The Maple Takeover is Here

WHILE YOU POUR THE JOE… ☕️ 
Aww Sh*t, Here We Go Again (like the meme)

Back in 2000, internet stocks were all the hype, especially with names like Cisco Systems (NASDAQ: CSCO) going to valuations as high as $560 billion, or roughly 5.4% of total U.S. GDP for that year.

Fast forward to today, and the same behavior is taking over semiconductor names like Nvidia Company (NASDAQ: NVDA), with a very similar headline coming out as it took over Microsoft in terms of value.

Nvidia is now worth $3.3 trillion, and that now is over 12% of U.S. GDP… Not saying history will repeat itself, but Cisco crashed so hard that it still has to recover to its 2000 price two decades later (oof) 🥴 

If you hold Nvidia stock, watch out… Anyway, let’s get on with today’s email.

AN EAR TO THE GROUND
Canada’s Land Grab

As routine, we have dug out the latest PMI index trends (manufacturing and services). To save you from falling asleep this early in the morning, here’s a snapshot of what we found:

• Manufacturing is contracting but being held by employment breakouts within the oil industry, which is why Buffett bought Occidental Petroleum stock.

• Services are expanding, driven mainly by breakouts in business activity and export orders.

• Real estate services were to be credited for these business activities + export order breakouts.

Now, how can you export a real estate service? I had the same question, and after some ChatGPT digging, here’s what I found…

When a foreign nation wants to buy/lease US property, the closed deal is considered an export for this industry’s service. That led me to wonder who in the world is buying US property.

It turns out it’s Canada. Over the past 12 months, the Maple Nation has invested up to $16 billion in US property, but not just any property.

It’s commercial property they’re after, the ones that auto parts dealers use or that Amazon relies on to deliver your goodies. So, which company is exposed to this trend and set to rally soon?

It’s Granite Real Estate Investment Trust (NYSE: GRP/US). This company holds most of its real estate investments in the US, and a majority of its properties are in the commercial segment.

But wait, there’s more…

One of Granite’s biggest tenants is also in play here. Magna International (NYSE: MGA) serves Toyota, General Motors, and Ford with warehouses and logistics networks inside the US.

Now that manufacturing is breaking out on employment figures. The current administration’s ambition is to create onshore jobs in space and diversify supply chain risks away from China and other Asian nations; seeing how much upside there is for these two stocks makes sense.

Analysts at J.P. Morgan see a price target of up to $71 a share for Magna, daring the stock to rally by 67.8% 🔥 from today's price. For Granite, analysts want to see it rally to $91 a share, or 33.8% higher than today's price.

Speaking of stocks ready to take off soon…

STOCK OF THE WEEK(END)
Airlines Aren’t Sexy, Until They Are

Activist hedge fund bought a $1.9 billion stake in Southwest Airlines Co. (NYSE: LUV) for a controlling interest. These types of transactions typically are made when an investor wants to take a hands-on approach to controlling the future of a particular company.

What they saw in this stock is something that we at InvestiBrew have also been eyeing for the past few quarters.

Comparing the company on a pre-COVID and post-COVID basis, it looks like two completely different businesses, and there’s a reason for that.

Post-COVID travel volumes went off the charts; with free stimulus money, remote work settings, and rock-bottom interest rates, Southwest had to adapt to these new trends in record time.

The problem is that the company’s systems and procedures are a bit outdated, which caused airline-wide delays and flight cancellations, worrying some investors and crashing the stock.

Through a majority stake, Elliott Management plans to update the company’s technology and systems, not to mention its board of directors.

Southwest was brought up by some school of hard knocks types, like this author. While that was good for building the company into what it has become today, it’s not enough to keep it up to par with other—more significant—peers in the airline industry.

We believe that Southwest can achieve the same margins it had before the pandemic by upgrading its systems and processes.

Because of this ‘return to normal’ profitability, the stock’s valuation could be much higher than where it sits today.

The activist buyer touts it can go up by 77%, but we think differently…

Our discounted cash flows (DCF) model shows the stock is valued at just shy of $90 a share, which means a potential upside of up to 216% 🔥 from where it sits today, which is only 72% of its 52-week high.

NOW GO AND MAKE IT HAPPEN
Get Some Perspective, and Sound Smarter

If you want to ensure that Nvidia is potentially the same speculative bubble that was Cisco in 2000, here’s an excellent book recommendation to learn a bit of past history to compare today’s financial market.

Spoiler, the coquettes that started trading are like today’s OF models making YouTube videos on trading options. Definitely, the top is coming soon 💩

By the way, here’s a great YouTube video from one of my favorite channels, ‘Everything Money,’ reviewing their views for Southwest Airlines stock. It can’t hurt to get another POV, right?

Now I gotta go, but it was great to see you here again. Until next time, feel free to tweet to us with any ideas or opinions on what you want to see more (or less) of.

To your success,

G. 🥃