market

As you can see in the chart below, rising prices have been the theme in copper since late 2016:

If the electric car market explodes, as most analysts believe, copper demand will as well. Tesla can’t make electric cars without copper…

In a recent interview for the annual LME Week in London, Codelco Chairman Oscar Landerretche said: “Our projections show a sustained increase in deficits, and we don’t have any reason — that we know of — for closing them in the future.”

This was a huge flip for Codelco. Landerretche attributes the change in outlook to “the acceleration of the electrical economy.”  The company didn’t expect the speed of the change.

Supply of metals from mines is slow to react, both going up and going down. On the other hand, demand can move quickly. When that happens, it can have a huge impact on prices.

Part of that rapidly rising copper demand comes from electric vehicles.

According to analysts at Morgan Stanley, the average electric vehicle has 165 pounds of copper in it. Over 88 pounds of copper are in the batteries alone. The rest is in the vehicle itself. A typical electric car battery is 20% copper, by weight.

If this market explodes, as most analysts believe, copper demand will as well. You can’t make electric cars without copper…

The Copper Sector Is Red-Hot

Today, electrical and electronic products consume 38.7% of the copper supply. Building construction is a close second at 30%.

The copper price rises and falls with the world’s largest economies. When we have robust economic growth, the copper price climbs as supplies tighten. However, when growth slows, supply outpaces demand, and the price falls.

Today, we are in a period where demand is rising. Giant investment bank Goldman Sachs increased its 12-month price target to $3.20 per pound. That’s a serious increase for a metal that spent most of 2017 below $2.75 per pound.

The copper sector is hot, but if the price rises, it’s going to positively boom. Make sure you can profit.

Good investing,

Matt Badiali
Editor, Real Wealth Strategist

It’s not silver or platinum. It’s not aluminum, nickel or lithium, either. But this “magic” METAL is found in everything from cars to airplanes, smartphones and computers, even batteries and cosmetics. It even has the power to fight diabetes, depression, weight loss and cancer. It’s worth billions, even trillions. But here’s the problem—this metal is disappearing. The world’s reserves are quickly being sucked dry. But a group of geologists have just struck the motherlode, and the one company behind it could earn investors an absolute fortune as they solve the greatest commodity crisis in human history. [FOR MORE INFORMATION CLICK HERE]

Source: Banyan Hill 

Energy

My Recommendation Is Up 19% Since August. Did You Buy It?

Back on August 4, I told you that major oil companies were raking in record cash flows. Giants like BP (NYSE: BP) and Royal Dutch Shell (NYSE: RDS) made more cash in the first half of 2017 than they did in 2014, when oil was more than $100 per barrel.

However, one critical sector didn’t see the benefits of that cash flow at the time — oil service stocks.

At the time, Schlumberger Ltd. (NYSE: SLB) had its best quarter since the end of 2015. Revenue and earnings spiked higher.

It was clear that these companies made it through the bear market. The fundamentals headed higher … but share prices just hadn’t moved yet.

As I told you in August, there was zero chance that the service companies will continue to fall if the major oil companies are making record gains. That’s exactly what happened in mid-August. Oil service companies bottomed, as you can see from the chart below:

As I told you in August, there was zero chance that the service companies will continue to fall if the major oil companies are making record gains.

The chart above is the VanEck Vectors Oil Services ETF (NYSE: OIH). It found a bottom at $21.76 per share in mid-August.

Since then, shares rose steadily. Today it trades at $25.84 per share. That’s a 19% gain in less than two months.

The price these companies charge oil companies is flexible. Oil service companies can raise their rates as their clients make more money.

The service companies, like the oil companies, took a huge hit in 2015 and 2016 as oil prices fell. Now rates are going back up. More earnings will drive the shares of these companies higher.

It’s still early in the game for oil services. If you haven’t gotten in yet, you have plenty of time to make some gains here.

Good investing,

Matt Badiali
Editor, Real Wealth Strategist

Right now, an untapped ocean of energy—found underneath all 50 states—is about to transform the world’s energy industry. In fact, there’s enough of this energy in the first six miles of the earth’s crust to power the United States for the next 30,000 years. Wanna know this untapped energy source? Learn NOW! And as companies rush to extract this energy from the ground, they’ll need the help of one Midwestern company’s technology to make use of it. This is your chance to take advantage of John D. Rockefeller-type fortunes. Early Bird Gets The Worm...

Source: Banyan Hill 

Resources

There’s Life in the Oil Patch

Today, we have too much oil on the market. The supply of oil is still well above its five-year average.

In other words, supply is high.

That should keep prices lower. However, Hurricane Harvey could push U.S. supply down … which is good for oil prices.

There is also the risk of a shooting war between major powers. The strength of the words used by both North Korea and the U.S. are fanning the flames of aggression.

It won’t take much of a mistake to cause an international incident. That risk is driving oil prices higher.

You can see it happening in the chart of Brent crude, the benchmark for European oil prices. Brent hit its highest point since July 2015.

The supply of oil is still well above its five-year average. But for the first time in a long time, it’s time to focus on the oil sector.

For the first time in a long time, it’s time to focus on the oil sector. While oil supply is still strong, demand is warming up.

The European economy is improving. Europe is the world’s second-largest consumer of crude oil. Increasing demand there would go a long way for rebalancing the oil market.

This trend could signal big gains in a beaten-down energy sector.

Regards,

Matt Badiali
Editor, Real Wealth Strategist

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