Behind Closed Doors at Big Ideas 2025 By Michael Salvatore, Editor, TradeSmith Daily In This Digest: - Sharing our biggest ideas for 2025 and beyond…
- Mike Burnick thinks AAPL is the weakest link of the Mag 7…
- A subscriber drops in to Jason Bodner’s “office hours”…
- Why “stealth tech” companies have never been more important…
- And there’s so much more to come…
This past week, I’ve been in Baltimore for our annual Big Ideas summit… Here, we join around the table with the top minds across TradeSmith, Derby City Insights, InvestorPlace, Freeport, Masters in Trading, and Omnia to figure out what’s coming up for markets, and our subscribers, for the year ahead. You might remember the 2024 conference held back in March, which I described as a one-of-a-kind idea incubator. From that gathering came ideas like: - Buying quantum computing stocks early – an idea from our own Jason Bodner that has clearly proven valuable. Many quantum computing stocks are up hundreds of percent this year.
- Senior analyst Mike Burnick’s strategy to sell covered calls on high-dividend oil stocks for annual returns of 25% – all with just two days of work a month. With the energy sector choppy and sideways this year, that’s proven to be a great strategy.
- Andy and Landon Swan of Derby City Insights pounded the table on bitcoin – predicting a long-run price of $1 million, and $100,000 this year. Since then bitcoin is up about 48%, making it past $100,000… And they believe it could reach $1 million sooner than many think.
And these were just a handful of the things I learned there that have since made their way to our subscribers. 2025’s conference is proving to be an even better source of great investing ideas. Today, I’ll share a few with you… Mike Burnick thinks the Magnificent 7 is more like the Magnificent 6… Can you guess which of the seven companies doesn’t earn the title? A few months back, I would’ve said Tesla based on its price action. But that’s changed in quick fashion. It can’t be Microsoft, which holds a substantial stake in OpenAI. And it can’t be Nvidia, which has risen more than 189% this year. And there’s no way it’s Google, which just surged on news of its latest quantum computing chip, Willow. As you start to run down the list, it becomes clear who the laggard really is. It’s Apple. And according to Mike, it all comes down to what we talked about recently – valuation vs. growth rates. If you’ll recall, we showed you that high valuations can be justifiable when a company has the growth rates to back them up. And I’ll pass the mic to Mike to give you the details: One way to measure those growth rates is with the PEG ratio. That’s a simple tweak to the price-to-earnings (P/E) ratio that instead uses a company’s expected earnings growth rate for the 12 coming months. Just like P/E, a higher number means a higher cost for growth. Apple’s PEG ratio is at 2.41, the third highest among the Magnificent 7 – just behind Nvidia and well behind Tesla (10.54). AAPL is also the only Mag 7 stock with a long-term annual growth rate in the single digits, at 8%… once again, behind Tesla. Tesla may seem like the richly valued elephant in the room. And by the numbers, it is. But the reason why investors buy TSLA is because they expect innovations and breakthrough tech products – think robotaxis, the Optimus bipedal robot, and widespread self-driving. Apple’s growth rates are far lower… but its PEG ratio remains among the highest in the Mag 7. Apple is a steady smartphone and home computer maker with a solid services offering. Kind of like a utility stock. The problem is that, like your typical utility, Apple’s growth has slowed significantly in recent years. But AAPL is still trading with a P/E ratio of 40.8x earnings. Compare that to your average utility stock with a P/E of just 18.4, less than half Apple’s valuation. So, for my money AAPL may be a better short right now. But at the very least, it’s likely not the best place to put your money if you’re focused on the kind of market-beating growth rates we see in other Mag 7 stocks. Nvidia and Google would be your best bets. I also caught up with Jason Bodner today… Jason and I go way back to 2018. I can confidently say that when it comes to growth stock investing research, Jason sits at the top of the mountain. Today I’d like to share two things involving Jason. One, a question from a subscriber who took us up on our “office hours”… and another idea we’re set to pursue and potentially publish to subscribers if we like the results. First, the question from Patricia: Jason, I have followed some of the stocks with the highest, hottest Quantum Scores since joining MAPsignals this year. Take APO with that screaming QS that was nearly too hot to handle for months without a breather. It dropped to a QS of 82.3 one day and I held my breath, bought it, and never looked back. Question: Are there specific factors in Jason’s rating system that indicate that Big Money will continue to flow into any particular stock? Thanks for all the good work you do there at TradeSmith. We look forward to reading and discussing your daily reports as they come in. We are members of MAPsignals as well as Platinum members of TradeSmith. – Patricia and Jeffrey And here’s Jason’s response… Patricia and Jeffrey, Nice to hear from you again! I always think of your toast on your anniversary, and I hope you’re doing great! To answer your question, the short answer is… not really. There are a few things to understand about how Big Money invests… First, the size of the investor affects the likelihood of more signals clustering. Unfortunately, because this is an algorithmic representation of unusual buying, we can’t know what type or size of investor it is until months later when and if 13F or 13D filings release. For instance, say a small $500 million fund invests $50 million into one stock. That’s 10% of the fund, and it may only yield one or a few signals over a few days. But if a larger fund, say $20 billion, invests only 5% of their fund in a stock – that’s $1 billion! That will definitely yield more signals over perhaps a few weeks. The signal itself is there just to tell us when there’s likely unusual buying (or selling) on any stock. The beauty and elegance of this signal is that it helps illuminate when something unusual is happening in a stock. When we marry buying with high scores, that’s what gives us those high-probability investment ideas. Now, I’ll say that a stock’s fundamentals tend to signal a high likelihood of continued inflows. If a company has outstanding sales and earnings growth, expanding profit margins, and higher guidance, these stocks naturally attract investors, especially growth investors. Beating estimates by wide margins is a great indicator that investors will flock to a stock. This is why I’ve found over time that the best is a combination of buying pressure (signals) and superb fundamentals. This is why the pond I fish in is maybe 150 stocks per week as opposed to thousands! I hope that helps. And if you need more info, don’t hesitate to reach out! You can write in to me and my team directly at JasonQE@TradeSmith.com. Now, a bit more on an idea Jason and I have been cooking for years… We love the idea of what we call “stealth tech” stocks. This is what we call little-known companies in old-school businesses that are applying breakthrough tech to great effect on their earnings and growth rates. When you think of what the company does, though, you don’t automatically think “cutting-edge technology.” So, it’s not an obvious play to most investors. But talking at the Big Ideas conference, we think we’ve found a way not only to uncover these stocks, but to find signs that major Big Money institutions have discovered this hidden technological edge. The first and most obvious step is to simply run Jason’s Quantum Edge score on companies not in the technology or communications sectors. The score itself, particularly the Fundamental score, as Jason discusses above, shows us the small pool of companies with the best earnings and revenue growth rates in the market. For example, here’s a screen I just ran using these parameters: 
These are the stocks outside of tech with high Fundamental scores from Jason’s Quantum Edge system that have recently entered the Green Zone. More than 230 stocks with a Fundamental score above 70 are currently in the Green Zone. Clearly, this is a small sliver of the market… But Jason and I want to take it a step further. And that next step involves the Technical score. Jason’s Technical score measures both momentum and institutional buy signals. A very exciting thing to see on any stock is a sudden cluster of these signals where there were none before – a suggestion that the most well-connected, smartest, wealthiest institutions on Wall Street have suddenly discovered something about a non-tech stock that isn’t immediately obvious. This is an even bigger idea in the world of AI… Many analysts pointed out during the conference that we’re moving into a new phase of the AI trend. The infrastructure buildout defined 2023 and 2024. But what’s coming in 2025 and beyond are the companies that apply AI effectively to their businesses in order to grow profit margins and accelerate earnings and revenue growth. So, this idea of a sudden influx of Big Money to companies that don’t otherwise seem like huge tech plays… It’s never been more important. We’re early to this idea, and we want to spend some time backtesting what happens when you buy stocks that see a sudden cluster of these signals. Naturally, we’d like to know what you think. Should we pursue this strategy? And what else would you like to see from TradeSmith and our extended network? Let us know at feedback@TradeSmithDaily.com. As for the rest of the conference, just know that what I’ve shared today only scratches the surface. New income trading strategies from Jeff Clark… hidden pockets of high yield from the Freeport Society… a looming January sentiment opportunity from Derby City… the future of self-driving vehicles taking to the air from Luke Lango at InvestorPlace… and a whole host of software features and upgrades here at TradeSmith. You’ll be hearing about all of this throughout the year in TradeSmith Daily. To your health and wealth,  Michael Salvatore
Editor, TradeSmith Daily P.S. As excited as we are for 2025 and the opportunities breakthrough technology will create for investors… There’s also the risk of “flash crashes” and other moments of pure chaos in the market. With that in mind, my friend and colleague Luke Lango has this advice: “Embrace the boom” while you also “beware the bust.” But how do we do that, exactly? In my recent interview with Luke, he gives his answer: a new stock screener called Auspex. Like our tools at TradeSmith, Luke’s Auspex model finds you stocks with the strongest fundamentals, technicals, and sentiment. Not many screening systems do all three at once, though… and narrow the field to around 10 to 20 stocks per month out of a universe of 10,000. And with this rigorous – and highly selective – approach, Auspex has beaten the market every single month since they first brought it to Luke’s Inner Circle in July. In a long-term backtest, the model also blows away the S&P 500 benchmark, gaining 19,340% over 20 years. 
So, if you missed it, on Wednesday Luke held a live event that went into more details about Auspex. They’re making a replay available for a limited time – click here to watch now.
| 
0 Response to "Behind Closed Doors at Big Ideas 2025"
Post a Comment