Chris’ note: Our mission at the Cut is to help you really move the needle on your wealth. That means during good times and bad.
So today, I’m bringing you insight from our tech expert, Jeff Brown. He reveals three sectors that have proven to be “virus-resistant.” They’ve held their ground… and even climbed… during the worst of the coronavirus sell-off earlier this year.
It pays to listen to Jeff. Folks who followed his recommendation to buy chipmaker NVIDIA (NVDA) in 2016 could have seen 1,800%+ gains since then. Now, he’s found another stock he believes has the same potential. Next Wednesday, he’s hosting a free training session on how to build your own million-dollar tech portfolio. When you sign up, you’ll get a chance at free access to this pick. So before you read on below, make sure to reserve your spot here.
I first noticed it in December…
China was reporting flu-like symptoms in patients in the city of Wuhan. By early January, it was clear we were in the early stages of exponential growth in the outbreak.
By now, we all know the story. The virus – COVID-19 – spread globally by early spring. Aside from the obvious health consequences, the virus – and the subsequent economic lockdowns – caused an unprecedented level of fear and uncertainty in the equities market.
The S&P 500 fell more than 33% in early spring. Some well-known companies like American Airlines (AAL), Carnival (CCL), and Hertz (HTZ) shed more than half their market capitalizations. Hertz even declared bankruptcy and is now down 95% from its February high.
Of course, we also know what happened next…
From the March lows, the equities markets began an incredible run. As I write, the S&P 500 is up more than 57%. The technology-rich Nasdaq is up more than 73% from the lows.
By now, I know what many investors are likely thinking: Did we miss our chance? Is it too late to get into incredible investments?
The answer is no.
There is still a way to build an incredible portfolio of quality companies at reasonable valuations… if you know where to look.
As I write, the S&P 500 is up only about 8% on the year. But some well-known companies have done much better.
The FAANG stocks (Facebook (FB), Apple (AAPL), Amazon (AMZN), Netflix (NFLX), and Google (GOOGL)) have been on an incredible run since the fear-induced selling in late February and early March.
All five stocks are up double digits for the year. Amazon alone is up an impressive 85%.
This is very logical.
In the wake of the COVID-19 lockdowns, the world turned to a variety of technologies to carry on with daily tasks.
Can’t go to the grocery store? Order groceries or everyday products on Amazon’s e-commerce platform.
A company’s workforce can’t go into the office? They can rely on cloud-based applications supported by Amazon’s AWS.
Stuck at home? Turn on Netflix or browse the web, where Google can serve us more ads.
Need to stay in touch with friends and family? Scroll through Facebook or Facebook-owned Instagram to communicate.
That’s a very high-level explanation. But it demonstrates how these companies have been supplying the essential technology for a world on lockdown.
The FAANGs haven’t been the only winners…
We’re entering a golden age of biotechnology.
Thanks to COVID-19, the biotech industry is progressing at a pace I have never seen in the more than two decades I’ve been an analyst. Breakthroughs that would typically take years are happening in months or weeks.
Suddenly, the world is aware how quickly we can sequence a virus and develop potential vaccines… use artificial intelligence to find compounds that might bind to COVID-19 and render it ineffective… and create antibodies that can fight a virus.
Every venture capitalist and private equity house has just woken up to how powerful these technologies are and how quickly biotech can move. We’re going to see an acceleration in biotech investment, early stage companies, and IPOs (initial public offerings) as a result.
And many biotech companies are not impacted by supply chain problems. They don’t care if the market is volatile. When they make progress with their research and development, their stocks run higher.
Then there’s one more sector that has benefited from this new world…
My longtime readers already know this, but the COVID-19 lockdowns caused data traffic to spike dramatically.
In the weeks after lockdowns began, videoconferencing traffic – for both work and socializing – spiked 300%. Gaming traffic exploded 400%… probably because kids were staying home from school.
Our current network infrastructure just can’t handle this volume of data traffic effectively. The world needs 5G – the new generation of wireless internet technology – more than ever.
For companies that provide 5G technology, business is booming. And that’s shown up in a number of 5G stocks.
Take SBA Communications (SBAC). This is a company that erects and maintains wireless infrastructure, including 5G wireless architecture. I recommended this company to readers of my large-cap investing service, The Near Future Report, in June 2018.
SBAC sold off with the rest of the market earlier this year. But once investors realized how essential 5G technology would be for a world in quarantine, the stock rallied.
It regained all its losses and even made a new 52-week high. My readers sold SBAC for a 90% gain in less than two years. Outstanding.
We must remember, 5G is not a “nice-to-have” technology. It’s an essential piece of national architecture on par with roads, bridges, and tunnels.
5G is coming no matter what the economy is doing. In the event of a depression – which I don’t expect – quality 5G companies will weather the storm better than the broader market.
Consider one more thing…
It can be useful to analyze where “smart money” is investing. That can show us where to invest.
For example, where have venture capitalists, private equity firms, corporations, and even governments been investing during the last six months?
The answer? 5G wireless technology and infrastructure, biotechnology, cloud-based services, artificial intelligence, and semiconductor technology.
We can find great investment opportunities regardless of the economic environment by following where the smart money flows.
At the top of this essay, I posed a question: Is it too late to get in on the incredible gains?
As I said, the answer is no.
It’s still possible to build a million-dollar tech portfolio from scratch in today’s market. But it’s important you invest in the right companies in the right sectors.
That’s why I’m hosting a free investing summit on Wednesday, October 21, at 8 p.m. ET. We’re calling it Jeff Brown: Beyond Exponential.
On that date, I’ll show you the stocks to buy today to build your own million-dollar tech portfolio from scratch. So be sure you mark that date and sign up here. I’ll see you there.
Editor, The Bleeding Edge
P.S. If you attend my summit, I’ll send you a free bonus report with my No. 1 tech watchlist company. This is a stock I believe could rival the monster gains some of my followers have seen with NVIDIA (NVDA) – which has climbed more than 1,800% since I recommended it in February 2016.
You can get the name of that stock by signing up right here.