Category Archives: Technology

Tesla Is Going to Embarrass Warren Buffett

October 9, 2017 Chad Shoop

“I’ll meet you at Pilot” my future wife said to me before hanging up the phone.

She was explaining to me how to get to her parents’ house. (This was before our phones were a GPS device.)

But by meeting me at the Pilot gas station, I knew exactly where that was.

In the town she grew up in, it was a local landmark. Right off the highway, Pilot always had the cheapest gas and was a spot everyone knew of.

That was over 10 years ago, though.

Now it’s just another gas station along the Interstate 40/Interstate 85 corridor in the middle of North Carolina.

However, even though it is just one of many gas stations with competitive gas prices across the country, legendary investor Warren Buffett felt the value was now ripe for an investment.

Last Tuesday, he announced his company, Berkshire Hathaway, would buy a 38.6% stake in Pilot Flying J, which operates the little truck stop I was meeting my future wife at.

To me, he is clearly going against one of his investing rules — never buy a stock you are not comfortable owning for 10 years.

And if you typically follow Buffett’s investments, this is one you should pass on. Here’s why.

The Oracle of Omaha

I have a lot of respect for the Oracle of Omaha. Who wouldn’t? He is the world’s third-richest person, and his success story is one of the greatest.

Many investors idolize him and simply buy whatever he buys.

However, I think he is making a mistake on his latest acquisition, Pilot Flying J.

It actually goes against one of his main rules, if you ask me.

I have used his No. 1 rule before, which is to never lose money, but he has a few other rules to invest by. One of them is to never buy something you don’t want to own for 10 years.

That’s his investment time frame in a nutshell. “If you aren’t willing to own a stock for 10 years, don’t even think about owning it for 10 minutes.”

But Buffett’s latest acquisition is one I am uncertain about in just five years, and I question its existence 10 years from now.

Still, that hasn’t stopped investors from chasing his trade.

TravelCenters of America LLC (Nasdaq: TA) jumped 10% on the news, without even knowing the financial details of the transaction. That’s partly because the announcement of the Pilot acquisition mentioned Berkshire Hathaway’s capital and ability to expand, and TravelCenters may be one acquisition it is eying.

However, I doubt the usefulness of a truck stop/gas station in a future that is going electric and self-driving.

Going Electric

I find it extremely ironic that Buffett made this acquisition in the same month that Tesla planned to unveil its electric, self-driving semitruck. Granted, it is several years away from being operational, but the fact remains that in five years, almost all of the new cars being released will be electric, as indicated by the major automobile manufacturers.

I’m sure Buffett has thought about this, and still finds the real estate that Pilot owns to be a worthy acquisition. But to me, in just five years this is a company that will be searching to find its place in a world that is going electric and autonomous.

Does Pilot just become a place to stop on long trips and use the restroom? Somewhere to get junk food? Or will it be branded as a completely different use? I don’t know.

But I do know that when major manufactures like Ford, General Motors and BMW make the shift over the next few years to an almost entirely electric and automatic fleet, the amount of charging stations will multiply. And I may be five years off, but that brings up Buffett’s 10-year time frame, and I don’t know what a gas station will be like in 10 years.

I just know it won’t be your typical gas station anymore. Because instead of having to stop at a gas station before you get home, you’ll simply charge up at your house.

And instead of having to stop for gas after a 300-mile trip, you’ll simply pull into the hotel and charge up while you stay there.

So this is not an investment I would want to own for the next 10 years. And I think trading TravelCenters is a risky bet at the moment too.

If you buy it, you’re hoping Berkshire Hathaway has its sights set on that company. Because if it doesn’t, TravelCenters will likely fall back. But betting against it is too much of a risk because of the possible acquisition.

For now, this is simply not the investment to follow Buffett on. And I don’t say that often.

Regards,

Chad Shoop, CMT
Editor, Automatic Profits Alert

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

Growth Stocks, Technology

Warren Buffett Bought These 3 Airline Stocks for Their Wifi

October 5, 2017 Tony Daltorio

One certainty I discovered when conducting my Singularity research project is this. . .that new technologies will disrupt nearly every industry.

Take the stodgy airline industry. The Internet of Things (IoT) is about to make airlines more profitable than they’ve been in the past. I’m sure you wondering how this will be accomplished. Simple – instead of treating their passengers as travelers, consider them online consumers.

Before I go into more detail, let me fill you in on more background on the industry.

Low-Cost Carriers and Services

In this age of low-cost airlines, the days of when airlines made the majority of their money from airfares are largely gone.

Today, so-called ancillary services have become an important source of revenues. On average, airlines today earn about $17 per passenger from add-on services such as food and drink, and duty-free goods purchases. The estimated total for the entire industry is $60 billion from add-on services.

Looking more closely at the top 10 airlines (ranked by add-on services), just 10 years ago, they earned only $2.1 billion from ancillary services. But research from IdeaWorksCompany and CarTrawler found that last year these airlines earned $28 billion from add-on services.

However, the lure of buying duty-free goods on airlines has become stale for passengers. A 2016 report from m1nd-set Generation forecast such sales would experience an annual growth rate of minus 1.5% for airlines through 2025.

Another revenue source has to be found and quickly. And it’s there. . .awaiting the airlines that adopt in-flight broadband and Wi-Fi – the Internet of Things in the air.

Passengers Want to Be Connected

Passengers’ expectations of the in-flight experience have changing rapidly. They now expect the same level of connectivity at an altitude of 30,000 feet as they do on the ground.

That much was pretty clear in a study conducted by the market research firm GfK and Inmarsat PLC (OTC: IMASY), the world’s leading provider of global mobile satellite communications. Here are the most interesting results:

60% of passengers believe in-flight WiFi is a necessity, not a luxury.
61% of passengers said Wi-Fi is more important than onboard entertainment.
45% of passengers said they would gladly pay for WiFi rather being stuck with the onboard entertainment options.
66% of passengers traveling with children would consider in-flight internet a “life saver”.

Connectivity now ranks behind only ticket prices and flight slots as a priority for passengers. That could be seen when that same survey revealed 44% of passengers would switch airlines within a year if what they considered to be a minimal level of connectivity was available. This is especially true of business travelers, as 56% said they want the ability to work while in flight.

Shopping at 30,000 Feet

Yet, most airlines still lag in offering connectivity to their passengers. The aforementioned report from IdeaWorks found that a mere 53 of the world’s estimated 5,000 airlines offer “in-flight broadband connectivity.”

Many seem unaware that they now have access to a global, reliable broadband network in-flight. As David Coiley of Inmarsat Aviation told the Financial Times, “Airlines have to adapt to this new opportunity.”

And it is an opportunity. Consider shopping an online store at 30,000 feet filled with everything from ground transport options to tours to other destination-related activities. Or returning passengers could do their grocery shopping while in-flight to have the groceries delivered when they arrive home. The possibilities are almost endless.

A study conducted by the London School of Economics and Inmarsat said that in-flight broadband – offering streaming and online shopping to passengers could create a $130 billion global market within the next 20 years. The study estimated that the airlines’ share of that total could amount to $30 billion in 2035. That’s quite a jump from the forecast $900 million in 2018.

Investing in Airlines

With this possibility of e-commerce revenue streams in the not too distant future, it may be time to look at the airlines. Even long-time skeptic Warren Buffett now owns airline stocks including Southwest Airlines (NYSE: LUV), American Airlines (Nasdaq: AAL), Delta Air Lines (NYSE: DAL) and United Continental Holdings (NYSE: UAL).

I would stick with the airlines that have the best Wi-Fi connectivity. Conde Nast Traveler magazine reports that a survey from Routehappy found that U.S. airlines are leading the way, with at least a chance of Wi-Fi on 83% of the total seating capacity.

Two of the top three airlines globally with the highest percentage of seats with Wi-Fi connectivity, according to the survey, are Delta Air Lines and United. Other smaller airlines with good connectivity are JetBlue (Nasdaq: JBLU)and Virgin America, which was sold to Alaska Air Group (NYSE: ALK). I would focus on Delta,United, and Alaska Air.

Delta operates a fleet of over 700 aircraft and serves more than 170 million customers annually. Its revenues fell 3% in 2016 to $39.64 billion, giving its efforts to reduce its debt levels more urgency. Its management is also maintaining capacity discipline while simultaneously trying to modernize its fleet and expand its operations.

The company is trying to enhance its shareholders’ wealth through dividends and share buybacks. In May 2017, Delta announced that its board of directors approved a new share repurchase program worth $5 billion and raised its quarterly dividend by more than 50%.

United is the world’s largest airline, operating about 5,000 flights a day. However, the merger of UAL with Continental has left the merged company with a significant debt load. Its significant exposure to Houston also means it was greatly affected by Hurricane Harvey.

Its return on equity (ROE) is 29.5%, above the industry average of 27.6%, offering growth potential. And it is cheap. Its trailing 12-month enterprise value to earnings before interest, tax, depreciation and amortization ratio is only 3.9. That compares to the value for the S&P 500 of 11.1.

Alaska Air operations cover the western U.S., Canada and Mexico as well as, of course, Alaska. I like the purchase of Virgin America, despite the rise in the amount of debt it now has. The company’s August traffic report showed that its load factor (percentage of seats filled by passengers) increased to 86.2% from 85.8% in the year ago period as traffic growth exceeded capacity expansion.

I think that is due to the company’s expansion efforts. One example is the frequent-flyer partnership with the European airline Finnair, announced in May 2017. This customer friendly move aims to provide the members of the program, at Alaska Air Group as well as Finnair, the opportunity to earn miles/points on flights of either carrier.

It has been a turbulent year for airline stocks as the combination of natural disasters and terrorist attacks have taken their toll. Not to mention overcapacity, high labor costs, and now rising fuel costs. That’s largely why the three stocks are down respectively.

But now may be the time for contrarian investors to look past the short-term turbulence and take a small position in the airlines that are forward-looking. I fully expect we won’t recognize the industry in a decade as technology disrupts it.

source: Investors Alley

Buffett just went all-in on THIS new asset. Will you?
Buffett could see this new asset run 2,524% in 2018. And he's not the only one... Mark Cuban says "it's the most exciting thing I've ever seen." Mark Zuckerberg threw down $19 billion to get a piece... Bill Gates wagered $26 billion trying to control it...
What is it?
It's not gold, crypto or any mainstream investment. But these mega-billionaires have bet the farm it's about to be the most valuable asset on Earth. Wall Street and the financial media have no clue what's about to happen...And if you act fast, you could earn as much as 2,524% before the year is up.
Click here to find out what it is.

Technology

China Leads the Robot Revolution

October 5, 2017 Ian Dyer

When it comes to factory automation, China is way ahead of the game.

In fact, the demand for robots in China is more than twice as high as any other country. As the chart below shows, it is seeing huge growth in the field of factory automation.

By 2020, an estimated 1.7 million new robots will be “hired” by factories all over the world.

An example of this revolution is a Chinese factory that recently cut its number of employees from 650 all the way down to 60. About 90% of the laid-off workers were replaced by robots.

The factory’s general manager predicts that the number of employees will drop to 20.

Things have only gotten better for that factory since the robots took over. Defects in their products have been reduced by 80%, while efficiency has gone up by 250%.

This is just one example of the many factory transformations going on today. Foxconn, a manufacturer of iPhone parts, has set a goal of 30% automation in its factories by 2020.

Robots taking jobs may seem scary, but when they can work around the clock without getting tired, and assuming maintenance costs are less than hourly wages, it makes sense.

To profit from the robot revolution, you can buy the Robo Global Robotics and Automation Index ETF (Nasdaq: ROBO). This exchange-traded fund is already up 34% since the start of the year.

Regards,

Ian Dyer
Internal Analyst, Banyan Hill Publishing

Technology

3 Electric Car Winners That Don’t Sell Electric Cars… Or Batteries Either

October 3, 2017 Tony Daltorio

One obvious theme I picked up in my Singularity research project is the fact that it seems like everyone is jumping into the electric car ‘race’. By 2018, there will be 112 battery electric and 72 plug-in hybrid models available globally, says Bloomberg. That is up from 76 and 36 respectively just a year ago.

Adding to an already crowded field is Dyson. Yes, that Dyson from the U.K., founded by inventor James Dyson, that is best known for its vacuum cleaners. And no jokes please about how the Dyson electric car will be loud, made of cheap materials, underpowered and yet make Elon Musk blush with its exorbitant price.

The point you need to realize is that electric cars are beginning to reach the tipping point. My physics background tells me the tipping point is when a balanced object tips over after an additional weight was added to it.

But in societal terms, a tipping point is the point when a quick and dramatic shift in behavior occurs.

We’re not there yet with electric vehicles, which account for only roughly two million of the two billion vehicles on the road in 2016. But the point is approaching, according to some surprising sources.

EVs Tipping Point?

One such source is the world’s largest mining company, BHP Billiton (NYSE: BHP). Its chief commercial officer, Arnoud Balhuizen, said to Reuters: “I think if we look back in a few years we would call 2017 the tipping point of electric vehicles.”

It’s easy to see why BHP thinks 2017 is such an important year for the future of electric vehicles. There have been a number of very positive developments pushing forward EVs.

First, we have countries including France, Norway and the U.K. setting firm dates for when vehicles powered by fossil fuels would no longer be sold in their countries. India has taken similar action with a 2030 target date and China is working on setting a definite deadline for ending sales of internal combustion engine vehicles.

China’s expected move is so important because of its size – it accounts for one-third of the entire global auto market. It is also the biggest electric car market, with 507,000 such vehicles produced domestically last year, a rise of over 50% from the prior year.

And keep in mind, still only one in five Chinese citizens own a vehicle!

The most likely date China will set is 2040. But the founder and head of BYD (OTC: BYDDY), Wang Chuanfu, is lobbying the government for a 2030 date.

He may not get his wish but the Chinese government is already helping companies like his. It plans to launch a carbon trading scheme, likely in 2019, whereby traditional automakers in China will have to produce a certain number of electric vehicles or else be forced to buy credits from electric car makers such as BYD.

For those of you not familiar with BYD, it is China’s largest electric vehicle maker and the largest producer of lithium-ion batteries. It is bringing online an additional four gigawatts of battery-making capacity by year’s end. That will make its annual battery output 12 times larger than the expected production from Tesla’s Gigafactory. Warren Buffett owns 8.5% of the company.

Source: Investors Alley

Bottom line – almost 80% of the global auto market is pushing toward the phase-out of fossil-fuel-powered vehicles and toward electric cars.

Why the Optimism

Of course, it isn’t just government action that says we may be near a tipping point. It’s also the economics of batteries.

Bloomberg New Energy Finance (BNEF) forecast that, in a mere eight years, electric vehicles will be as cheap as gasoline autos. All thanks to the plunging price of producing lithium-ion batteries.

These batteries have already fallen in cost by 73% since 2010. Batteries currently account for roughly 50% of the cost of an electric car, but BNEF says these costs will fall another 77% by 2030.

However, the BNEF scenario all depends on whether the battery makers can get their hands on the necessary metals and minerals – what I call the technology metals – in sufficient quantities. After all, there are expected to be built dozens of gigafactories (nearly all in Asia) in a forecast $240 billion battery industry within the next 20 years.

EVs and Copper

So what will be the effect on commodities?

My thinking is in line with that of BHP Billiton. . .that the impact for producers of raw materials would first be felt in the metals markets (positively) and then felt in the oil market (negatively). By the way, I talk about all sorts of technology related-commodities in my new newsletter – Growth Stock Confidential.

BHP expects there to be about 140 million electric vehicles on the road in 2035, or about 8% of the global fleet. If so, that is great for big copper mining companies like BHP since an electric car uses approximately four times as much copper as does a gasoline or diesel vehicle.

A report released this summer from the industry body, the International Copper Association (ICA), forecast demand from the auto sector for copper will increase nine-fold in a decade, from 185,000 metric tons this year to 1.74 million tons in 2027. That would be the equivalent of about 6% of global copper demand in 10 years.

Electric vehicles use a substantial amount of copper in their batteries and in the windings and copper rotors used in electric motors. A single car can contain over three miles of copper wiring, according to the ICA.

This presents an investment opportunity with rising demand meeting supplies that will struggle to keep up. That’s due to the fact that current mines are aging (ore grades are dropping) and few major discoveries have occurred in the last two decades.

Three Copper Investments to Buy

One company worth consideration to buy is the aforementioned diversified miner BHP Billiton (NYSE: BHP). It was the world’s fourth largest producer of copper in 2016 at 1,113 kilotons. A kiloton is equal to about 1,120 of our U.S. tons. BHP’s stock has risen 12% year-to-date and 17.6% over the last 12 months.

Its copper assets include the Escondida and the Spence mines in Chile and the Olympic Dam mine in Australia. BHP is investing into copper’s future with the recent announcement of a $2.5 billion project to extend the life of the Spence mine by 50 years. There is expected to be an additional 185,000 tons extracted annually thanks to the investment.

The company is also spending $43 million on a new facility to produce 100,000 metric tons of nickel sulphate – a key component in lithium-ion batteries – annually. Production is expected to start by April 2019.

Next on the list is the world’s largest publicly-traded (Chile’s Codelco is government-owned) copper producer, Freeport-McMoran (NYSE: FCX), which trailed only Codelco in copper production last year (1,696 kilotons). Its stock is up 5.5% year-to-date and 27.5% over the past year.

It produces copper at seven mines in Arizona and New Mexico, as well as the El Abra mine in Chile and the Cerro Verde mine in Peru. And, of course, its crown jewel is the Grasberg mine in Indonesia, which is one of the world’s largest deposits of copper and gold. A dispute with the Indonesian government over the mine was recently settled.

Like many miners, Freeport suffered under the burden of too much debt incurred during the commodity supercycle (2001-2014). But it has lowered its debt by $9.5 billion since the end of 2015, thanks to strong cash flow from its copper operations.

Another possibility is the fifth-biggest producer of copper in 2016, Southern Copper (NYSE: SCCO), which indirectly is part of Grupo Mexico and has operations in Peru and Mexico. Its stock rose 22% so far in 2017 and is up more than 46% over the past 52 weeks.

The company hit a record high for copper output in 2016, at 900 kilotons, which translates to a 21% year-on-year growth. That is really good news since it is the highest margin major copper producer globally with a cost of only $0.95 per pound. Copper is trading currently at about $2.95 a pound.

Southern Copper also happens to be sitting on the largest proven copper reserves in the industry. And its mines have an expected 90+ years of life, giving you a great long-term play on copper and the whole electric vehicle revolution.

Growth Stocks, Technology

3 Stocks to Profit from No-Profit Electric Cars

September 26, 2017 Tony Daltorio

There was a real race going on at this year’s annual mid-September Frankfurt Motor Show in Germany. Not an actual race, of course. But a race among automakers’ executives to see who could promise the greatest number of future electric vehicles.

This makes sense as government policymakers around the world push hard for a move away from combustion engine cars and toward battery-powered electric vehicles. France and the U.K. have a 2040 target to have that changeover happen. Norway’s target is 2030.

And as I recently highlighted in a recent article, China – home to one-third of the world’s car market – is also working on a timetable to end completely the sales of fossil-fuel-based vehicles. Its largest electric vehicle maker, BYD (OTC: BYDYY), is urging the government to set a target date of 2030.

The sentiment among auto company executives toward electric vehicles has certainly changed from nine years ago. That was when the first Roadster from Tesla Motors (Nasdaq: TSLA) went on sale. Before that, the only major automaker that was serious about electric cars was Japan’s Mitsubishi Motors (OTC: MMTPF).

Profits Anyone?

While some U.S. investors act as if Tesla is the only company that will be making electric vehicles, the sector is rapidly becoming very crowded. Auto companies from Europe to Japan and Korea to our domestic automakers – General Motors (NYSE: GM), Ford Motors (NYSE: F) and Chrysler Fiat Automobiles NV (NYSE: FCAU) – are all piling into selling battery-powered vehicles to the public.

This raises a big question for investors in the sector — will the automakers have to sacrifice margins and possibly even profitability in this race to, as the CEO of German carmaker BMW (OTC: BMWYY) Harold Krüger called it, “electric mobility.”

The CEO of Japan’s Honda Motor (NYSE: HMC), Takahiro Hachigō, spoke bluntly to the Financial Times about what everyone is the sector is facing at the moment, “Until we reach certain volume, the profitability will not be as great [as compared to conventional vehicles].”

In many cases, profit margins at automakers are already stretched. Margins will only worsen in this transition period to electric vehicles as investments into research and development rise and component costs do as well. All the while electric vehicle sales are still not at the profitability tipping point.

Even ignoring money-burning Tesla, other vehicle manufacturers are feeling the jolt from the move toward electric vehicles. Germany’s Daimler AG (OTC: DDAIY) said its margins could fall by two percentage points (despite a cost-cutting program) thanks to the costs associated with getting batteries and redesigning cars. One such cost is the $1 billion Daimler plans to invest in its Alabama plant to produce electric cars in the U.S.

Turning our attention to domestic automakers, analysts at BCA Research estimate that GM loses about $9,000 for every Chevy Bolt it sells. In order to get the “average” corporate profitability from the Bolt, BCA says General Motors would have to raise the price on each car by $26,900. Obviously, GM isn’t going to do that.

Much of the added costs for electric vehicles comes from the battery. And a lot of this cost comes from the necessary metals and minerals that make the battery work.

The ‘Picks & Shovel’ Winners

The good news for the automakers is that battery costs are falling. But instead of buying a car company, you should take a look at investing into the makers of electronic components that will go into future electric vehicles.

At that very same Frankfurt Motor Show, the ebullience of the auto components makers was evident. They were kids in a candy store. It’s easy to see why. . .

Right now, the vehicle manufacturers control design, and nearly every other important aspect of vehicle production. But that is slipping away from them as the wave of the future is more electrical systems and electronics and not mechanical systems.

Estimates are that 50% to 70% of the value of a car will lie in those electronic components, which the automakers purchase from other companies. Companies, ironically enough, that U.S. carmakers spun off years ago because they were thought to be low-margin businesses.

However, as with all investments, you have to pick and choose among the companies in the sector. Some auto parts companies still have their hand in the sand, saying that the changeover to an electric car future may never happen.

Here are three stocks for you to consider where management ‘gets it’.

Stock #1 – Delphi Automotive PLC

At the top of the list is a company that was once part of General Motors (NYSE: GM), Delphi Automotive PLC (NYSE: DLPH). The spinoff was completed in 1999, as sadly, GM management listened to Wall Street advice about streamlining operations by getting rid of a business “going nowhere.”

But now, it’s Delphi that’s in the fast lane. That will be even more true once it completes its own spinoff – of the powertrain business – that will be completed in March 2018.

The spinoff will allow Delphi to focus the remainder of itself (about ¾ of the current company) on self-driving, connected and electric cars. Delphi is heavily involved in components for hybrid vehicles and its $12 billion advanced electronics business is the company’s top revenue generator.

The reason behind the split was given by CEO Kevin Clark: “The pace of change in our industry is accelerating.” That move has pleased shareholders, adding about 28% on to the value of its stock, putting it up 50% year-to-date. Delphi is moving right along with that “pace of change” in the industry.

The company continues to innovate in all sorts of new vehicle technologies. . . . .

It teamed up with Frances’ Transdev on operating Europe’s first self-driving vehicle service and with BMW (OTC:BMWYY) on developing a self-driving car. It also partnered with Israel’s Innoviz Technologies on providing high-performance LiDAR solutions for autonomous vehicles and with Blackberry (Nasdaq: BBRY) on an autonomous driving operating system platform.

Stock #2 – Visteon Corporation

The next company to consider was also a spinoff – this time from Ford in 2000 – Visteon (NYSE: VC). The reasons were similar to those of General Motors.

Visteon designs and manufactures electronics products for automakers. Visteon provides everything from standard gauges to high resolution, reconfigurable digital 2D and 3D displays to infotainment and audio systems.

It is turning out to be a big winner as the automakers and Silicon Valley battle to see who will control the cockpit electronics inside your vehicle. Visteon is agnostic and winning sales from carmakers whether they are using their own systems or those of some tech company’s systems.

The vehicle display market is expected to reach $21 billion by 2022 and Visteon is sitting in the catbird seat. It already has a record $17.3 billion order backlog. That trend should keep the stock motoring ahead, adding to the more than 51% year-to-date gain.

Stock #3 – Autoliv Inc.

The third company has been a relative laggard, with its stock only up about 8.5% so far in 2017, the Swedish auto parts giant Autoliv (NYSE: ALV). Most of that upward movement in the stock price happened after a recent announcement.

Its management said it is currently considering whether to follow the path taken by Delphi and splitting itself in two, separating its fast-growing electronics business from the parts of the company that makes things like seat belts and air bags.

Autoliv’s electronics components business consists of things like radars used in autonomous vehicles and positioning systems. It expects the market for electronic safety products to more than double over the next several years, from $20 billion this year to $40 billion in 2025. Autoliv management is targeting $3 billion in such sales in 2020, up from $2.216 billion in 2016.

So there you have it – a choice between fast-growing auto parts companies or automakers that will struggle to remain profitable.

Source: Investors Alley

Insider Trading, Technology

Buy These 3 Stocks Before the Next Big Computer Hack

September 22, 2017 Tony Daltorio

According to a Lloyds of London report issued in July, a global cyber attack could result in damages of as much as $121.4 billion. But based on the growing frequency of such cyber attacks and hacks, this estimate will likely turn out to be too conservative.

The reason is straightforward. The world’s volume of data has been growing exponentially year after year, with the trend really accelerating after 2005. This gives cyber criminals more and more opportunity to gain access to massive amounts of data in a single breach. And potentially a bigger payoff.

Research from IT services firm DXC.technology gives us an idea of how much of our data is out there, exposed to unsavory people. Its research forecast that…

By 2020, over one-third of all data will live in or pass through the cloud.
In 2020, data production is estimated to be 44 times greater than in 2009. That’s a 4,300% increase!

The reality is that our personal data as well as corporate and government data will become more and more exposed to those who would exploit access to such data. That does open though a world of opportunity for investors. More on that later.

But first, more on this nasty underside of life in the 21^stcentury coming to the fore again as the credit-reporting agency Equifax (NYSE: EFX) revealed a massive breach of its cyber defenses.

Equifax Debacle

Equifax, with $3.1 billion in revenues in 2016, has a dual role as both a credit-data bureau and fraud monitor. Yet, its cyber defenses could be best described as a sieve.

The hack, which began in mid-May, went undetected for two and a half months. Exposed were the personal records of up to 143 million Americans. That’s nearly half the U.S. population, folks.

The hackers gained access to both the credit card files as well as the company’s back-end systems that store exhaustive data profiles on consumers. This data included Social Security numbers, driver’s license numbers and other sensitive information.

This isn’t the industry’s first brush with poor security of customers’ data. In 2013, it was discovered that an identity thief in Vietnam ran a service that helped others access millions of Americans’ credit reports from a company Experian PLC (OTC: EXPGY) had recently purchased.

Of course, massive data breaches aren’t confined to just this industry. Last December, Yahoo (now part of Verizon (NYSE: VZ) revealed that attacks between 2013 and 2016 had compromised the personal information of more than a billion users. The data stolen included names, phone numbers, birth dates and passwords.

But Equifax’s approach to the breach seemed particularly egregious to me.

First, it did not report the breach for 40 days – just beating the deadline of 45 days, which certain states require. Then, if you were affected by the hack and sign up for Equifax’s offer of one year of its TrustedID product, which scans the black web for your stolen information, you lose all rights to sue the company.

And finally, three Equifax executives sold $1.8 million worth of stock just days after the breach was discovered. That may have been a coincidence, but still the stench from Equifax is almost overwhelming. Talk about a stock to avoid.

More Dangers Lurk

You and I are more at risk though from more than just fraud being committed in our name. Other types of hackers are aiming at other important targets in our lives.

According to a report from cyber security company Symantec (Nasdaq: SYMC), hackers have breached the operational systems of utility companies in the U.S. Symantec says they are lying in wait with the ability to switch off the power and sabotage computer networks.

The group of hackers goes by several names – Dragonfly, Energetic Bear and Berserk Bear. The group is believed to have ties to Russia and has been around for a while. In 2014, it is believed to have compromised the systems of more than 1,000 organizations in 84 countries.

Access is almost too easy for these hackers. With the recent hack of U.S. utilities, entry was gained by simply tricking employees into opening Microsoft Word documents that steal employees’ usernames and passwords.

The danger is very real. Eric Chien of Symantec said that even if hackers compromised a small electric utility company, they could put the power grid at risk by either removing or putting too much power into the grid.

This should not come as a shock to any of us. In July, the Department of Homeland Security and the FBI warned that the U.S. energy industry had been targeted by hackers.

Cybersecurity Investments

While these hackers may be waiting for the exact right moment to strike, you should not.

Wall Street continues to largely ignore the threat of cyberattacks and hacks. This has left most cybersecurity stocks trailing the performance of other technology sectors, making them relative bargains.

For the broadest possible exposure to the sector, I like the ETFMG Prime Cyber Security ETF (NYSE: HACK). It is up nearly 13% year-to-date and just 10% over the 52 weeks.

Its portfolio consists of 25 stocks, with its top five positions being: Palo Alto Networks (NYSE: PANW), Cisco Systems (Nasdaq: CSCO), the aforementioned Symantec, Splunk (Nasdaq: SPLK) and the British cybersecurity firm, Sophos Group.

This group of stocks contains my next two choices – Symantec and Palo Alto Networks. These companies are benefiting from the growth of the IT security industry from $75 billion in 2015 to $101 billion in 2018, according to IT research firm Gartner.

Symantec provides a wide range of Internet security solutions to both individuals (41% of revenue) and businesses (59% of revenue). You probably have one of its Norton products installed on your computer.

The company’s last earnings report was strong with revenues jumping nearly 33% year-on-year. These kind of results should continue propelling the stock higher (up 34.5% year-to-date and 31.25% over the past 52 weeks).

Palo Alto Networks offers network security solutions, such as next-generation firewall products, to businesses, service providers and governments. As of the end of 2016, the company was third in the security appliance segment (in terms of revenues) trailing only Cisco Systems and Check Point Software Technologies (Nasdaq: CHKP).

It continues gaining customers, with it recently adding 3,000 to its 42,500 global customer base. I also like the fact that Palo Alto’s balance sheet is strong with cash on the books and no debt obligations.

As with Symantec, its latest quarterly report was good with revenues climbing 27% year-on-year. Those kinds of numbers should finally get the stock going. It is up more than 16% year-to-date, but just 1% over the past year.

Owning some sort of cybersecurity is one of the rare no-brainers in the investment world, especially in light of recent events like the Equifax breach.

Amazon CEO Jeff Bezos is calling this technology “a renaissance” entering a “Golden Age.” Other tech billionaires like Elon Musk and Bill Gates are already investing their own fortunes in it. This free report reveals how you can also also tap into a world-alerting technology that will dwarf the internet. Click here for access.

[FREE REPORT] Options Income Blueprint: 3 Proven Strategies to Earn More Cash Today Discover how to grab $577 to $2,175 every 7 days even if you have a small brokerage account or little experience... And it's as simple as using these 3 proven trading strategies for earning extra cash. They’re revealed in my new ebook, Options Income Blueprint: 3 Proven Strategies to Earn Extra Cash Today. You can get it right now absolutely FREE. Click here right now for your free copy and to start pulling in up to $2,175 in extra income every week.

Source: Investors Alley

Dividends, Technology

3 Electric Car Stocks to Crush Elon Musk and Tesla

September 20, 2017 Tony Daltorio

There was news out last week about electric cars that will change the industry forever. And it was bigger than anything that Elon Musk has ever said.

What could possibly be more important than Elon Musk when it comes to electric vehicles, you ask? That’s easy – the world’s largest vehicle market – China.

Comments were published by Xinhua (China’s official news agency), from the vice-minister of industry and information technology, Xin Guobin, that the government will likely announce the future date when production of internal combustion engine vehicles will be banned. In going down this road, China is following the path already taken by countries like France and the U.K. that have prohibited the manufacture of such vehicles, beginning in 2040.

China’s move is so important because of its size – it manufactures the most vehicles, with about 28 million vehicles produced in 2016 according to data from the International Organization of Motor Vehicle Manufacturers. And it is already the biggest electric car market, with 507,000 such vehicles produced domestically last year, a rise of over 50% from the prior year.

And yet, still only one in five Chinese citizens own a vehicle!

An official announcement of a ban on internal combustion vehicles while give an almost unimaginable boost to the global electric vehicle industry. This news already set off a frenzy among investors worldwide.

So let’s ‘imagine’ a bit… I’m going to reveal to you the best ways to play this milestone for the electric vehicle industry. And it does not involve buying Elon Musk’s Tesla Motors (Nasdaq: TSLA).

China’s Electric Powerhouse

I was almost amused at the reaction of some U.S. investors. They bid up the price of Tesla by more than 10% last week after the news broke.

Tesla will be lucky to get even a tiny sliver of the Chinese market. It should not be surprising to you, but the companies that will gain the vast majority of market share will be Chinese companies.

The Chinese government has zeroed in on electric vehicles as a “strategic and emerging industry”. To this end, the government plans a 48-fold increase in charging stations nationwide to 4.8 million by 2020. That’s because the government’s goal is to have 5 million electric vehicles on the road by then.

There are a number of Chinese companies already in the electric car race. One example is Volvo, which is controlled by the parent company of Geely Automobile (OTC: GELYY), will introduce its first 100% electric car in China in 2019.

Leading the race already in China is BYD (OTC: BYDDY), of which Warren Buffet owns 8.25%. It is currently the world’s largest electric car maker and produced nearly 47,000 electric and hybrid vehicles in the first seven months of 2017.

And it is also the world’s biggest producer of electric car batteries in the world. While Tesla investors are breathlessly awaiting the company’s Gigafactory to crank up annual production of batteries to one gigawatt, BYD passed that mark more than three years ago. BYD is bringing online an additional four gigawatts of battery-making capacity by year’s end. That will make its annual battery output 12 times larger than Tesla’s!

So its stock nearly 20% move up in Hong Kong is a bit more justified than Tesla’s, although it is probably too much too soon. By the way, Buffett’s investment into BYD in 2008 has now grown more than sixfold.

Electric Dreams to Come True

You may wonder whether all the hype surrounding the future of electric vehicles is justified. I believe it is – the only disagreements are as to the timing of the changeover to an electric future.

Research from Bloomberg New Energy Finance (BNEF) forecast that falling battery costs will make electric vehicles cheaper than conventional ones by 2025. Batteries currently account for roughly 50% the cost of an electric car, but BNEF says these costs will fall 77% by 2030.

The automaker Renault also believes the cost difference between the two types of vehicles will be negligible by the mid-2020s. That could mean there are more than 37 million electric vehicles on the road in 2025, according to Navigant Research.

Looking even further ahead, BNEF predicts there will be 530 million electric vehicles traveling on global highways in 2040, a third of the overall market. Even OPEC says there will be 266 million such vehicles by then, having quintupled its forecast number over the past year.

Of course, all of these forecasts are contingent on one thing – the falling price of batteries and cars.

That brings me to that best path of investing for you in this electric future… the electric car revolution cannot happen without the necessary commodities that go into the making of electric cars, and most importantly – the batteries.

New Commodities Boom

Thanks to rising production of electric vehicles, there will increasing demand for metals and minerals such as copper, aluminum, nickel, manganese, graphite and certain rare earths.

Let’s look at copper, for example. Electric cars contain about three times more copper than a regular vehicle. That’s because copper is needed in these vehicles’ motors, inverters and charging points as well as in the lithium-ion batteries. And don’t forget about all those charging stations that will be needed.

Copper recently hit a three-year high, rising 18% for the year at one point. While a pullback is underway, rising demand for copper from electric cars meeting dwindling supplies will mean higher prices going forward. New mine supplies will be needed, perhaps as much as 20 million metric tons by 2025. That much added supply is unlikely considering the long lead times (a decade or more) it takes to bring a copper mine online.

Another example of commodities needed for electric vehicles are two rare earths – neodymium and praseodymium – whose prices have over 50% so far this year. That’s because some electric carmakers, such as Tesla, are choosing to use rare earth-based permanent magnet motors rather than induction motors because they are lighter and more powerful. Argonaut Research says such usage will cause demand for these two rare earths to soar by 250% over the next decade.

And now I want to tell you about the hottest commodities sector…

Lithium and Cobalt

That hottest of all commodities sector centers on the key elements needed in lithium-ion batteries – lithium and cobalt (needed for the cathodes). These commodities account for roughly 60% of the cost of a lithium-ion battery, so says Simon Moores of the specialized consultancy, Benchmark Mineral Intelligence.

And these prices are soaring, according to data from Benchmark. Since 2015, lithium prices have quadrupled and cobalt prices have doubled. The price gains, especially for cobalt, have only accelerated this year.

These gains are highly likely to continue. Another consultancy, Roskill, forecast demand for lithium will soar fourfold by 2025. I’m sure that’s why the London Metal Exchange is considering starting to trade a lithium contract. And cobalt demand will also soar.

There are intricacies to these specialized markets. For instance, lithium can be obtained either from lithium brine deposits, which are found in salt flats, or it can be mined from spudumene lithium hard rock deposits. In general, brine is a lower-cost asset to develop. But then there are other considerations such as the richness of the find and its location.

Then after mining, there are specialized types and multiple grades of lithium and cobalt that are needed for lithium-ion batteries. Some of these include lithium carbonate, lithium hydroxide, cobalt sulphate and cobalt hydroxide.

Investors almost got it right this past week when they poured money into the Global X Lithium & Battery Tech ETF (NYSE: LIT). Investors sent the price of this ETF up by 10.25% last week, pushing this year’s gain to 55.25%.

This is the right space to be in, but LIT is the wrong instrument. Its top position – 23.5% of the portfolio – is FMC Corporation (NYSE: FMC), which I would not touch with a 10-foot pole.

How would I play the electric car revolution?

Market Mavens