Thursday, December 19^th, 2024

Top AGRICULTURAL Stocks With BIG “UPSIDE” Potential

Key Points

• *AGRICULTURAL sector stocks like FMC, MOSAIC and, NUTRIEN are capitalizing on RISING DEMAND, positioning themselves as strong positions in a shifting economy.
• *Analysts project up to 38% UPSIDE for FMC, supported by robust EPS growth and institutional buying.
• *Trading at just 68% of its 52-week high, MOSAIC offers a potential 27.6% UPSIDE, with strong institutional confidence.
• *NUTRIEN combines INFLATION BEATING DIVIDENDS with MARKET BEATING UPSIDE, supported by a 30% price target increase.
• *Large institutional investors are INCREASING positions in these stocks, signaling confidence in their LONG TERM GROWTH potential.

Some investors will try to create the perfect mix of indicators on a chart to lead them to the right moment to “BUY” or “SELL” a stock or a financial product.

The problem is that if everyone is watching the SAME indicators and looking for the SAME patterns and setups, would that NOT render the validity of a strategy worthless???

In fact, all indicators are based on one (1) thing and one (1) thing only: PRICE ACTION!!!

When watched diligently, PRICE ACTION can lead YOU, ME, WE the ATWWI FAMILY to the market’s sentiment toward groups of stocks as a whole, where the rest of the “HOMEWORK” becomes relatively more straightforward afterward.

Ever since the U.S. Presidential SELECTION/ELECTION, PRICE ACTION has been led by the AGRICULTURE SECTOR—specifically, FERTILIZERS and the CHEMICAL COMPANIES that support these products and their rising demand.

This is where names like FMC Co. (FMC), The Mosaic Co. (MOS), and Nutrien Ltd. (NTR) come into play to offer YOU, ME, WE the ATWWI FAMILY new UPSIDE potential.

FMC Co (FMC): Wall Street Targets Double-Digit Gains

Even after rallying by nearly 6% recently, FMC stock still has a significant way to go if it wants to regain the 52-week highs made previously. Currently trading at 85% of that peak, the stock's recent movement has provided WALL STREET analysts with a clearer basis for assessing its “FAIR VALUE”.

An AGRICULTURAL SCIENCES company, FMC focuses on developing innovative and sustainable CROP PROTECTION TECHNOLOGIES. Their product portfolio includes INSECTICIDES, HERBICIDES and, FUNGICIDES designed to enhance CROP YIELD and QUALITY. FMC is committed to advancing precision AGRICULTURE TECHNOLOGIES and SUSTAINABLE FARMING PRACTICES.

Analysts recently reiterated their OUTPERFORM rating on FMC stock, valuing shares closer to $81. To prove this new price target right, FMC stock would need to move higher by as much as 38% from where it is trading on November 25^th, 2024.

This target calls for a new 52-week high in FMC, which stands out from the pack in terms of perceived upside, something analysts very rarely provide. The reasoning behind this view is that as the Federal Reserve (FED) CUTS INTEREST RATES, business activity will pick up, and that includes consumer spending and consumption of goods like food.

Knowing that FMC is in the middle of producing more crops to satisfy this potential demand, Wall Street feels comfortable projecting up to 90 cents in earnings per share (EPS) for FMC over the next 12 months, representing just under 50% growth from its reported 69-cent level as of its fiscal quarter ending in September 2024.

The MOSAIC Co. (MOS): Markets Spot Discounts

YOU, ME, WE the ATWWI FAMILY need to keep one (1) thing in mind during this DYNAMIC and PRICE ACTION: any and all discounts present in the market will be closed down by the right “AGENTS”. This time around, these “AGENTS” are INSTITUTIONS and ANALYSTS.

As MOS stock trades DOWN to 68% of its 52-week high, a level so low that it has opened the company up to trading at a PRICE-TO-BOOK (P/B) RATIO as well, a few metrics have started to show that this level is one that a few in the market don’t want to miss.

As one of the world's leading CROP NUTRITION companies, MOS specializes in the production of POTASH and PHOSPHATE FERTILIZERS, which are essential nutrients for plant growth. Their mission is to help the world grow the food it needs by providing HIGH QUALITY CROP NUTRITION PRODUCTS.

With an analyst consensus price target of $33.2 a share, investors face a NET UPSIDE potential of as much as 27.6% from where the stock was trading on November 25^th, 2024.

NUTRIEN Ltd. (NTR): Why Shareholders Are Positioned To Get “P.A.I.D.”

If the business activity uptick scenario ends up making its way to the United States economy, then INFLATION might start to become an issue once again. If that happens, professional money managers will have to look for stocks with INFLATION BEATING DIVIDEND YIELDS and the potential for market-beating UPSIDE.

Nutrien Dividend Payments

Dividend Yield

4.69%

Annual Dividend

$2.16

Annualized 3-Year Dividend Growth

5.61%

Dividend Payout Ratio

144.97%

Next Dividend Payment

Jan. 17^th, 2025

Lucky for them, NTR stock brings both…

Offering shareholders a PAYOUT of $2.16 a share would translate into an annualized DIVIDEND YIELD of up to 4.6%, beating inflation and most other dividend stocks in the sector.

NTR is a major FERTILIZER manufacturer, producing and supplying POTASH, NITROGEN, PHOSPHATE and, AMMONIUM SULFATE FERTILIZERS.

Beyond FERTILIZERS, NTR offers AGRICULTURAL SOLUTIONS, including CROP PROTECTION PRODUCTS, SEED SOLUTIONS and, DIGITAL TOOLS for crop growers.

The company also provides retail services such as FIELD ADVISORY and CROP CONSULTING to support farmers globally

Analysts rate NTR a “BUY” with a price target of up to $61, calling for a NET UPSIDE of 30% from where the stock traded on November 25^th, 2024. Successfully looking to beat the MARKET and INFLATION is another great way for YOU, ME, WE the ATWWI FAMILY to MONETIZE the “AGRICULTURAL WAVE” and get “P.A.I.D.”!!!

PEACE & BLESSINGS

Kenneth Reaves, Ph.D.

Monday, December 9^th, 2024

The Latest 13F Filings Are In: See Where “BIG” Money Is Flowing

Key Points

• Now that the latest 13F filings are out for investors, a few bargain stocks and asset classes might be uncovered as potential buys today.
• From consumer names to international giants, investors have a list of stocks with double-digit upside.
• A new wave of capital is flowing into Bitcoin, where institutions choose this one ETF for their exposure.

Every quarter, YOU, ME, WE the ATWWI FAMILY get the chance to look inside the “HOUSE OF MONEY” as the regulatory 13F filings come out for some of WALL STREET’s biggest players.

Inside these reports, YOU, ME, WE the ATWWI FAMILY can see who has been “BUYING” and “SELLING” certain stocks, not necessarily to “PIGGYBACK” on these ideas but to potentially “CONNECT THE DOTS” moving forward for our own market views.

The data as of November 2024 shows that “MEGA” investors like BILL ACKMAN, HOWARD MARKS and, MICHAEL BURRY decided to boost their holdings in certain areas of the market during the most recent quarter.

These areas may not be the most popular today, but that is part of what comes with taking on a “VALUE” investment. “SAVVY” investors, like our “BELOVED” ATWWI FAMILY MEMBERS, need to be willing to take the “CONTRARIAN” route.

By “BUYING” a BEATEN-DOWN CONSUMER DISCRETIONARY stock like NIKE INC. (NKE), BILL ACKMAN believes today’s price is nothing short of a ”GOOD” deal.

The same can also be said of BURRY “BUYING” even more stock in ALIBABA GROUP (BABA), a rare CHINESE “STAR”

Then, as of late… an even less common move has been made by the HEDGE FUND industry into CRYPTOCURRENCY.

What Ackman Hopes to See With His NIKE (NKE) Stock Investment

After recent filings, YOU, ME, WE the ATWWI FAMILY, will notice that BILL ACKMAN has built himself a position of up to 16.2 million shares of NKE stock, a move that not many would have the courage to make considering the stock trades at a dismal 63% of its 52-week high.

It isn’t common to see “BIG” BUYERS when a stock demonstrates such “BEARISH” price action, but that’s where most “VALUE” investors earn their paycheck. This time around, plenty of tailwinds push the envelope for NKE stock to potentially stage a comeback.

One of them is the broader economic landscape, which has investors jumping back and forth between a potential recession or inflation scenario based on the price action between many asset classes. Because most of the market’s attention is now on TECHNOLOGY stocks like NIKE (NKE) fly under the radar today.

Whether there is an INFLATION or RECESSION scenario, Nike’s scale at $115 billion MARKET CAPITALIZATION, along with its international exposure and reach, helps the brand cushion whatever impact they may have on the industry. It would seem some on Wall Street also share in ACKMAN’s enthusiasm for NKE stock.

As a vote of confidence already, investors can ADD the valuation of $110 a share placed on NKE stock for further validation into this potential investment, which calls for a “NET” upside of as much as 42% from where the stock trades today.

Compared to the UNITED STATES OR CHINA’s TECHNOLOGY SECTOR offers one of the widest divergences in HIStory…an opening that two(2) of the best VALUE investors are willing to uncover for a PROFIT.

MICHAEL BURRY has added to his largest position, ALIBABA (BABA) stock, and it seems he's not alone in this view.

As of November (2024), SANDERS CAPITAL decided to INCREASE it’s stakes in the CHINESE giant by 0.3%.

While this new allocation may not seem like much “PERCENTAGE WISE”, it brought it’s net investment to a HIGH of $1.9 billion, a direct vote of “CONFIDENCE” in BABA future.

With analysts at BARCLAYS assigning a $130 price target, BURRY and other investors now face up to 53% UPSIDE from where the stock trades today. This is an undeniably attractive deal for those willing to invest in overseas markets.

Another willing investor is HOWARD MARKS , who chose PDD as his CHINESE COMMERCE pick.

That stock now trades at a LOW 60% of its 52-week HIGH, making it a similar discount—price action-wise—to where ACKMAN decided to buy NKE stock.

More than that, the consensus price target from WALL STREET analysts now sits at $173.4 a share, calling for a 74.6% UPSIDE from where it trades today.

These picks cover discounts, double-digit upside, and a way to diversify away from the two potential themes that might take over the United States economy: BURRY and MARKs.

Hedge Funds Are Turning to Bitcoin ETFs

After reiterating his view on inflation during a recent CNBC interview, PAUL TUDOR JONES has decided to “HEDGE” this possibility by “BUYING” heavily into BITCOIN (BTC) through his HEDGE FUND.

JONES BOUGHT up to $230 million worth of BTC through “SPOT” positions and the iShares Bitcoin Trust (IBIT).

That ETF didn’t just attract JONES and his HEDGE FUND other INSTITUTIONAL players on WALL STREET joined the party as well.

As of the second quarter of 2024, GOLDMAN SACHS decided to “BUY” up to $238 million into the same BITCOIN ETF, joining JONES’ timing on this new asset class.

Then, CAPULA MANAGEMENT a LONDON based HEDGE FUND, recently revealed its MASSIVE $400 million position in this BITCOIN ETF. It makes sense that this would be the case since the markets are “RISK-ON” and face the possibility of INFLATION themes coming back into the scene.

PEACE & BLESSINGS

Kenneth Reaves, Ph.D.

Wednesday, December 4^th, 2024

U.S. Markets Are Set To Experience a “DRAMATIC” Shakeup

When the markets experience a “DRAMATIC” shakeup in the next 18 months – traders/investors will want to know the make, color, and year of the car that “HIT” them.

PLUS, a description of the driver!!!

The media will tell you that the driver was “ORANGE with BLONDE HAIR”…

But I assure you - it was a “CLOWN CAR” full of CENTRAL BANKERS and HEDGE FUND MANAGERS.

There is a REFINANCING “CRISIS” on the horizon. The system has changed “DRAMATICALLY” from investment in the ”REAL” economy to grand-scale “FINANCIALIZATION” over the last three (3) decades.

Today, we have to OVERSTAND/UNDERSTAND the difference between the two (2) things.

The economy has two (2) separate power systems, like a house with two (2) electrical grids.

The INDUSTRIAL CIRCUIT processes ”REAL” things - building factories, making products, providing services. It moves SLOWLY because physical stuff takes time.

Want to build a factory???

That's months or years of work.

The FINANCIAL CIRCUIT moves MONEY AROUND THE GLOBE…

It works at COMPUTER SPEED, shifting billions of dollars in SECONDS.

This FASTER circuit now controls everything else.

“TRADITIONAL” theory says TRADE determines EXCHANGE RATES—EXPORT MORE and the CURRENCY gets STRONGER.

Data shows only 41% of currency movements come from TRADE.

About one-third come from what is called the "VALUATION CHANNEL"—how money flows affect BALANCE SHEETS. The key discovery is the "QUALITY MIX" between two (2) types of money. They are:

1. 1.PRIVATE SECTOR money (created by banks and businesses)
2. 2.CENTRAL BANK money (created by institutions like the Federal Reserve)

When PRIVATE SECTOR money grows FASTER than CENTRAL BANK, CURRENCIES STRENGTHEN.

When CENTRAL BANKS print more money than the PRIVATE SECTOR CREATES creates, CURRENCIES WEAKEN.

This mix matters more than TRADE BALANCES or INTEREST RATES.

These quality mix dynamics create “DANGEROUS” cycles…

When CENTRAL BANKS print money to keep their currency WEAK, it pushes UP DOMESTIC ASSET PRICES. The U.S. will probably need to do this in the future if the U.S. dollar continues to APPRECIATE against other currencies of nations that take on a lot of dollar-denominated DEBT.

HIGHER ASSET PRICES attract FOREIGN MONEY, which puts UPWARD PRESSURE on the currency. We have seen this in the U.S.

This forces CENTRAL BANKS to print even MORE money, creating what is known as "POSITIVE FEEDBACK LOOPS."

The U.S. FEDERAL RESERVE and CHINA’s CENTRAL BANK drive these cycles GLOBALLY.

When the FED prints money to support U.S. markets, it spills over through cross-border flows. CHINA must respond by printing money, too, or its currency will become too STRONG (which is BAD for its exports). This will affect exchange rates worldwide.

“TRADITIONAL” economic policies often fail because, central banks can change interest rates, BUT their currency weakens anyway if they are creating too much money compared to the private sector.

The FINANCIAL CIRCUIT isn't just FASTER than the INDUSTRIAL CIRCUIT - it's become the main driver of how modern economies adjust to change.

PEACE & BLESSINGS,

Kenneth Reaves, Ph.D.

Tuesday, December 3^rd, 2024

How to Spot a “BUBBLE”

Financial “BUBBLES” are a funny thing.

During a “BUBBLE”, most traders/investors are in DENIAL.

Boosted by tales of soaring prices, the siren calls of “THIS TIME IT’S DIFFERENT” are difficult to resist.

Yet a financial “BUBBLE” seems obvious – even absurd – once it “POPS”.

All financial “BUBBLES” are a mix of unbridled GREED, newfangled VALUATION MEASURES and a disdain for CONVENTIONAL THINKING.

I love studying the details of financial “BUBBLES” and the larger-than-life characters who promote them.

Whether it’s the railroad “BOOM” of the 1840s, the British bicycle “BUBBLE” of the 1890s or the dot-com “BUBBLE” of the 1990s, each story is UNIQUE.

Yet all “BUBBLES” have characteristics in common.

The challenge for a trader/investor is to identify a “BUBBLE” – and better yet, get “P.A.I.D.” when it “POPS”!!!

A pair of Maryland business school professors, BRENT GOLDFARB and David A. Kirsch, tackled this issue in their book, Bubbles and Crashes: The Boom and Bust of Technological Innovation.

Specifically, the pair focused on identifying a subset of financial “BUBBLES”: MAJOR TECHNOLOGICAL INNOVATIONS.

Using a sample of 88 TECHNOLOGIES spanning 150 years, GOLDFARD and KIRSCH found four factors predicted when conditions were right for a technology “BUBBLE”.

1) Uncertainty Around the Innovation

Technology “BUBBLE” stocks feed on UNCERTAINTY....

AND, as with OPTION PRICES, the more UNCERTAIN the outcome, the HIGHER the stock price.

This UNCERTAINTY stems from “UNTESTED” business models.

When radio became popular in the 1920s, no one knew how it would generate revenue.

Would it be radio manufacturers???

Would profits come from advertisers and program sponsors???

Or would profits from subscription fees???

Investors ask the same questions during the “WILD WEST” period of any new technology, whether it’s the internet, 3D printing or electric vehicles (EVs).

And the greater the UNCERTAINTY about the OUTCOME…

The more chances investors have to invest in the parts of the “VALUE CHAIN” that they “BET” will be most valuable.

“BET” on the right horse, and you generate OPTION-STYLE returns.

“BET” on the wrong horse, and your investment will turn out to be WORTHLESS!!!

2) Large Numbers of Novice Investors

INEXPERIENCED traders/investors are always ready to chase any “NEW” and “EXCITING” technology.

Over the past decade, we have had CRYPTOCURRENCIES and EV stocks like Tesla (TSLA).

Today “NEWBIE” traders/investors are called “ROBINHOODR” traders/investors. Instead of camping out at “BUCKET SHOPS” watching stock tickers as they did in the 1890s, these traders/investors trade stocks on their iPhones.

SEASONED traders/investors are far more SKEPTICAL of new technologies.

SIR JOHN TEMPLETON SHORTED internet stocks at their PEAK.

CHARLIE MUNGER famously called BITCOIN “RAT POISON.”

WALL STREET’s leading HEDGE FUND managers JIM CHANOS and DAVID EINHORN have LOST millions SHORTING Tesla (TSLA).

Yet, as CHANOS’ and EINHORN’s LOSSES show, in a technology “BUBBLE”, the LESS experienced you are, the smarter you look.

That is, until the day the “BUBBLE POPS”!!!

3) The Opportunity to Invest in “PURE PLAY” Firms

“PURE PLAY” firms are closely tied to “NEW” technology.

This technology could be the bicycle, radio or internet stocks. The “PURER” the play, the more attractive the stock.

GOLDFARB and KIRSCH cite the “CAUTIONARY” tale of eToys, a pure internet play on toys.

“We’re losing money fast on purpose to build our brand,” Toby Lenk, CEO of eToys, proudly proclaimed in February 2000.

At that moment, eToys was trading at $86 a share, implying an enterprise valuation of $7.7 billion.

That was 35% more than brick-and-mortar industry leader Toys “R” Us.

Back in the “REAL WORLD”, in 1999, eToys’ revenues were $30 million!!!

The same year, Toys “R” Us took in $30 million in a SINGLE DAY!!!

By November 2000, eToys’ stock had from FALLEN $86 to $6.25 a share…

The stock eventually FELL to $0.09 a share, and eToys SHUT DOWN in March 2001.

The fate of eToys is hardly unique.

4) A Compelling Story

A “COMPELLING STORY” is another NECESSARY CONDITION of technology “BUBBLE” stocks.

CHARLES LINDBERGH’s trans-Atlantic flight helped drive the story of an optimistic future for aircraft companies.

ELON MUSK’s predictions about EVs, SOLAR ENERGY and a million humans on MARS by 2050 are part of this long tradition.

A compelling story makes TESLA (TSLA) more “EXCITING” than GM (GM), even though GM also makes EVs.

A compelling story makes BITCOIN (BTC) more “EXCITING” than GOLD, even though GOLD has been a “STORE OF VALUE” for millennia.

As Nobel Prize-winning psychologist DANIEL KAHNEMAN pointed out, it’s easier to generate a “GOOD STORY” when we have FEWER “HARD FACTS” fewer hard facts.

The less we know, the more we can fill in with our “IMAGINATION”.

The lesson for traders/investors???

In the words of GOLDFARB and KIRSCH…

These mistakes have been repeated countless times. That we get fooled is not surprising; narratives and stories are how we think. But with a better idea of how, when, and for whom these stories become costly, we can better avoid them.

So what do you think???

Are we in a “BUBBLE”???

OR, do you think current VALUATIONS are justified???

PEACE & BLESSINGS

Kenneth Reaves, Ph.D.

Monday, December 2^nd, 2024

The News Vs. The Market

EFFICIENT MARKET THEORY (EMT) argues that NEWS IS ALREADY FACTORED INTO PRICES.

By the time you hear about a NEWS event, EMT claims, all of the effect that information will have on the market is ALREADY PRICED INTO THE STOCK.

The challenge with that is that it only measures an INITIAL REACTION.

In reality, it is more like the “RIPPLE EFFECT” where the immediate response to the price is just the beginning.

The “RIPPLES” that follow are moves that can be RECOGNIZED AND TRADED TO GET “P.A.I.D.”!!!

COVID 19 was a great example of this…

Technically, the news of COVID hit in December of 2019 with the World Health Organization (WHO) releasing an alert.

It can be argued that the scope of the potential impact of the VIRUS was not yet known.

On January 21^st, 2020 the first case was reported in WASHINGTON STATE in the U.S.

By January 31st, 2020 there were already 213 deaths in CHINA and nearly 10,000 cases GLOBALLY with 19 countries impacted.

Yet the markets continued to “RALLY” and pushed to ALL-TIME HIGHS. For nearly a month AFTER the VIRUS hit the US markets stayed near their HIGHS.

It is clear that the NEWS had already hit but it was the CONTEXT and EVOLUTION of the story that triggered the “CRASH”. The “GRAVITY” of the news was what sent prices DROPPING.

But the NEWS did provide a spot light on key stocks that “SKYROCKETED” during the crisis. In fact, as the market tanked at an unprecedented pace, certain COVID related stocks saw HUGE gains.

Alpha Pro Tech (APT), makers of MASKS and PPE shot from $5 to nearly $40 in just weeks.

Another stock that launched as the market “CRASHED” was PHARMACEUTICAL COMPANY, Inovio (INO).

Clearly, the NEWS impacts the markets in WAVES and is NOT completely factored in “INSTANTLY”.

Both of these stocks were companies that had the potential to provide value in the midst of the crisis. As the news stories about COVID unfolded, it was made clear that there would be a need for PPE and a focus on TREATMENTS and VACCINES.

Of course, these were not the only companies producing these types of products, but by honing in on just companies in these areas and then using TECHNICAL ANALYSIS to pinpoint which of those handful were really positioned to take off, there was significant PROFIT to be obtained.

These type of opportunities happen as often as the NEWS OVER REACTS TO A CURRENT EVENT!!!

Make sure you are on the right side of the media “MADNESS”…

PEACE & BLESSINGS

Kenneth Reaves, Ph.D.