[Charts] Chips, Netflix Flex, and a New "Trade of the Decade"

Lou Basenese

Friday, September 24, 2021

It’s Friday in the TTD Nation.

So what, you say? Well, welcome! You must be a newbie.

Here’s the dealio...

Every Friday, I curate a handful of graphics to convey some important investment insights.

All it takes is a quick glance — and you’ll be up to speed and poised to profit.

In this week’s edition, we’re diving into the single biggest driver of Netflix’s dominance and stock price. Then, it’s onto two “no brainer” buys in the current market.

So without further ado...

Streaming Spending Wars

Nowadays, there’s no shortage of streaming options.

Hulu… Disney+... Paramount+... Apple TV… ESPN… and of course the original (streaming) gangster, Netflix (NFLX).

For consumers, this plethora of choice is a blessing. But for investors, having too many streaming providers to choose from can be a curse.

That is, unless you know the right metric to track.

Forget the all-too obvious metric of subscriber growth. That’s a lagging indicator.

Instead, focus on how much these companies are spending on content. After all, this isn’t a “chicken or egg” situation. The content always comes before the subscriber growth.

Therefore, the streaming company consistently spending the most on content should enjoy the most subscriber growth — and in turn, the most share price appreciation.

Newsflash: Netflix has decided to start flexing its spending power. It doled out $4.4 billion for content in the last quarter alone. That’s pretty close to an all-time high.

(click image to enlarge)

Sure enough, since revealing this spending spree on its quarterly report, its shares have rallied 11% (and counting). To put that gain into perspective, the S&P 500 index and Nasdaq only mustered about a 2% gain over the same period.

If this spending continues — and I expect it will — so should the stock rally. Bet on it!

“Keep Buying Chip Stocks!”

You’ve heard me say this non-stop for roughly 18 months and counting…

But I’m going to keep saying it because we’re living in an Era of Tech-Biquity. And that means demand for semiconductors can only go up!

Here’s the latest proof point:

Sales for integrated circuits (which are required for the biggest tech trends like data centers, 5G smartphones, robotics, self-driving vehicles, artificial intelligence and machine-learning) are on track for a record year.

The latest forecast from IC Insights predicts total integrated circuit foundry sales will soar 23% this year to $107.2 billion… and then 73% by the end of 2025.

(click image to enlarge)

I bet it checks-in higher!

So, yeah:

Welcome to the Department of Redundancy Department…

And keep buying every dip in chip stocks.

Introducing the Next “Trade of the Decade”

Longtime readers know I previously dubbed cybersecurity a “Trade of the Decade.”

And I’m still as bullish on it as ever.

But now it’s time to add another “no brainer” (but surprising) trade for the decade to come:


This might come as a shocker to many. After all, I’m the farthest thing from a commodity and hard-asset freak. However, I am a data geek — and the numbers don’t lie here.

Once every decade or so, commodities and stock prices get completely out of whack. And trading this disparity at market extremes represents an easy trend trade.

Right now, the chart is screaming for us to back up the truck and buy commodities.

Take a look:

(click image to enlarge)

That’s easier said than done, of course, because who wants to (or even can) buy and store physical assets like crude oil, corn, and copper. Not this guy!

But fear not. That’s where today’s Trend Trader Pro recommendation comes into the picture.

I expect this trade to outperform massively over the next decade. Check out the details below.



>>>>>>>>>> Learn more <<<<<<<<<<

Ahead of the tape,

Tags: circuits programming