This ad, yet another one that focuses on the potential for 5G cellular data networks to rewrite the investing world, comes in from the growth-happy folks at Motley Fool Rule Breakers… the ad letter that I saw was from Rex Moore, one of their analysts, and this is the section that caught my attention:
“One of America’s most trusted stock pickers recently featured my ‘hidden 5G superstar’ in his high-end stock-picking service… and it’s doubly important because his team recently made the stock a double recommendation to his members.
“But why should you trust him?
“Well, for starters, because he’s legendary for leading investors to huge winners after all the hotshots on Wall Street have declared it’s ‘too late’ to cash in.”
That’s a reference to David Gardner, of course, the founding Motley Fool brother who is most associated with “growth” investing and heads up their Rule Breakers newsletter — among the criteria he uses to pick “rule breakers,” he prefers companies that Wall Street writes off as “overvalued” (and these days pretty much all technology and growth stocks are trading at almost unimaginable valuations, so he should be like a pig in slop).
So what is the stock this time? They’re flogging a “special report” about this stock that they call the “5G Investors Playbook” in order to tempt new Rule Breakers subscribers ($99/yr at the moment), and the lead-in featured the oft-hyped story of Bob Pelissier, the truck driver who recognized the beginning of the dawn of the cell phone (or got lucky) and bought the FCC license for some spectrum in New Hampshire, eventually turning his $40,000 gamble into a fortune in the wild west era of the early spectrum wars.
We’re not going to see that kind of opportunity, of course, making a bet on your own business will always have more potential than investing in some well-known growth stock, but what might it be that they’re talking about?
Turns out, they’re hinting not just at the benefit of getting in early on one of the companies that’s directly exposed to 5G — like the telecom companies, the tower companies, or the chipmakers — but by betting on a company that itself will benefit from 5G’s adoption. So that means we’re pushing out that impact further into the future (conceptually we’d assume that the first winners are the network builders, the second winners are the device makers, the third winners are the companies that come up with new ways to take advantage of all that lightning-fast data to build new products or services that people don’t yet know they need).
Here’s more from the ad:
“There’s a small, very unassuming company I’ll tell you about today that could have already quintupled your money had you invested in it three short years ago, and given what’s going on right now in the cellular world and the key dates coming up… one of the world’s top growth investors thinks this is a great time to get in.”
That sure does sound like a David Gardner favorite… buying stocks that have already risen by 400% often gives me a headache, but it’s certainly part of the “keep buying your winners” philosophy that has worked well for him with huge long-term gainers like Netflix and Amazon.
What other clues do we get about this David Gardner 5G stock?
“Thanks to this new window of opportunity coming up, this company’s growth is poised to skyrocket. Here’s why I say that:
* It’s been growing revenue by a heady 70% annually.
* Its active customer count has increased fourfold in four years.
* It has what stock geeks call a ‘huge moat’ and ‘high switching costs’… meaning customers find it very hard to switch to another company.”
OK, so that’s some good fuel to shovel into the Thinkolator… what else do they drop by way of hints for us?
“This company might best be thought of as a critical link for all the data that zips around the world on cellular waves. We’re talking data such as voice, texts, video, and pictures… and