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 information.

“HAD is the most disruptive change in the automotive industry since the invention of the car and will require an advanced on-board map to support various vehicle systems.

“The company’s patented technology delivers a highly optimized, 3D lateral and longitudinal view of the roadway….

“Tech pundits were preparing the last rites for this navigation pioneer a few years ago, but it has proved to be resilient. As others fell away, this company is now the biggest and arguably the only consumer tech company Europe has left to boast about…..

“… since July, it’s seen a steady increase of 24.96%.

“It just came to a collaboration agreement with a major car manufacturer and is now only one of three companies in this all-important space.”

This is the European GPS mapping company TomTom (home listing in Amsterdam at TOM2, trades in the US at TMOAF (full share) and TMOAY (half share)). A few years ago I would have written them off as a Garmin competitor, and since Garmin was headed down the tubes I wouldn’t have been terribly interested… but perhaps their new mapping data and work with OEMs to build their navigation into new vehicles will help fight against the smartphone-led commodification of GPS mapping services.

I don’t really know much more about them, other than that they downgraded their guidance in October (which is why they’re no longer up by 24.96%, though they did post that gain from July into the October earnings report), so they’re not really growing and, for a non-growth company, the stock is pretty expensive (expected annual earnings at 0.23 euros, so right now the shares are trading at about 35X current-year earnings).

Other than that, I’d be delighted to hear if any readers follow this one more closely or have any TomTom insight… mapping data is an oligopoly, but it seems to me like there hasn’t been much pricing power for the participants so far despite the big effort that TomTom and Navteq (now part of Nokia) and others put into collecting the actual GPS-integrated data about roads and terrain, and from my perspective it looks like the business of coming up with new ways of processing mapping data is a Wild West of deep-data startups as well as a large focus of the major tech companies (the mapping cars we all see from Google, Apple and Microsoft), so I’m not really clear on who or how the money is getting made when it comes to this fundamental and important data.

“‘Auto Crisis 2.0’ Stock #3

“Its first foray into the tech world was as a 3D graphics company, primarily designing the graphics used in video gaming, but that eventually led to a surprisingly natural partnership with automakers, setting up virtual wind tunnels or crash tests to help advance the design and engineering of cars.

“Over time, this company has progressively worked itself into vehicles you use or hear about every day — like Tesla, which uses them for the graphics on its giant 17-inch touchscreen.

“There are now 10 million cars crossing 20 different brands on the road today using some form of this company’s tech inside.

“More importantly, it designs the brain that runs self-driving cars, like ones built by Audi, Ford, Mercedes-Benz, and Volvo.

“In total, there are more than 80 automakers, startups, and research institutes relying on the company’s brain to power their self-driving cars….

“This company’s stock price was sitting over $1.25 in June of 1999. As of mid-September 2016, the price is over $60… a 4,647% gain…

“151.66% since February 2016.”

This one, sez the Thinkolator, is market darling NVIDIA (NVDA), the graphics chip pioneer that has been using that graphics know-how to design chips that think differently in the processing of huge amounts of data — which is, as you might imagine, a key need for autonomous cars. They still rely heavily on high-powered gaming chips for PCs for a big part of their revenue, but certainly virtual reality, servers, “artificial intelligence” smart data processing, and autonomous cars are all big parts of their potential growth… and still, pressure from their closest competitor, AMD (AMD), has really failed to emerge despite the fact that competitive pressure has been feared and predicted by NVDA analysts and investors several times over the past few years.

I personally took profits in my NVDA call option position earlier this year, so I enjoyed the first half of their run but have been missing out on this more recent surge… and this is one where Stutman’s stale data under-reports the gains, since NVDA is up around 60% again since October and now sits near $100 a share, by far the best performer in the S&P 500 this year. So yes, I wish I had held on to a long position in NVDA, but I certainly never expected this kind of growth (the latest surge came when they beat earnings estimates by 45%). Right now analysts see “only” growth of 11% for next year, and if that turns out to be what occurs investors will be disappointed — but it could easily be that those estimates will keep driving higher (estimates for both this year and next year have jumped up by 30% or so in just the last few months).

These high-momentum growth names can be very hard to buy, partly because most people don’t like to buy a stock that is at the top of a hockey stick growth chart since they go in with the knowledge that they’ve already “missed out” on a big run… but NVDA does have real growth and they’re trading right now at about 31X 2018 earnings estimates, so it’s expensive and it’s a momentum stock and it’s now a very large company (market cap over $50 billion), but the valuation is not completely out of touch with reality if they can really keep this growth rolling in these “hot” sectors.

Scary stock to buy, but a great stock to own if you’ve been lucky enough to hold it this year… it hasn’t had many “dips” recently when it would have been slightly easier to buy the stock, but perhaps those who are watching it longingly will have that chance someday — if I were to buy into NVDA again I’d just bite the bullet and buy a small 1/10th position now and ease into it over a few months, hoping for a bad press release (or a great new report from AMD) to let me add at slightly lower prices… when everyone loves a stock, as is the case with NVDA, it can tumble down pretty quickly if there’s any bad news and people get anxious to protect their 300%+ gains over the past year or two. I haven’t talked myself into getting back into NVDA yet, personally, but it is a great company.

“‘Auto Crisis 2.0’ Stock #4

“This company develops vision-based advanced driver assistance systems (ADAS), providing warnings for collision prevention and mitigation.

“The company’s technology is based on the use of optical vision systems with motion detection algorithms, unlike many other systems that use a combination of visual detection, radar, and laser scanning.

“Its vehicle detection algorithms recognize motorized vehicles such as cars, motorcycles, and trucks, in day and nighttime conditions.

“The version performs its vehicle detection–based functions using a single camera mounted in the rearview mirror, unlike the usual approach of using radars, laser scanners, or, in some cases, stereo-cameras…..

“The company is a pioneer in this space and looks to dominate for years to come. It’s a good time to get in now because once the self-driving car industry ramps up to full production, this company’s technology will be utilized by many.

“Its stock price has been fairly steady since its IPO late in 2014. But since February 2016, we’ve seen gains of 70.53%…”

This one is almost certainly the Israeli tech company Mobileye (MBLY), which does indeed use a single-camera system and their proprietary image processing software (OK, “algorithms”) to detect obstacles and provide road data. At the end of September the clues did match on that “70% gains” bit — but I would disagree when he says that “stock price has been fairly steady” since the IPO back in 2014… MBLY has been both a market-darling momentum growth stock and a publicly-shorted “future disaster” stock during those couple years, depending on when and who you asked, and the stock has bounced around pretty dramatically with highs in the $60s and lows in the $20s over just those two+ years. Unlike a couple years ago when I first looked at the stock, it’s actually pretty reasonably priced now based on forward earnings estimates — predictions are for 50% growth in the next couple years, and the stock trades at just 35X 2017 earnings estimates… so if they hit those numbers, that’s actually quite a nice valuation.

That’s all I’ve got time for today — your four “Auto Crisis 2.0” stocks… any of them look appealing to you? Let us know with a comment below.