Jeff Brown over at Bonner and Partners is launching a new newsletter called The Near Future Report, which sounds like it’s the “entry level” letter (currently offered at $75) to go with his pricier Exponential Tech Investor, and the first bait they’re dangling for new subscribers is a fat, juicy promise of a stock that “could do even better than Nvidia.”
So, naturally, we want to know what he’s talking about — Nvidia, after all, has been an incredible stock market darling for almost two years now, going from $20 to $160 thanks to its connection to so many hot trends (data center upgrades, artificial intelligence, virtual reality and gaming, and self-driving cars). I even own a few shares myself, despite the fact that I still get a little tremor in my hands when I think about the current valuation (30X 2020 earnings estimates).
The promise of that next Nvidia is what is driving questions our way, but the hook that actually gets readers to open Brown’s promo emails is the headline…
“New Research Says Your Cell Phone Could Kill You…
(And it has nothing to do with radiation or cancer)
“The Centers for Disease Control warns that cell phones are the cause of a rapidly spreading epidemic. It kills one person every 24 seconds. And it’s growing faster than cancer, heart disease and diabetes – combined.
“Here’s everything you need to know to protect yourself from this ‘cell phone’ disease – including details on a potential miracle cure.”
The story that spins out of that intro is basically one about “distracted driving” causing an increase in car accidents — fatalities from auto accidents have been falling for years in the longer-term trendline, probably because of safer cars and more public awareness of things like drinking and driving and seatbelts over decades, but there’s been an uptick of accidents in the “texting and driving” era when we all have computers and movie screens distracting us in our dashboards and phones chirping temptingly at us from the cupholder.
So the “vaccine” for auto fatalities is, as you’ve probably already guessed, more safety equipment — in the form of “self driving cars” or, as we evolve to really autonomous machine driving, what Brown calls “help driving cars.”
A lot of this technology is already in vehicles, particularly the more expensive luxury cars where most new gadgets are first released — and it is helpful, with the lane change alerts and the heads-up displays and whatever else. Though I almost caused an accident last time I rented a car and the lane-change alert vibrated my right buttock when I was too close to the white line and scared me half to death.
Then we start to get to the real hintification about what exactly Brown is recommending…
“Now, there’s a new player about to enter the self-driving car market. And that stock could do even better than Nvidia.
“By the end of 2017, I expect a government mandate will be passed that requires all American cars have the ability to communicate with each other, using advanced computing power to process that information and avoid accidents – all in a split second.
“And this company is going to become one of the biggest players in self-driving technology.”
OK… what other hints does he drop for us?
“Its parts have already been used to drive a car from San Francisco to New York, with 99% of the driving done by the car itself, thanks to this company’s advanced technology.
“It’s already partnered with BMW. And in the next year, its parts could find their way into almost every car manufactured in America – thanks to this government mandate….
“While ‘hot’ driverless tech companies like Nvidia and Mobileye’s shares are valued around 30 times their expected revenue…
“This company’s shares are only at 1.6 times its expected revenue.
“Put simply, when the mainstream finds out about this company – likely after the government mandate is announced – there’s a reasonable chance its valuation could climb 3,000% or more!
“… the company I think is best positioned to profit when the U.S. government V2V communication mandate is passed. This company’s parts are critical to V2V functions and will soon be required on all cars. That means this company is about to claim a large chunk of the $2 trillion automobile market. This stock could climb exponentially in the next few months alone.”
So who is it? Well, we tossed all those clues into the Mighty, Mighty Thinkolator… and as long as you scrub away the iffy hype (there’s no “reasonable chance” that it “could climb 3,000% or more!” anytime soon), the best match for the clues is… good ol’ auto parts giant Delphi Automotive (DLPH).
"reveal" emails? If not,
just click here...
Delphi was probably the first wave of the collapse of the over-levered auto industry in the 2000s — it was spun out by GM back in 1999, then went into bankruptcy protection in 2005, well before GM and Chrysler had to be bailed out, and they came out of bankruptcy in reasonably good shape in late 2009 and went public again in 2011. Since then they’ve been growing their revenue pretty steadily, as you would expect for a major supplier during years when global auto sales spiked to new records (though Visteon (VC), which spun out of Ford much the way Delphi spun out of GM, has not ramped up sales as rapidly)… and they’ve done a pretty decent job operationally if you go by their income statements, with operating margins pretty consistently in the double digits while competitors like Magna and Visteon mostly post operating margins i