This morning, we’re back to business after a great holiday party with the RagingBull.com team in Baltimore.
I’m back at my desk pouring through the news and have got a great new batch of stocks for you to consider on Monday.
In addition, I want to talk about a major risk factor that has entered the frame this morning.
Don’t forget that there is life outside of the Federal Reserve and the Treasury Department — an old European friend has shown up for breakfast.
Let’s dive into that story and my Monday Watch List.
This morning, the focus is less on the vaccine and stimulus. Today, we’re having a rare day where geopolitical news is driving market sentiment. Right now, European stocks are sinking due to a last-minute effort to save a trade deal over Brexit.
Remember, the Brexit happened a year before President Donald Trump won office, one of the most remarkable populist events of our young century. Yet, the U.K. and the European Union have still failed to come to an agreement that makes the EU easy.
Today is just a reminder for investors that we have to think about the possibility of a major geopolitical event shaking up the global markets. It might have felt like five years ago, but Iran shot down a Ukrainian jet in JANUARY 2020, and thoughts about World War III instantly emerged.
A Black Swan geopolitical event (or at least a semi-predictable Grey Swan event) involving the Middle East, North Korea, South America, or something out of space could happen. What is the likelihood we hear about North Korean nuclear missiles once again in January or February? Volatility is falling once again on the expectation of increased Fed and Treasury Department spending.
That’s where low implied volatility trades with asymmetric payoffs can present themselves. If the VIX falls under 20, I’ll lay out some possibilities for speculators in the months ahead.
All the chatter this morning around 2021 is the competition between IPOs and SPACs. IPO are traditional offerings where a company goes from being private and files to become a public company. SPACs are mergers where an acquisition vehicle pools money and then purchases a private company. Which will be the bigger play in 2021?
I think SPACs at the moment. And I’ve got one in mind.
One company that has been in my Family Portfolio is Flying Eagle Acquisition Corp. (FEAC). I started buying shares of the SPAC at $11.76, but now shares have surged to $17.76 in about a month. The reason: Investors are very optimistic about the future of the company that specializes in online gambling and tournaments in popular card games like solitaire and gin rummy.
There will be a lot of opportunities in SPACs in the year ahead. I plan to continue monitoring the SPAC industry for the best opportunities in the year ahead. If you’re interested in having me do more research in this area, please leave a comment below.
Banking on a Cure
Last week, I explained that a vaccine still faces massive logistical challenges. But I have to pull an offer at midnight on my latest report “Banking on a Cure.” Insider, I outline three stocks that will be the biggest winners in the months ahead. The market is turning its attention from vaccine development to the deployment of billions of doses. I’m only giving my new report to my Portfolio Accelerator readers.Get your copy before midnight.
MY STOCK WATCH LIST
CHUY: A Midwestern restaurant operator in an area competing against mom and pop restaurants. The stock signals positive growth and decent value. It has a good balance sheet. I think the question here is how you manage it. I would look to try to purchase shares around $23. It has an average price target of $30.
CAT: Caterpillar is looking like it will continue its breakout pattern in the week ahead. The stock is in the upper half of its momentum cycle. These are good stocks to potentially sell put options on in order to find an ideal entry point and then ride the stock higher should you be assigned the stock. That said, I expect that CAT will continue to generate institutional interest as more talk about stimulus dominates the news.
KODK: A stock that entered my watch list last week, Eastman Kodak surged more than 72% in premarket hours. The rally comes after a government watchdog said that the company engaged in no wrongdoing with the government loan program.
IDCC: Don’t let this 5G stock fall off your radar. Wall Street consensus puts the stock at $95. Everyone is bullish. I think that once the EV and pot craze fades, we’ll see another wild rush back into 5G stocks given the perceived value of the technology. This would be a great place to start as an investor. It’s InterDigital.
Other stocks to watch: APTO, TCOM, FUBO, FISV