TradeSmith Presents: The 5 Biggest Investing Takeaways of August 2022

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Each month, I like to highlight five stories published in TradeSmith Daily and share them with you as a way to catch our collective breath.

I know that not everyone has the time to read every issue, so my hope is that collecting the investing takeaways shared throughout the month in one spot is not only a time saver, but also something you find valuable.

And helping you cut through all the noise out there, remove emotion from investing, and focus on what’s important is something I place a tremendous amount of importance on.

That’s why we’ve launched three new features in TradeSmith Daily between July and August: TradeSmith Snippets; Buy This, Not That; and Special-Situation Central. Not only are we continuing with these features, but our team is actively working on launching more and bringing even more value to your inbox each morning.

If you missed the launch of Buy This, Not That or Special-Situation Central, don’t worry — they each made the collection of investing takeaways for the month.

Let’s jump right in…

Takeaway No. 1: Buy This, Not That: An ‘Auto Play’ to Grab — and One to Run From

Not too many years ago, a long-running General Motors Corp. (GM) ad campaign boasted that the company’s Chevrolet lineup was the “heartbeat of America.”

But I can tell you with complete confidence that it’s Ford Motor Co. (F) — not Chevy — that’s the automotive backbone of the good ol’ USA.

After all, it was Ford that brought mass production to the auto industry — and made it possible for workers to buy the very cars they were building.

It also just toppled Wall Street’s expectations in its most recent quarter, and the stock price is up over 19% in the past year.

So if you’re going to buy an auto-related stock, Ford’s the only play, right?

Indeed, that brings us to the quandary that investors like you and me often face: When it comes to a business sector, asset class, investment index, geographic market, or powerful new trend, what’s the right move to make? What should you buy? And, just as important, what should you avoid?

These are important questions, ones that I like to address with an investing exercise I refer to as Buy This, Not That.

I settle the answers for the auto industry here.

Takeaway No. 2: This Company Spinoff Is More than Just News — It’s an Investing Clue

At the start of the movie “The Big Short,” the narrator shares that a few individuals knew we were headed toward a real estate collapse in the mid-2000s.

He says that while the world was having a big party, a few “outsiders and weirdos” saw what was going to happen because they did something “the rest of the suckers never thought to do.”

“They looked.”

Although that quote was in reference to the real estate bubble, it reminds me of company spinoffs and how investors aren’t taught how to “look” at them.

Because if more people knew that spinoff stocks generated a 22% return in the first 12 months of trading, they would be investing.

With one company set for a three-way spinoff in 2023, I want to make sure you’re well ahead of the curve by telling you about this Green Zone stock.

Takeaway No. 3: Special-Situation Central: This Company Is Wearing a Buyout Bullseye

Takeover plays, breakups, spinoffs, stock splits, share buybacks, recapitalizations, activist targets, and more.

Wall Street pros refer to these as “special-situation” investments.

I view them as catalysts for some of the biggest moneymaking opportunities you’ll find.

Currently, entertainment sharks like Netflix Inc. (NFLX), Amazon.com Inc. (AMZN), and Walt Disney Co. (DIS) could be circling a potential takeover target. And each of these companies may also be willing to pay a hefty premium to buy the company.

That’s because the chance to buy a company like this is once in a lifetime, offering a unique potential profit opportunity I wanted to put on your radar.

Takeaway No. 4: The U.S. Is Building a Semiconductor Empire, and This Stock Is Flashing Our ‘Buy’ Signal

From Speaker of the House Nancy Pelosi’s visit to Taiwan to the passing of a new piece of legislation, one thing is clear: The United States never wants to run out of semiconductors.

The United States CHIPS and Science Act was signed into law on Aug. 9, and it will provide $52 billion to increase the domestic production of semiconductors.

In this story, I share:

• The jaw-dropping valuation the semiconductor market is expected to reach by 2029.
• Five popular semiconductor stocks that you want to avoid right now.
• The one semiconductor opportunity that’s separated itself from the pack.

All you have to do is click here.

Takeaway No. 5: Don’t Go Ape for AMC. Be a Real Investor Instead.

For my birthday in May, I had a bit of a tug-of-war with my family on what we should do.

They wanted to go out somewhere, but I was content with staying in and watching the premiere of “Stranger Things” season four together on Netflix.

We could have gone to the movies and seen “Top Gun: Maverick,” but I wasn’t enticed by the idea of circling the parking lot for an empty spot, spending $15 on a bag of popcorn and a drink just for myself, and hoping the person sitting behind me wouldn’t keep up a lively conversation with their neighbor the entire time.

I can’t say that everyone is like me, but even before the pandemic, fewer people were going to the movies.

That decline has been a problem for one of the biggest names in the movie theater business, AMC Entertainment Holdings Inc. (AMC).

Understanding the bleakness of the situation, CEO Adam Aron decided to sell preferred shares of his movie theater company.

The preferred shares (listed under the ticker symbol APE, a nod to meme-stock investors) are a new class of shares that were given to AMC shareholders as a dividend, and those shares did not require a vote from shareholders to be issued. The company’s board has authorized 1 billion shares to be issued and has issued 516.8 million in August.

But now isn’t the time to “go APE.”

It’s time to do this instead.