Stutman’s “Auto Crisis 2.0” Basket of Companies

What are the "Automated Cars, Self-Driving Profits" stocks being teased by Technology & Opportunity?

By Travis Johnson, Stock Gumshoe, December 15, 2016

The latest pitch from Jason Stutman for his Technology & Opportunity newsletter is all about the big changes happening in the auto industry — primarily the safety and self-driving innovations that are driving auto tech forward.

The intro is, of course, much more attention-getting than my first paragraph above — this is how the ad opens:

“Auto Crisis 2.0

“9,643,000 People Could Find Themselves Deprived Of Their Earnings

“As An Entire Industry Is Wiped Out…

“Ignore This Letter And Stand By While It Happens, OR Take My Advice And “Get Behind The Wheel” On A Basket of Companies That Are Set To Turn This Industry Upside Down…

“The Choice Is Yours.”

You can almost hear the ominous theme music opening up behind those portentous words… but what it is it that Stutman is actually selling? It’s not the breakdown of the auto industry or the driving industry (cabbies and truck drivers), which he says is forcing people to lose “Everything They’d Worked Their Entire Lives” ….

And it’s not the increased safety of the driving public (and their loved ones), despite the terrible stories about people backing over their own children in the driveway (which is bringing required backup cameras to most cars as safety regulations continue to build)…

No, what he’s selling is an investing newsletter — which means he’s going to drop some hints about his favorite investing ideas to try to entice you to subscribe. Here’s a bit from the ad:

“Banking Tesla-Like Gains (Up to 1,458%) From These Auto Tech Companies

“The market is hot…

“There are so many companies gearing up for this new revolution that, once identified, can bring in massive gains…

“Becoming the blue chips of your portfolio.

“You see, the companies we’re going to cover in a second are positioned extremely well to see in a short period of time the types of gains that Tesla (NASDAQ: TSLA) has seen since 2010.”

He provides a couple other examples of stocks that have been winners in auto technology in the recent past aside from Tesla, including NXP Semiconductors (NXPI, which I own and is in the process of being acquired by Qualcomm for $110 a share) and Autoliv (ALV), the Swedish seatbelt/airbag and auto safety pioneer. But the four “secret” stocks are then teased, and that’s where we’re going to put the Thinkolator to work for you — we’ll see if we can name the stocks, give you a chance to think about them in the cold light of day, and then, if you feel like it, sure, you can subscribe to his newsletter if you want to follow his thinking… just get a little info under your belt first.

(That’s why we do what we do here, if you happen to be new to Stock Gumshoe — learning about the ideas before considering a subscription will give you a much better chance of thinking about these kinds of stocks with a little healthy dose of skepticism. If you commit to a subscription just to learn about a “secret” stock, well, you’re going to be inclined to buy that stock to reinforce your subscription decision… and first impressions matter, investors have a tendency to evaluate all future research from the foundation they built from the first thing they read or learned about a stock… if that first info is a sales pitch that builds the stock up into a world-beater in your mind, it’s hard to break out of that initial impression).

So what are these “secret” stocks? Let’s check the clues for all four…

“Auto Crisis 2.0” Stock #1

“Most automotive cameras treat video quality as an afterthought.

“This company’s automotive solutions — sensing cameras, viewing cameras, and drive recorders — put video processing at the forefront, recognizing that pristine imagery is about more than improving the driver’s experience.

“It’s also about safety.”

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OK, so some kind of camera and imaging company. Other clues?

“This company’s stock price was sitting over $6.00 in October 2012. By July 2015, the price was over $124… a 1,994% gain.

“It has since come down a bit, but just since May 2016, it’s seen gains of 93.33%, making this a very nice choice for the portfolio.”

That tells us this teaser pitch info was probably gathered starting a couple months ago — perhaps they put out a special report to their subscribers back in October or November and are just repurposing it into a pitch for new subscriptions now… because though that data is accurate, the 93% gains hit about 2-1/2 months ago and the stock is down by 20-25% since then.

Who is it? This is, in a bit of a deja vu moment, Ambarella (AMBA) — I wrote a little about this one earlier in the week because it was also part of a pitch about drones (their camera and video chips are used by automakers and drone makers and other camera makers). I don’t have much new to add, other than that Ambarella’s exposure to the auto business has traditionally been in aftermarket video recorders and cameras but that it is gradually building its OEM and dealer-install business as automakers and dealers offer more video options.

I don’t know whether this is going to be a major part of their business in the near future or not, drones and action cameras and security cameras are all much larger businesses at the moment… but certainly there’s potential for more cameras in cars as well, both those that are used by autonomous driving engines and those that are used for displaying or recording video for human drivers. Probably drones and the latest GoPro sales are going to drive volume for Ambarella for the near future, and there’s not much sign of real growth re-igniting immediately, but things are probably looking a little better for Ambarella than they did six months ago.

Next?

“‘Auto Crisis 2.0’ Stock #2

“This company has been in the automotive arena for quite some time, but most wouldn’t know it’s about to become a major player in the autonomous driving arena.

“This company’s HAD (highly automated driving) Map provides a highly accurate and realistic representation of the roadway profile, including curvature and terrain inform