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☕ The best, most necessary, turn around in cyber defense stocks

Oct 09, 2024

Good morning! 👋

Before we get rolling today, my thoughts are with everyone in the M5 and OBA Families who had to contend with Helene and now, scores more who must deal with Milton.

I’ve been through my share of wild weather – tornadoes, hurricanes, typhoons, earthquakes, blizzards and more – and safety is always first.

Please leave if you can because that helps first responders focus while also concentrating precious medical resources, fuel, and equipment on those who need it most. And hunker down outta the way if you can’t get clear.

Now, on to the markets...

The S&P 500 has just hit another fresh record high, and naturally, that’s great for many of the names we talk about frequently.

Here’s my playbook.

1 – Boeing credit is now junk, planes debatable

S&P Global Ratings is reportedly considering downgrading Boeing credit to ‘junk.’ (Read)

I don’t think they have a choice, frankly.

Boeing may – if rumors are correct – raise $10 billion to $15 billion through the sale of stock and equity-like securities to maintain its investment-grade credit rating but I’m not sure that’ll happen.

I can’t imagine there’s an underwriter in the world today that won’t demand a piece of Boeing’s hide as collateral and with a strike on that’s probably rarer than an Airbus assembly worker in Renton.

Putskies, short or avoid.

Meanwhile, Bombardier and Embraer are +105.32% and +109.85% YTD.

The one to buy if you could – if I could – would be COMAC (Commercial Aircraft Corporation of China) but it’s not publicly traded. As I have noted repeatedly, it’s only a matter of time before the C919 receives approval and is in fleet use... probably in the EU first, the Middle East and probably by late 2026 or early 2027 at the latest.

2 - TikTok

14 AGs have filed lawsuits against TikTok for its effects on children and younger users. (Read)

Not surprisingly, the company is being accused of deliberately programming for profits at the expense of knowingly damaging mental health.

That’s neither here nor there because proving it will take years and gobs of controversial testimony in an area of the law that hasn’t matured sufficiently yet.

I think the real teeth – legally speaking – will be operating unlicensed money transmissions which the DOJ is calling casino-like virtual currency.

Something stinks.

Facebook, Instagram, and a dozen other social platforms effectively do the same thing, but those platforms are like Teflon because nothing seems to stick.

Begs the question, “why?”

Keith’s Investing Tip: It’s important to keep our emotions out of the equation in situations like this one. Agree or not isn’t the issue. Finding companies with a clear path to profits is. And Meta, rightly or wrongly, seems to have a lock on that. 🤷

3 - PLTR – this is too good not to share!

I’ve never been included in a meme before and, honestly, couldn’t be more honored, especially since this one created by Grogu is good fun – thank you, Sir! 😊

Palantir is +158% YTD.

The game is still early innings.

ARK, btw, recently chimed in echoing my take on why Palantir still has a long way to go. (Watch)

And Palantir’s CTO Shyam Sankar just dropped this on CNBC. (Watch)

OBAers: Please check your email for a Special Alert I sent earlier today or Login to get the scoop. And if you’d like to join ‘em and be a more confident investor, I’m here.

4 – Google investors beware!

The Justice Department is hinting that it’ll break up Google after a recent ruling that found the company holds a monopoly in the search market. (Read)

What’s at stake?

Oh, dang near everything. 🤦

The DOJ is exploring options including contract restrictions, non-discrimination requirements, and structural changes to prevent Google from using its ecosystem — Chrome, Play, Android, and even AI — to dominate search over its rivals.

This situation is very, very different from Ma Bell or other actions like the Microsoft suit in 1998.

Continue to short or avoid.

MyPOV: Microsoft continues to eat Google’s lunch and will for a long time to come. Team Pichai has been in defense mode since ChatGPT launched and (I think) it’s increasingly clear they don’t have a clue how to move forward. Kodak, anyone??!!

5 - The best turn around in cyber defense stocks

American Water, the largest water and wastewater utility, has experienced a massive cyber-attack that has apparently disrupted customer access to billing and payments. (Read)

The annual cost of cybercrime will exceed $10.5 trillion by 2025 - just 3 months away - with one attack happening every 39 seconds in 2023. Probably 2x faster and more expensive now.

More importantly, Forbes estimated in 2020 that 87% of businesses report that profitability would increase if they could adopt an effective cybersecurity strategy. (Read)

CrowdStrike is undeniably best in class and regaining footing quickly after this summer’s faux pas.

I think it regains $400 in 12-24 months, but perhaps a whole lot sooner if there are more “American Waters” out there – and, unfortunately, that’s a foregone conclusion. AI is unfortunately, also increasingly being used for nefarious purposes.