Nova-X “Market Crusher” Stocks — “How to Beat the Market by Ninefold”

What's being hinted at by Michael Robinson?

By Travis Johnson, Stock Gumshoe, April 24, 2017

I haven’t looked at a spiel from Michael Robinson in quite some time, so when a few readers forwarded his latest pitch for the Nova-X Report I thought I’d take a quick look for you. That newsletter, which is currently being sold for $99, is getting the hype treatment with his pitch about marijuana investing, like most other growth-focused newsletters who don’t want to miss the boat, but the article I saw hinted at some of the “regular” investments in his portfolio… so that’s what we’re going to look for today.

The marijuana part of the ad, by the way, does not really hint at his current recommendations (the ad part is from December, anyway, so it’s getting a bit long in the tooth)… but the hinting in his current “article” is from just the past week, so perhaps it will give some real idea of what he’s recommending now.

And yes, for those who are asking, I continue to not dip my toes into marijuana investing — not because I’m against legalization, or because I have a moral objection (I’d say it’s about the same as alcohol, and should be treated similarly), but because so many of the companies are ridiculous story stocks that skyrocket by 1,000% and then fall by 99%. There is little fundamental basis for most of these stocks, and marijuana is a plant that’s pretty easy to grow just about anywhere… which means it’s a commodity where the prices should fall dramatically as legal production ramps up.

There are a few stocks that have begun to develop brands that might remain compelling and valuable, like Canopy Growth in Canada (WEED.TO, TWMJF), and I’d probably look at those first if I were inclined to put a lot of time into these stocks… but I’d have to understand the market a lot better in order to justify valuing even that market leader at a billion dollars when they have only $20 million in revenue. Even if they get up to $100 million in revenue in a year or two, as is possible, that’s hard to stomach for a company that actually has to invest in facilities and grow plants and process marijuana and distribute and sell it — this is not a particularly high margin business, and it should be fairly expensive to scale it up unless you’re going to grow outside and start using big agriculture’s industrial farming techniques.

So perhaps others will enjoy the “real” companies like Canopy, and while I’m not buying I wouldn’t try to talk you out of researching them… but I have no interest at all in looking at the dozens of micro-companies that have no real business, no brand, no unique product or meaningful revenue or anything else to distinguish them, and just add the word “cannabis” or “marijuana” to their letterhead. Those stocks have had 1,000%+ runs a couple times as well, but almost all of them have given up those gains almost as quickly — a 20 cent stock that goes to $7 is exciting, but not if you’re the sucker who was convinced by the growth move to buy it and purchased at $4 on the way up and wasn’t nimble enough to sell before it fell back down to 20 cents. Those stories repeat over and over in marijuana-world, they happened each of the times there was a major legalization vote (Colorado a few years ago, California this past year, etc.), and those companies really have no “there” there, betting on one of the teensies to be a survivor is a bet with very, very long odds, even if you’re not worried about the US Federal Government cracking down on marijuana again. That doesn’t mean everyone should avoid them — some people like long odds gambling and see the huge potential reward as fair compensation for the strong likelihood of a 99% loss, but I don’t like to spend a lot of time researching or writing about ideas like that.

Most marijuana microcaps and startups and penny stocks are not investments, they’re speculative thrill rides — and those can be fun and I wouldn’t begrudge you playing with them if you have money to risk, but, despite what they told you about keeping your hands and feet inside the car at all times when you were a kid on the roller coaster, you should always remember to unbuckle and jump out of the car whenever you see it starting to go down. Companies that are trading just on speculation and sentiment have no clear fundamental basis for any particular stock price (like revenue, or even revenue growth, or earnings, or assets), and that means they tend to have no floor when sentiment shifts and they start going down.

So that’s my long way of saying I’m not going to try to ID whatever pot stocks Robinson was teasing back in December, but I will try to identify the stocks he’s teasing today. Here’s a bit of his pitch…

“How to Beat the Market by Ninefold…

“Here’s the thing Wall Street doesn’t want you to know: This remains a stock picker’s market.

“See, as far as the Street is concerned, they’d be happy if you’d just be “passive” โ€“ and stick all your money in market-tracking mutual funds or ETFs. Of course, if you’re a bit of a bigger “whale,” they’re happy to charge you a bundle for their analysts’ mediocre “buy” and “sell” advice.

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“But if you did that, you’d be leaving a lot of money on the table.

“You see, having the right tech investing guide could help you beat the S&P 500 by as much as ninefold, as members of my Nova-X Report premium service know.”

And then he gets into specific stocks he’s recommending to his Nova-X folks:

“Nova-X Market Crusher No. 1: OLED Screens for Smartphones

“The world’s top smartphone developers are locked in a pitched battle. So they’re all looking to come out with features that the other guys can’t match.

“Samsung Electronics Co. Ltd. (OTCMKTS: SSNLF) touts that its phones are waterproof. Then along comes Apple Inc. (Nasdaq: AAPL) saying it has the best speakers.

“But all of the top players agree on one thing.

“Super-crisp organic light-emitting diode (OLED) screens are the next frontier. For one thing, they’ll make watching videos on phones a much more pleasurable experience.”

OK, so it’s some kind of OLED stock. Which one?

“Whether these phone makers build their own OLED screens or farm it out to contract manufacturers, one firm stands to benefit.

“As I told Nova-X readers last May, this firm controls more than 3,500 OLED patents. And so it stands to earn licensing fees for every single OLED-equipped phone that is sold.”

OK, I don’t want to get too excited… but that’s my favorite kind of business. If you could wave a magic wand and create your business, it would be something that generated passive revenue for you because of people licensing your invention or your brand or whatever and paying fees and royalties. Mmmmmmm, royalties.

How about some specifics that we can feed into the Thinkolator?

“… this company is geared up for sales growth that should rise from 25% in 2017 to 30% in 2018….

“Investors are just now waking up to this high-growth opportunity, pushing shares of this firm up 52% in the first quarter.”

That, sez the Thinkolator, must be our old friend Universal Display (OLED). That patent number is a few years out of date, they now claim 4,200 pending and issued patents worldwide (about 500 of them were purchased from BASF last year). They do R&D on various OLED technologies, provide some proprietary materials, and license their OLED intellectual property without really having a manufacturing facility (like most semiconductor companies, they farm out the actual fabrication or manufacturing to contract facilities. All of which generates very nice margins, though the actual revenue numbers are not all that high at the moment.

OLEDs have provided the promise of unusual form factors and cool new gadgets for years, things like curved screens or even “roll-up screen” handheld phones that roll up like your window blinds to fit in your pocket like a pen. That promise hasn’t yet turned into real wacky products, but OLEDs have come a long way since I first saw Universal Display teased probably a decade ago (it had the ticker PANL back then), they are no longer just future gadget fuel — they are being used on TVs and mobile devices to create better image quality, better contrast, faster refresh rates for better video, and significantly thinner possible form factor and lower power usage because the phosphorescence of the OLED colors means they don’t require a backlight or liquid crystal backing. So it is pretty cool, and quite real.

Despite that, however, the rampup in earnings and revenues is not particularly linear — OLED has had pretty flat revenue and earnings over the past three years despite the pretty steady increase in the number of products that use their technology. They had $191 million in revenue in 2014, and it was up to only $199 million in 2016… so even if your margins are very high (theirs are, the gross margin is well over 80%), that doesn’t provide a lot of potential for earnings growth.

Clearly a lot is riding on the next wave of mobile phones, which are the highest volume products with screens in the world, and the market every technology component maker wants to be focused on — so the expected high volume next-generation OLED-using phones from Samsung and Apple are the key, and those are presumably the reason why earnings expectations have ramped up from $1 a share last year to $1.45 this year, $2.34 in 2018 and $3.18 in 2019. So there’s not much trailing growth, but there is certainly an expectation of pretty solid forward growth — and at about $80 a share you can justify the valuation if you’re pretty confident in that forward growth. That’s about 35X 2018 earnings, so it’s not cheap but investors are likely paying up for the upside surprise potential — the good thing about a licensing based business like this is that revenue could jump by 20% if the end demand turns out to be better and Apple licenses their technology for the next iPhone, and that might be enough to boost earnings by 25-30%. The revenue number is still pretty small, relative to the size of the market for smart phone (and TV and laptop) components, so that potential surprise upside is probably what investors are buying in for today.

I’m not sure I’m willing to pay that much for this stock, since it’s probably going to be very volatile as rumors swirl about iPhone and Galaxy sales and OLED components and what kind of revenue is going to trickle down to Universal Display from those products — Samsung has boosted their license payments to OLED in recent years, but that payment only hit $75 million last year, and Apple’s secretive nature means we have no real idea what their display will be like, or whether it’s licensed from OLED or uses some competing technology. But the company does confirm that they expect to be back “on a growth trajectory” in 2017 after several disappointing years, and investors have taken them at their word and bid up the stock in preparation.

At this valuation I think I’d be more tempted to wait and see if they have another lousy quarter that takes some of the air out of the stock, but it’s certainly an interesting story stock as the next generation of mobile phone screens really hits the mainstream with Apple’s expected adoption later this year. They will probably report earnings in about two weeks (it was May 7 last year), and the expectations are high this time out — anything the company says about the revenue expectations for the rest of the year will probably be watched pretty closely.

And Robinson hinted at a couple other Nova-X picks in his piece, I’ll skip forward to one that perked up my interest:

“Nova-X Market Crusher No. 4: The Must-Own Chipmaker

“One of our favorite chipmakers, which has been in the Nova-X portfolio since October 2014… one of the fastest-growing firms in the semiconductor industry.

“This firm is not only seeing rising sales with top client Apple. It’s making big inroads into top-tier Chinese smartphone builders as well.

“A savvy go-to market strategy has already boosted the company’s sales base โ€“ from $1.07 billion in 2010 to $3.29 billion last year. And its revenue base is on pace to approach $4 billion by next year.

“This firm is benefiting from an expanded client list, and it’s also gaining from the rising content of chips in today’s smartphones and tablets.

“The iPhone 7, for example, has 33% more chips than the iPhone 6 had, and the iPhone 8 is expected to have 25% more chips than the 7. We’re talking about more than $30 worth of chips per phone, according to Charter Equity.

“And that trend is clearly boosting this company’s fortunes. Its shares rose 31.2% in the first quarter, which puts us on pace for more than 100% in annualized gains.”

“Annualized gains” don’t mean much to us, of course — not unless you can promise that you’ll also find a stock that rises 30% next quarter, and 30% the quarter after that. But 31% in a quarter is certainly nice… so who is this?

Well, Thinkolator sez the stock is Skyworks Solutions (SWKS), which I also just added to my personal Real Money Portfolio that I cover for the Irregulars — I didn’t buy it back in 2014, unfortunately, though I suppose that also means I didn’t have to fret about whether to sell at a stop-loss in 2015 or 2016 when it dropped 40% from those 2014 highs because of falling iPhone volumes and Skyworks’ inability to find other large customers.

Lately that seems to be shifting, as Robinson teases, and I took a look at Skyworks after reviewing it for a Frank Curzio teaser a couple weeks ago and decided I like what I see… mostly, I must admit, because the expectations of iPhone volumes in this next iteration of Apple’s phone are much higher. I do think Skyworks is likely to remain pretty dependent on Apple, even though that dependency is lessening, but I also think this is a better year to be Apple-dependent than 2015 or 2016 were.

So Skyworks is one of the smaller positions in my portfolio now, and I do think the current price is a fair valuation, but I’m hoping that they will be cautious or have some bad news in the next quarterly release, which is on Thursday (April 27), that might allow me to build my position at lower prices. We’ll see.

And with that, I’ll leave you to your own cogitation — interested in Skyworks or Universal Display as growth picks teased by Michael Robinson? Have other favorites in the “growth” category? Let us know with a comment below.

P.S. Have you ever subscribed to Nova-X Report? If so, please click here to let your fellow readers know what you think of it and how you’d rate your experience. Thank you!


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TONY CSoGiAmDouglas SmithjoeybagsGreg O. Recent comment authors

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TOM D (fatherhenny)
Guest

ANY INPOT (CUTE ERROR) ON EMBLEM ? CAME WITH GOOD CREDS FROM ONE CANADIAN SERVICE.

David Cregar
Guest

I have followed some pot stocks. There are two sides to every coin so one positive yet undetermined outcome of the federal struggle with the population and it’s majority, the pot companies as i are leary of rapid expansion. The undermining and fear associated with federal crackdown. You can stand on sideline thinking I’m not putting 100k into the market it’s going to fall 20% and I can’t handle the losses. I’m going in when there is a correction. Only eventually once that correction comes. I’m not going into the market it’s falling and probably going to crash. So far… Read More ยป

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Jake51
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After less than four months, performance not encouraging. Of nine stocks acted upon, one is profitable, three are flat and five selling for less than purchase price as of this moment. One other had been “profitable” by $4/share as of a few weeks ago–and Merrill Lynch had also recommended it with a hefty year-end target. He recently devoted 11 pages to an investor report recommending IMMU (at an initial 1/3 buy), selling at the time for just under $7; it now sits at just over $5, so presumably there is time to turn around. Two recent recommendations, neither of which… Read More ยป

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Craig R.
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Craig R.

I am a current Nova-X subscriber. I’ve had some nice gains on recommendations as well as a few bad losers. Anyone who invests in the market knows that is usually comes down to timing. If your fortunate enough to get in on a stock early, it definitely increases your chances of success. Having said that, there are no guarantees.

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kevin McCrary
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kevin McCrary

check out this new Investopedia article which discusses SWKS:
Samsung Galaxy S8 Could Boost Semiconductors Stocks
http://www.investopedia.com/news/sorry-apple-samsung-galaxy-s8-could-boost-semiconductors-stocks/?utm_source=news-to-use&utm_campaign=dfp&utm_term=9429101&utm_medium=email

Dave
Guest
Dave

The current outline for cannabis in Canada allows for some interesting growth. Unfortunately it allows for up to four plants to be home grown. That could make a significant dent in commercial sales. Not as difficult as home beer or wine.

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R. Hall
Guest
R. Hall

It is harder to grow good weed than you might think. And amounts used are small enough (an ounce will last most people weeks) that paying for quality is worth the
price.

dcohn
Member
๐Ÿ‘191

So friggin true. You really are not understanding the market Travis though I am not in any way saying its time to invest as I have no clue in which one. The edibles market alone requires skills at creating quality oil that is not using dangerous mixes like the juice used with Tabacco VAPE products. Quality oils will then be used for edibles in both the retail and medical markets. Making the right CBD strains requires the skills of real botanists. Anyone can grow weed but few grow quality strains used for medical needs such as for childrens illnesses. CBD… Read More ยป

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rudi11
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rudi11

I certainly agree with R. Hall. Huge volumes of sales will come with full legalization in Canada, and there will be huge demand. When supply catches up to the new demand, prices are bound to fall, and probably a lot. So in my opinion the only place to INVEST now is Canadian cannabis co’s. There are several very much established leaders, who WILL MAINTAIN leadership. A portfolio of 3-5 should have steady meaningful returns as we get much closer to the July 2018 date.They are Canopy,Apphria., Aurora,C-Med, Aurora,and Organigram. will be very volatile in the next e 4-6 pos ,… Read More ยป

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pam day
Guest
pam day

With all of the pot talk ,Canada has an ETF…HMLSF….trades1.3 million daily and ascets of 86.4,not bad….less than a month old…has in it both SMG and TWMJF….felt safer as mostly Canadian stocks and someUSA….also MJNA,apenny stock that CNBC had a show on…..He for years took boatload under the S.FBridge.. Calif..Finally caught,he served a short prison term,as not a cartel type..I call him the JFK of marijuana!!!!Interesting history….all for fun!!!!

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mudmar
Member
๐Ÿ‘14
mudmar

Good time to look at the Canadian cannabis stocks. Last week was a big drop probably a good time to enter.
If you are considering I would check out 420 Investor and New Cannabis Ventures websites for good professional research and info.
I subscribe to only two sites this one and 420 and appreciate the quality info I get from both forums.

Andrew
Guest

interesting info, in looking at tech, Chinese home appliance stocks through hk http://eqibeat.com/top-20-chinese-home-appliance-stocks-by-market-cap/

Vic
Guest
Vic

Emblem is a LICENSED cannabis producer out of Paris Ontario Canada. Currently (1st May) around $ 2.60 (52 wk range 2.05-4.60) with 560 000 – 3 month av volume on the Toronto TSX venture. It has a 4.44% weighting in HMMJ (Horizons ETF) so it has merit as they would have considered all factors. IMHO if someone wants a small position in these stocks they might as well buy the ETF and get exposure to many of them that have been researched.

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Nathan kearby
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Nathan kearby

Im hoping Michael leads me in the right direction. I get emails from several investors, and picked Micheal to follow.
If I can swing the cost of the stocks, Lets go Micheal..
I am wanting to get to the Pre- IPO information, that could be interesting.
Good Trading Everyone & Have a Blessed Day..
Nathan

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Greg O.
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Greg O.

I just traded stock OLED with a Sept 15 expiration BULL CALL Spread. Bought the 100 call sold the 110 call. Was in the trade for about 2 months. I made $200. I got this recommendation from Chuck Hughes Optioneering.

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joeybags
Member
๐Ÿ‘7
joeybags

I was just reading over a NOVA X report involving CRYPTO CURRENCIES AND THE 3 STOCKS GETTING READY TO SOAR while PENNY STOCK MILLIONAIRE is touting the same story however with only 2 that are set to OUTSELL AND OUT BEAT BITCOIN. Now back in 2013 I subscribed to NOVA X and I read cover to cover the info sent to me about bitcoin. I told my wife(now ex wife)that we should invest in this. she being always right poo pooed on it then got a select few of her lap dogs to mock my ide saying thatll never happen.… Read More ยป

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Douglas Smith
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Douglas Smith

Hi team, A month or so I invested in the Road map to Marijuana millions (Nova X). I took a long look at most of the stocks Michael recommended. i funded my account and purchased many of those stocks before the first of the year. After the first few days my account came to a halt. Since then I have been losing money in a big way in the range of $100. to $500. per day. My question is, is this all there is or should I hang in a hope for a rebound.? In a few more days 5… Read More ยป

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SoGiAm
Member
๐Ÿ‘11403

Douglas, Since you revealed no specific equities, how would anyone assist you? Never, never, never invest blindly on some shrills recommendation. Why wait for your a stop loss transaction to take you out at an even lower price? The following link may assist you to get re-plugged in on your MJ adventure: https://www.stockgumshoe.com/2016/03/microblog-420-investors/ Long #GR8Gummunity! #Best2ALL!

TONY C
Guest

PROBLEM NEEDS TO BE ADDRESSED ///AN END TO DAY TRADERS ,,,”’,,,I LOST TYHREE THOUSAND LAST WEEK ,,,THEFT BY DECEPTION ” SOME HOW THESE SCHOOLS TEACH THIEVES HOW TO VULTURISE YOUR STOCK ,,,,I OWNED CERTIFICATES OF TOYOTA FOR MANNY YEARS PAID EIGHTY CENTS NOW WORTH 135 DOLLARS EACH ,DAY TRADERS CANT STEAL MY CERTIFICATES ‘FINRA.ORG NEEDS TO PUT AN END TO DAYTRADING ,,,COMPLAIN TO THEM ,,,I INTEND TO ,,,

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