“The Stock of a Lifetime: The 1 Stock for This $15.7 Trillion Revolution.”
by Travis Johnson, Stock Gumshoe | January 15, 2020 11:26 am
Ray Blanco's ads for Technology Profits Confidential say this is his "Stock of the Decade" -- so what is it?
I need to start with this part, the most ludicrous promise made in the ad:
“This little-known company, which you can still get in early on today, is at the forefront of this $15.7 trillion economic revolution.
“Right now, it does about $3.3 billion in revenue annually…
“Next year, I expect it to hit $100 billion in annual revenue.”
Crazypants, right? Revenue does not go up 3,000% a year, especially not from a high level like $3.3 billion. So what’s the reality behind this ridiculous forecast?
It does get sillier, by the way…
“And that’s just a bare minimum, assuming it captures less than 5% of this $2.9 trillion.”
“Realistically, that number could be even higher.
“From there, it could hit $250 billion in revenue… $500 billion in revenue…
“All the way up to $1 trillion in revenue or higher over time.”
I put the cart before the horse here a little bit, no? This is an ad from Ray Blanco[1] for his Technology Profits Confidential[2], and he’s teasing that he has identified the “Stock of the Decade” — which, naturally, will let you not only retire in happiness but buy Ferraris for your grandchildren and perhaps pick up a nice little private island for yourself. (OK, fine, those are my words… he just says you could pay off your mortgage, travel the world in luxury, and turn a modest investment into “generations of wealth for you and your family”).
Just to get you a little more fired up, here’s more from the ad:
“But I believe this situation I’m telling you about today is, without a doubt, the biggest opportunity I’ve ever seen.
“That’s not something I say lightly… but the fact is I’ve never been more certain of anything in my life.”
That kind of language must work, because they keep using it over and over — but do not get yourself worked up about whether Ray Blanco (or any other newsletter editor) is really “putting his credibility on the line” in making these claims. All the hype-sellers “feel” this certainty about every one of the ideas they pitch, that’s how they sell them so rapaciously — just in the last 18 months or so he’s also stated that he’s “never been more certain of anything in my life” about 5,000% one-year returns in Esperion starting back in the Fall of 2018[3] (didn’t happen, shockingly enough), and about marijuana[4]-payday/">March 29, 2019 being the “most profitable day in history” as PharmaCielo turned their Colombian flower-growing greenhouses into a marijuana empire.
I don’t want to bang a broken drum here for too long, but here are the charts of those stocks starting on the day Ray Blanco told us he had never been more certain of anything in his life:
Esperion “will gain at least 5,000% within a year” …
[5]
ESPR[6] data by YCharts[7]
And PharmaCielo will “build the fastest fortunes in history”…
[8]
Ray Blanco isn’t the only one who makes these kinds of promises to get your money, of course, and he’s not even the only one who does it without offering a refund after you’ve seen the emptiness of what’s behind the curtain. We may even be charitable and look back fondly on those and say, “hey, well, he didn’t really mean 5,000%, I knew he was being ridiculous” — but those numbers are really part of these ads, and even if we think we don’t take them seriously our subconscious does.
Those little signals go into your head and skew every other thought you have about that company, particularly if you’ve never heard of the company before and those ideas can be planted on fresh ground in your noggin… so it’s important to try to reset those kinds of ludicrous daydreams before you buy shares of a stock or commit to a ludicrously expensive newsletter. Your “first impression” and foundational expectations of a company or a stock matter — if you think they’re going to change the world and give you 5,000% gains, you might bet too much or be too accepting of future missteps or mistakes by the company. If you think they’ve got a decent chance of a double or a triple in a few years on some good clinical or regulatory news, but you go in expecting that there will be a couple binary moments when it could all go really well or really badly, your future responses and reactions will be different. How you start matters.
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And, of course, there’s also the real risk that if you spend $3,000 to find out a “secret” stock that you’re convinced will change the world… your brain is going to go into overdrive trying to justify that expense by believing in the story, and maybe by over-committing to the stock. None of us likes to admit a mistake, and we subconsciously try to justify all our actions — sometimes by “doubling down” on that mistake.
Phew, sorry, got on the soapbox there for a minute — I don’t know why, but sometimes these Ray Blanco ads fire me up even more than similar stuff from other pundits. I’d like to say I’ll stop sermonizing on these points as my New Year’s Resolution, but, well, I don’t want to lie to you… Shall we get back on track with today’s teaser solution?
To be fair, this is NOT an ad for one of Blanco’s $3,000 newsletters like those FDA[9] Trader and Penny Pot Profits pitches noted above — this is for his entry-level letter, Technology Profits Confidential (they say list price is $199/yr, but I don’t think I’ve seen it promoted for much more than $49, the current price). And unlike the pricey letters, the entry-level services almost always offer a refund/trial period option — the goal being, of course, to get you “in the fold” as easily as possible, with no stress[10], so they can then upsell you into those more profitable newsletters.
OK, fine, back on track — what is the stock Blanco is talking up today? Let’s get back into the clues… what’s that mysterious business he’s describing?
“Today, the market for this is only $9.5 billion…
“In other words, there’s still time to get in early…
“But that’s quickly changing.
“In the next 12 months alone, a massive $2.9 trillion will be spent on this technology…
“That’s a 305x increase… in a single year!”
Those are big-picture numbers, and, of course, they’re exaggerated — spending is not going to go up in any major product category by 305X in a year, so it’s very likely he’s making a apples-to-watermelons comparison and using two different estimates for different interpretations of the business… but what he’s actually talking about, as he gets to eventually, is artificial intelligence (AI), a nebulous concept also referred to as “machine learning” and “autonomous computing”.
“AI will revolutionize just about every industry as you and I know it.
“Point being, AI isn’t just the next big thing…
“It’s the single biggest technological advancement the world has ever seen…
“And it’ll change just about every aspect of our lives, from where we shop to how we do business.
“Which brings me back to what’s inside this package over here…
“The final missing piece to make AI possible.”
That “package” is, of course, a little microchip that he holds on the tip of his finger. And apparently it’s a critical one….
“This may look like any other computer chip you’ve seen before…
“But it’s not.
“Without millions of these specific chips, AI wouldn’t be possible.
“See, AI works because it’s able to process millions of data points at once…
“Utilizing and learning from these data points to become more effective.
“But with ordinary chips, this data is worthless to AI.
“That’s because these specific chips, unlike ordinary ones, are able to reprogram themselves constantly…
“Allowing the AI to learn and adjust from data.
“Meanwhile, once an ordinary chip leaves its factory… it can’t be reprogrammed again.
“Making it virtually useless when it comes to AI.”
Ah, so now we see where we’re headed. That almost certainly means he’s talking about programmable silicon, so he’s probably talking about field programmable gate arrays (FPGAs). They’re often used in new products or technologies because they’re not “hard wired” for a specific function but can be reconfigured after they’re made — thus “field programmable.”
That obviously makes them relatively less powerful than chips that are designed to efficiently carry out a specific task, since you have to give something up if you’re demanding flexibility, so the challenge with FPGAs in the past has been that they are often used in the early days of a new product but, once the demands for that product or technology are better understood as the first wave of innovation has washed through, they are replaced with custom silicon designs that are specifically tailored to that product (and therefore are more efficient and powerful for that one purpose, and significantly cheaper).
Maybe AI will be different, since there is some logic to an AI system being able to not only learn from data but to reconfigure its own silicon, I have no idea. Moving on with more from the ad.
“… this is the ONLY chip that can power the future of AI…
“Without it, AI simply wouldn’t work.
“And there’s one company — the company I’ve been telling you about today — that has a virtual monopoly on these chips.
“That’s because to date, they’ve secured more than 4,000 patents on this technology.”
Other clues about that company? Here you go:
“Their revenue has exploded 9 straight quarters in a row, showing no signs of slowing…
“Take it from someone who knows: That kind of growth is unprecedented.”
Growing revenues nine quarters in a row is NOT unprecedented, to be clear. It’s not even particularly unusual.
Other hints? I thought you’d never ask!
“… the CEO of this company has done this before…
“Just recently, shares of the last company he was a part of went from $2.78 to a high of $44.25.
“But this time around, the opportunity is much, much bigger.
“He no doubt agrees — he’s bought up thousands of shares of his own company…
“He knows, just like I do, that this stock is about to explode to unprecedented highs.”
And we get some hints about the big institutional investors…
“But the good news is that all it takes is a small stake in this company — even $100…
“And you could easily amass significant wealth.
“No wonder some of the biggest Wall Street institutions are rushing in…
“Vanguard has invested $3.6 billion in this company.
“BlackRock has invested $2.1 billion.
“JPMorgan has invested $470 million.”
That’s all balderdash, of course — the $100 is a clue to the share price, but every single company of meaningful size has Vanguard and Blackrock at or near the top of its list of major holders… that’s because those are the custodians for the largest index funds and ETFs in the world, it’s not because they’re seeking fortunes in this particular company for some company-specific reasons.
So who is it? As you might have guessed from my mention of FPGAs above, the Thinkolator confirms that this is Xilinx (XLNX)[11], which is indeed a semiconductor industry pioneer — they are credited with introducing the first FPGA chip, and with spearheading the fabless semiconductor business model (designing chips but outsourcing all their actual production to manufacturers, something that hundreds of chipmakers do now).
How else do we match? Well, the CEO, Victor Peng, was last at AMD, from about 2006 to 2008 after the GPU company he was working for (ATI) was acquired by AMD. It’s true that AMD subsequently went from under $2 to over $44, though that was eight years after Victor Peng left to take a job at Xilinx — during his time at AMD it went from about $25 to $4. Not that this really had anything to do with him specifically, AMD was a disaster and was being crushed by Intel at the time.
And the revenue has actually grown for more than nine quarters in a row, though “exploding” is a bit of an exaggeration. Over the past three years, average revenue growth has been about 10-12% a year (it’s very volatile, late 2018 and early 2019 were extremely strong but it was much lower before that… and more recently).
Remember that bit at the beginning about going from $3 billion to $100 billion in revenue? Here’s a refresher:
“Right now, it does about $3.3 billion in revenue annually…
“Next year, I expect it to hit $100 billion in annual revenue.
“And that’s just a bare minimum, assuming it captures less than 5% of this $2.9 trillion.”
The first part is true, XLNX did have revenue of about $3.3 billion over the past four quarters, which is pretty good for a $25 billion (market cap) semiconductor company with strong margins. The $100 billion is ridiculous. The largest semiconductor companies have never approached that number — even mighty Intel (INTC)[12], with its $260 billion market cap (10X the size of XLNX) and amazing performance as it dominates so much of the semiconductor world, only had revenue of $70 billion last year. Taiwan Semiconductor (TSM)[13], an even larger company that does most of Xilinx’s fabricating, had revenue of only about $30 billion.
Sell-side analysts are not usually exactly right, but they follow the company more closely than anyone and they’re almost always pretty close, partly because the company tells them what to guess — they expect XLNX to see its revenue grow by about 5% in the current year, which has been a disappointment (they’re about halfway through their fiscal 2020), and then to accelerate a bit to about 10-12% revenue growth over the next couple years. Which should translate into earnings growth that’s a little stronger than that, probably in the 15% neighborhood (analysts say ~12% for 2021, ~18% for 2022).
Here’s my perspective on this one: I bought Xilinx shares earlier this year because I thought the huge drop on their first quarter earnings announcement was overdone… mostly because I expected volumes to pick up for 5G (5G is new and the operators will be tinkering with how the silicon works for a while, particularly given the vast number of different wavelengths being used, so the expectation was that equipment makers would use FPGAs heavily in the first year or two of 5G rollout before moving to custom silicon… which may still happen, but hasn’t helped their sales much yet, partly because Huawei was a large customer and the export ban created a significant headache). I stopped out of my shares at about $100 (a ~17% loss) during the Huawei/trade war scare in August. So I may be a bit jaded on this one, and I’m not currently invested.
Xilinx is a fine company, but they’ve grown in fits and starts — they have had trouble generating any really sustainable growth for long periods of time. Mostly, I would guess, because companies have become faster at customizing silicon and designing specific chips to replace the flexible FPGAs. There’s still a role for their product, they’re still innovating, and they’ve had a good decade, stock-wise (as long as you didn’t buy in the first nine months of 2019).
They do have a big role to play in artificial intelligence, but they are not the only provider who can say that — they do sell ZYNC chips for advanced adaptive systems, and they have edge devices that they say accelerate “inferencing” in AI, along with Alveo accelerator cards for enhancing data center performance and a new AI operating system called Vitis. I expect they’re all super impressive (I’m definitely not a technical expert), but they’re also, to some degree, competing with the beefier accelerator systems and inferencing chips and operating systems from giants like NVIDIA (NVDA) and AMD (AMD). To say nothing of the fact that the only other meaningful FPGA company is big ol’ Intel (XLNX is the market leader and likely still taking share from Intel, which has not been focused on FPGAs and programmable chips to the same degree, but they’re still a challenging competitor).
So I wouldn’t try to talk you out of Xilinx — it is fairly unique in being a “pure play” on programmable silicon and a market leader, and it is certainly levered to both 5G and AI to some degree, with some interesting new products that could help them get their growth potential heated up. But I would urge you to realize that everybody in the industry already knows this, and they see earnings growth in probably the low teens, with variability probably to come more from resolution of trade disputes or the Huawei blacklisting than from any fundamental explosion in their business. They’ll probably grow earnings at something like 15% a year, and the shares trade for about 30X earnings — which is a rational valuation, though not a particularly “cheap” one. Hold off on researching the private island.
It’s been a tumultuous year for XLNX, going from overly ambitious 5G-fueled excitement in January to Huawei/trade war despair over the summer, so I’d expect continued volatility as stories shift — if you’d like to get a better handle on the company’s plans you might check out their Investor Day presentations[14] (that was back in May, but it’s still relevant — the latest quarterly guidance presentation from October is here[15].) I would expect the stock to react pretty sharply to the next earnings report, since it usually does, and that should come out in about two weeks (on January 28, after the market close) — so if you’re interested in building a position, keep that in mind.
And with that, I’ll leave you to it — interested in picking up some Xilinx? See great things to come in AI from this FPGA maker? Or do you think there’s still too much optimism embedded in the shares? Let us know with a comment below. Thanks for reading!
Disclosure: Of the companies mentioned above, I own shares and/or call options[16] on Intel and NVIDIA. I will not trade in any covered stock for at least three days, per Stock Gumshoe’s trading rules.
- Ray Blanco: https://www.stockgumshoe.com/tag/ray-blanco/
- Technology Profits Confidential: https://www.stockgumshoe.com/tag/technology-profits-confidential/
- Esperion starting back in the Fall of 2018: https://www.stockgumshoe.com/reviews/fda-trader/solved-warning-golden-pill-may-make-you-rich-tease/
- marijuana: https://www.stockgumshoe.com/reviews/penny-pot-profits/whats-being-hinted-at-as-the-1-stock-for-a-life-changing-a%20href=
- [Image]: https://ycharts.com/companies/ESPR/chart/#/?annotations=&annualizedReturns=false&calcs=include:true,id:price,,&chartType=interactive&colors=&correlations=&dateSelection=range&displayTicker=false&endDate=&format=indexed&legendOnChart=false&maxPoints=850¬e=&partner=basic_850"eLegend=true"es=true&recessions=false&scaleType=linear&securities=include:true,id:ESPR,,&securityGroup=&securitylistName=&securitylistSecurityId=&source=false&splitType=single&startDate=09/04/2018&title=&units=false&useEstimates=false&zoom=custom
- ESPR: https://ycharts.com/companies/ESPR
- YCharts: https://ycharts.com
- [Image]: https://ycharts.com/companies/PCLOF/chart/#/?annotations=&annualizedReturns=false&calcs=include:true,id:price,,&chartType=interactive&colors=&correlations=&dateSelection=range&displayTicker=false&endDate=&format=indexed&legendOnChart=false&maxPoints=850¬e=&partner=basic_850"eLegend=true"es=true&recessions=false&scaleType=linear&securities=include:true,id:PCLOF,,&securityGroup=&securitylistName=&securitylistSecurityId=&source=false&splitType=single&startDate=03/15/2019&title=&units=false&useEstimates=false&zoom=custom
- FDA: https://www.stockgumshoe.com/tag/fda/
- stress: https://www.stockgumshoe.com/tag/stress/
- Xilinx (XLNX): https://www.stockgumshoe.com/tag/xlnx/
- Intel (INTC): https://www.stockgumshoe.com/tag/intc/
- Taiwan Semiconductor (TSM): https://www.stockgumshoe.com/tag/tsm/
- check out their Investor Day presentations: http://investor.xilinx.com/static-files/567ced75-9daa-4083-a47b-bfe1370ae4a8
- here: http://investor.xilinx.com/static-files/54337734-2e83-4c98-9627-e3f53202ee25
- options: https://www.stockgumshoe.com/tag/options/
Source URL: https://www.stockgumshoe.com/reviews/technology-profits-confidential/the-stock-of-a-lifetime-the-1-stock-for-this-15-7-trillion-revolution/
I’m watching this one. Should go back to $ 94 before buying. Just sold this morning with a small loss.
Travis or anyone-
What do you think about $CDNS?
Thank you for your write up. I read Ray Blanco write up and I went out to buy my inland ( no I did not ). It is hard to find what is close to the truth. It is also hard to find out what will happen in 5G and when. And also how many people will die from the radiation! It is very hard to know what is real and what is not! It is hard to know what countries will be here ten years from now ( US more than $122,000,000,000,000.00 in debt, think derivatives).
Lucky the US never needs to pay that debt off huh….US balance of payments finances the US Govt debt, and every countries central banks holds that debt as T-Bills IOUs…
Nice work if you can get it…
Suggest you go the Summary page for XLNX on TD Ameritrade and read the January 14th article by Nigam Arora — it’s pertinent.
What do you see as pertinent? Please share for busy people.
Travis, please never stop skewering the ludicrous claims! We all need reminders of our rational frailties. And thanks for the belly-laugh.
I like it when he says balderdash…
Nice review. Well articulated Travis. If I were entering (I’m not), I would pay close attention to the support at $90 as she looks like she wants to revisit it for the 3rd time. If she holds that support, I suspect you could enter the trade , use a Monthly Stop at $90, and shoot for Target Exit to the retracement to $132. That’s a decent high reward (+46%), low risk (a few % to the downside) trade.
Lastly, the correct comments on the streaky nature of this business might be a factor in how long you want to hold this kind of trade. I’ve only portrayed a relatively short term swing trade (3-6 months).
Regards,
Buck
Good day Travis – I have a question that is bothering me. I have been a loyal reader for several years. In this time one theme that is constantly brough forth; most of these news letters are complete money grubbing scams. They make one wild statement after another and yet they still continue merrily on their way. Scamming money from generally people who cannot afford it.
My question is how do they get away with this? Why does no one (especially our esteemed politicians) step up and shut down these liars and snake oil salesmen? The politicians are so busy trying to destroy each other and could be doing some real good and stopping this crap.
Can we somehow band together, to force action against these people, and stop them from starting up under a new letter head? I usually do not tilt at windmills, but it is disgusting to see this continue. Personally I think these so called “experts” should be put into the worst prisons out there and made to make restitution to the people they swindle. Maybe even bunk them with Bubba .
It makes me sick to see this continued evil, and I for one am sick of it.
I know that these slimeballs skirt around the law, but how can they get away with stupendous puff jobs?
Yes I have been burned badly by one such organization which is still going strong to this day. This happened several years ago and it still hurts to think about. Fortunately the money I used was from another investment, and after taking their advice I saw my money shrink down approximatley 80%. It has recovered a little since then , but still not where it was.
Please let all of us know what other methods we could invest in to destroy these idiots. I have a lot more faith in your word than any other individual I have read about.
I thank you very kindly for letting me vent.
Respectfully’
Jon T
Please share the name of that awful Organization!!!
Jon – just like used car salesmen that can make a really good living (even in a really small town) shitting people over and over. If people that work the paper-town mills at 45-50000 a year continue buying 65,000 f-150 or whatever, and park it out in front of their double-wide, then those guys will keep selling them, and Ford will keep producing and pricing them there. There’s absolutely nothing u can do about it. As ling as there are suckers, something is going to suck. Be thankful u are fortunate enough to have lived thru your tribulation and only come out burnt (and cynical as hell! LOL) but nonetheless not ruined – i’m assuming. Somebody has to be on the lower rungs or there is no support for those of us that really try not to get scammed constantly. Me ole Pappy (God rest him) used to live by the old Murphy’s Laws. # 1 he used to say was “if it sounds to good to be true, then it probably is!”
I would love to see these Bastards Tarred and Feathered and I suppose we could gather together and find a couple names and do some old Social media shaming. and hope to strike a chord with their advertisers etc. But I have better ways to spend my time like trying to find real money
Hi from New Zealand, where we are big fans of this site. Travis – no need to apologise : “Phew, sorry, got on the soapbox there for a minute — I don’t know why, but sometimes these Ray Blanco ads fire me up even more than similar stuff from other pundits. I’d like to say I’ll stop sermonizing on these points as my New Year’s Resolution, but, well, I don’t want to lie to you”
We love your philosophizing on stock investments. It is just as important as the detail you provide on the individual stocks. Keep up the commentary on the psychology of investing.
G’day mate, from Australia; yeh love me some Gumshoe talk. I have a subscription to Blanco’s Tech Profits confidential, more a way, like here, to keep abreast of US things happening. The bestr part of the subscription is the recorded talks he has with Gentzler. Gives me a nice high level brief…..but that’s about it…
Well put Travis! No apologies needed…Blanco raises my BP just seeing his picture. IMHO he is one of the worst!
Hey Jetman, the reason why it is so difficult to go after these fraudsters is the state of our federal consumer protection laws. Our current system favors corporations and throws the little guy under the bus. If you want stricter consumer protection policies, we will need a much more progressive (think liberal Democrat or Green Party). And the fact presidential terms are so short means that the pendulum swings back and forth on consumer protection laws so fast that we lawyers do not have time to even make reasonable case law (precedents) to help the situation.
LeslieTheLawyer
Blowhard Blanco is at it again! I have been a subscriber to this newsletter for over a year now and have not yet made back my $49 subscription fee. He may be right on XLNX but revenue gains of 3000%? Sometimes his newsletters are just as ridiculous.
That’s a shame… tech-focused Nasdaq is up 35-40% in the past year.
Any ideas about Lattice Semiconductor, NASDAQ: LSCC ?
This is another FPGA maker. It was a year ago about $6 and trades now over $20. They seem to make FPGA’s of a small size, for 5G telecom and Artificial Intelligence.
Blanco’s projection for Esperion (ESPR) may have been overblown, but 2020 should be a pivotal year for the company as their Bempedoic Acid (BA) treatment for cholesterol have a scheduled PDUFA date of Feb 21 and a planned EMA Marketing Authorization for Europe in 1H2020. I have been a holder since early 2017 and saw the price drop in 2018 due to safety concern from their Study 1, which later dissipated. They plan to begin BA franchise commercialization this year 2020.
“Hold off on researching the private island” lol
XLNX and ESPR. Let’s follow. ESPR’s earning will be out shortly.
Hi Travis, the stock XLNX went down recently, do you think it is a good buy now, any thoughts
I was stopped out of my position a while ago, haven’t taken a deeper look yet but the slower pace of 5G investment (at least in their products) was the major concern this past quarter.
Well ….whoever got into XLNX should be pretty damn happy. Nice pick up for AMD!
there is no xlnx at TDAmeritrade, Schwab, or Fidelity What’s the scam?
No scam, this is just an older article — Xilinx (XLNX) was bought out by AMD (AMD) in February of 2022 (each XLNX shareholder got 1.7234 shares of AMD at the time).