In today’s Exponential Investor:
- I cheated you
- Decentralise this
- The doctor will see you any time!
On Monday I wrote to you about the discounts in the market.
I showed you some ideas of the kinds of stocks as an investor you might consider when looking at some of the world’s long-term megatrends.
I outlined six major trends:
- Artificial intelligence (AI)
- Quantum computing
- From combustion to electrification
- Autonomous systems
- Decentralised, permissionless finance
And I went on to cover three of those, which you can review here.
Today I will cover the next three and again, give you some ideas of the kinds of bargains worth running the ruler over.
But I must also confess something…
I’ve cheated you.
I left out a major trend. I did it somewhat selfishly. I did it because I have the inside track on to a major event coming for subscribers to Exponential Investor.
This event is one of the most exciting developments I’ve probably ever seen in the history of Southbank Investment Research. And for you, one of our loyal subscribers to Exponential Investor, it could change the very shape of your financial future.
I’ll tell you more about it at the end of today’s editorial…
But for now, with Russia seemingly now invading the Ukraine, the UK dropping almost all Covid-related restrictions and the markets continuing to be in a state of unadulterated fear, where should you be looking to pick up some stock bargains?
Your pizza is coming: what’s next?
You’ve probably not heard of a small robotics company called Nuro. But it is already pioneering one of the world’s most important autonomous (self-driving) systems in the world.
Nuro right now is demonstrating (in Houston, Texas) a self-driving delivery van with Domino’s Pizza.
The Nuro “van” is actually much smaller than what you might be thinking. The actual size of the Nuro is about the height of a person sat on a bike, and about two bikes wide. It’s not designed to have a person sit in it (which would defeat the entire purpose altogether).
Its primary design is to deliver goods, like pizza, to people. But the bigger idea is that it can carry things like groceries, prescription medicines, or anything that’s not overly bulky.
It uses a series of cameras and sensors to navigate its way around, and it operates on roads, with full licensing from the relevant authorities.
This is what the first wave of real self-driving systems will be like. They’ll be small, they’ll be low speed, local roads, they’ll be inconspicuous and have safety as the absolute priority.
However, something like Nuro is just the appetiser to a world with full autonomous cars, trucks, ships, planes… all forms of transport.
In that world, which is still a little while off, it’s important to look at the larger companies driving that change. One such company that’s worth a look is one that like Nuro, you’ve probably not heard of.
Aptiv Plc (NYSE:APTV) is a global automotive technology company. It has had a chequered past when it was previously known as Delphi, but in recent years the company has emerged as a pioneer of self-driving systems.
Its multi-billion-dollar joint venture with Hyundai, known as “Motional”, is focused solely on making, “driverless vehicles a safe, reliable and accessible reality.”
But the parent company of Motional Is Aptiv, which also develops connected systems, and other “mobility” technologies. Aptiv trades at a pretty lofty price-to-earnings ratio of 72-times, but it is profitable. Considering the recent tech sell-off, the company has actually remained robust and continues to spend up on research and development (over $1.3 billion a year).
Its price has peeled off a little and certainly puts the company in a position for the long-term investor to seriously consider.
Don’t deny or defy DeFi…
In my eyes there is no bigger long term global trend to jump on to than the move to decentralised finance (DeFi).
This is a power struggle between the existing ”traditional” financial system, and the new DeFi. DeFi has been driven primarily by cryptocurrencies like bitcoin, but it is now expanding to broader alternative “banking and finance” for people.
It promises to be inclusive, and to provide access to services and products that people might traditionally have found to be inaccessible or too difficult to access.
It is a fascinating and controversial change in how the world transacts and interacts financially. And in my view presents one of the greatest wealth-creation opportunities in the history of the markets.
In recent years, we’ve seen a spate of crypto-focused companies list on the traditional stock market. There’s somewhat of a conflict of ideals in doing that, but there’s also a place for companies that are willing to and able to bridge the old world and the new world of money.
The biggest and perhaps most obvious of those over the last year has been the listing of crypto mega-exchange, Coinbase (NASDAQ:COIN).
Coinbase listed on the Nasdaq in April 2021 as the crypto markets (all of them) were smashing all-time high records. On its first day of trading it closed at $381, substantially up from its reference price of $250.
It would be volatile and swing lower during 2021, and then higher again to those early levels in November as the crypto market boomed again. But since then with the selloff in tech, the crypto markets being depressed and investor sentiment gloomy, the price has been on a downward path since.
And at around $180 Coinbase is around half its value from its first day of trading, less than a year ago.
But Coinbase makes money. And it’s part of a megatrend where I doubt it’s going to slow down any time soon. This comes as it’s on the verge of releasing an NFT marketplace on its platform to the wider world.
Considering the price hit the stock has taken, the fact it’s profitable and trades at a price-to-earnings ratio of around 13-times for such a growth-potential-packed stock, it’s certainly one to think about for the long term.
The doctor will see you any time!
One of the great difficulties with global healthcare systems is maximising the efficiency of doctors. If the global pandemic has shown us anything, it’s that we must be better in ensuring all people who need medical assistance can get it in a timely fashion with the quality that is expected of the profession.
However, sheer numbers dictate that’s not physically possible. And the growing backlog of patients in the UK (now in excess of six million) seeking treatment is higher than it’s ever been.
So how do we fix this problem? My view is that telemedicine, remote doctor appointments, is not a potential solution, but an inevitable one.
One of the most prominent telehealth companies in the world is Teladoc (NYSE:TDOC). The company was already flying before the pandemic hit, rising from around $50 at the start of 2019 to over $100 at the start of 2020.
Then the pandemic struck and the realisation of the importance of a company like this caught fire. And by 9 February 2021, the stock was trading at $299.
Now, Teladoc isn’t profitable yet. They’re one of these high-risk, high-growth potential stocks… which has been decimated in the recent tech sell-off.
Today Teladoc is trading under $65. These are levels from around mid-2019, pre-pandemic.
Look, a stock like this is still highly risky. But if you’ve got an eye on the future, and the potential of remote telehealth, maybe, just maybe, it’s one to dive a little deeper into and to consider for a long-term portfolio.
The biggest trend of all?Finally, I did say earlier on I’d tell you about one of the most exciting developments in Southbank Investment Research’s history.
Well here at Exponential Investor, I’m not the only editor you hear from. You also hear regularly from Kit Winder and get to hear us both in Friday’s regular podcast.
Well Kit has been working on something big and we’re now on the cusp of being able to tell you about it and give you early access to it. That’s because you’re one of our loyal Exponential Investor subscribers and because like us, you have one eye on the future and the opportunities it presents.
I can’t give away all the details now, but soon you’re going to hear more about this new event… it’s not like the things you might have heard from us before.
It’s new, its huge, it’s exciting and it’s going to blow your socks off once you catch wind of what it’s all about.
So hold on, sit tight, but keep your eyes peeled… I promise it’ll be worth the wait.
Until next time…
Editor, Exponential Investor