Sunday, September 09, 2007
Mexico: America's Beard
I have been trying powerful hard to think of a truly recession-proof stock but, son of a vondruke, it's tough when you can paint a negative picture for nearly every goddamn industry. It doesn't mean you have to believe the negativity, but for the sake of planning, it can't hurt to think about it.
If the US falls into a recession, companies may spend less on anything and everything. Take advertising--why advertise to a bunch of broke chumps? So you can paint the picture that GOOG is fucked. Definitely LAMR. Or, you could consider the efficacy of online advertising versus TV and billboard advertising and conclude, "I would rather target my audience directly, than through TV and billboard ads," which would benefit GOOG, as ad dollars are diverted online. Perhaps a good data point, if they release it, would what percentage of their adsense revs are from small businesses. Since they don't have TV ads to cutback in the first place, they may just cutback period. But, that could still be more than offset by larger companies deciding to shift an increasing amount of their ad budget to the internet. It is conceivable though that ad spending declines YoY, even on the internets, as companies, despite being cash-rich, opt to conserve their powder. That would really only be possible if the US was assraped through the end of in a horrible crash and burn, but hey, "dope in a noose" thinks it's possible. Oh, and then, some BS landmark case comes and fines GOOG 50 billion for youtube copyright violations, claiming it should be total copyrighted views X $1. As the back-and-forth nature of my prose suggests, basically any number of great or terrible thing can happen, and the consequences could be any number of positive or negative things.
Of course, there is ample evidence to believe that the increase in internet advertising trend is firmly in place, though it is longer term in nature. I have never professed to be an amazing market timer, but in a general sense, I have a hard time believing that FEWER ad dollars will be spent on the internet, so almost as a de facto, GOOG should preform well. This isn't a GOOG rec, it all might be priced in, I just using the GOOG bit to draw a comparison here in a second.
The thing to remember is that in tumultuous times, it doesn't pay to not be in the market, so the best consolation you can have is knowing that a particular stock you own has a strong future, whatever the case is. Even "dope in a noose" can figure that one out. Sure, I think ZUMZ is a good LT stock, but it's expensive as fuck and if we really do have a recession, it will no doubt be impacted. What you want is security...
And that got me thinking.
So, where is the consolation? Where is the magic industry? I mean, even the greatest of stories have their flaws-- CMG, AAPL, RIMM, FWLT, KB, LNN--all would be negatively impacted by a [world] recession (duh). The fucking problem, what?! even conceptually, can't be tarnished or diminished by reduced output? I mean, only addiction (SAM, DEO, CEDC) appears to fit the bill of both a recession-proof and growth industry...
The Answer: Worldwide Electronic Surveillance.
Not the most original thought, as the issue has surely been discussed at length by others, but since it isn't discussed here, I thought I'd drop some science. I upgrade the whole sector to "Market Tepid." Unfortunately, like all the best things in life, this report comes with a price, and it is a high one. I propose someone buys it, then sends it to me, provided they can write it off as a business expense (nudge, fly). The way this relates to the GOOG is I have a hard time conceiving why this industry would falter in any environment. It's almost like, what choice do we have anymore? Either no security, or buy into this industry. It's almost too logical.
Here is a cacophony of words forming a cornucopia of reasons why I deem this industry to be "recession proof."
1.) If there really is a recession, there could be more crime, resulting in an increased need for CCTV other similar security devices.
2.) Since I doubt you read the article, CCTV is growing at a CAGR of 12.4 until 2008, and RFID is growing at 19% until 2016. That's good.
3.) Security spending is increasingly not a choice, with terrorism and other douchebags doing crazy shit. Especially at risk according to other articles are docks and ports--the article recommended CCTV and RFID solutions.
4.) This is in conjunction with VDSI being a totally kickass stock I wanna buy after it pulls back. Oh, and the FDA hasn't linked RFID to cancer. That news is BS. Not a real "recession-proof" reason.
5.) By examining the summary of the table of contents to the research, you can narrow your own search parameters. I am looking for an RFID and CCTV company with ROW sales, and strong fundamentals. Also, merely selling RFID labels or some ancillary thing isn't good enough--removing many stocks from the spectrum. IBM is too big and diverse. I found a penny stock that sells the right shit, but, it's a penny stock, and I ain't reccing no penny stock. I need to find a company with a strong niche, that is integral to the whole industry. Use the GME theory--don't bet on ERTS, TTWO, or ATVI--bet on the place that sells 'em all. That wasn't a reason though either.
6.) Walmart has been pushing for it. If you wanted a hedge, you could short the company that makes RFIDs for people (ADSX), since CA just outlawed it and everyone follows CA's lead. But that's an OTC stock too. Also not a reason.
7.) The is industry recession proof in my mind because it has more room to grow than shrink, regardless of economic conditions. As computers have become the norm, so shall these, because there is an economic benefit to having all your inventory tagged just like there is an economic benefit to electronic storage.
8.) Plays off fear. That's a powerful emotion there. It affects shipping, inventory mgt., as well as actual security, like where is the security guard on the premises, where was the break in, what was specifically taken. Even classics like LMT, GD, and ATK don't make money off fear. Security isn't tied to consumer patterns, or savings. Shit, in 20 yrs we may be outfitting our houses with CCTV to prevent marauding Moors and nomadic Chinamen from pillaging our women after America implodes into itself.
In summary, there was no perfect stock, but several interesting ones, and a few extremely small caps worth plopping on a list and tracking over some years. It may have been easier to pinpoint a specific one if my internet wasn't so fucking slow, making looking at all web pages very tedious. IMO, neither ZBRA, SBL, or IBM are related enough to this, though all good. There may not even exist a publicly-traded security RFID, CCTV, and logistics company. Maybe it's LLL, ID, CKP, ZBRA, SBL, maybe not.
Some more resources for your perusal are:
A slightly outdated but helpful list of related US-listed stocks There are probably many stocks on other exchanges that are good.
about Alien RFID (had shelf, never IPOd)
about Impinj RFID
DoD RFID site Great read on that site here
Security Stock Resource Has CCTV, RFID, and myriad others. Good site.
Every company, both public and private.
Go Chargers, even though you play like sloppy bitches sometimes.
UPDATE: CKP is definitely looking pretty good, though the level of DD is still at the "cursory" phase. $4 cash per share, negligible debt, the right products, and a nice trend line.
UPDATE II: With my spare time, I enjoy baking apple pies and listening to fancy violin music. The following is my fav' dude. Please don't rub my head into the sand too much over it. I loves me some 'lin.
I was expecting some amusing bullshit video and you give us this investment in RFID / security crap?
What's next? Defensive consumer staples stocks?
I bought VDSI in 2005 and made a mint off of it that year. Of course, as always, I sold it too early.
Don't get me wrong, I like eating Apples pies. However, I think it's quite fem to bake them.
I have no idea what you mean about me and violins.
However, was that spelling error a Freudian slip? Do you seek to do something violent with Danny's loins?
And also, I sold some stock Friday, and will likely sell more tomorrow, so you can go ahead and make me famous.
All of you Southern boys spend too much time in the barn with one another.
If I make you famous, Ducati will call your house.
Up to it?
I used to like them better when they would just get totally annihilated and get it over with, instead of giving me hope, only to snatch defeat from the jaws of victory.
Plus, read my latest post. I need to preserve my anonymity.
I demand you tell me now, else I will cancel your flight back to New York.
I'm fucking hedged. Don't worry about me.
Remember, I'm much, much smarter than you. And, my IQ is at least 90 points higher than your boy @ dope on a slope with soap.
With three firings and several cases of silencing the opposition, "The Fly" is truly in his element today.
Fly for President, 2008
Now, I will dispatch my French associate to punch your chest hairs off, else you quickly shave them off yourself.
Har, har, har.
I do not believe my commentary on Friday could've been more bearish.
And, as you know fuckface, I mentioned a bunch of shorts.
Personally, I'm short RSH, MDC, LAZ and long SRS.
Is it a full hedge?
Do I care?
Because I'm smarter than you.
How do I know?
Because in 5 minutes I will delete your post.
Because it's fun.
I think I should write you a little program that would automatically deletes such comments.
Love Mcnair. Tomorrow will be a great game.
However, I read somewhere that said to not watch sports, for it will drive your IQ to the single digits.
Also, the french are a bunch of crappy moor pieces of shit.
I don't follow. Unless I'm overlooking something obvious, it wouldn't be an enormous task.
Using a scripting language like AutoIt (http://www.autoitscript.com/), you should be able to accomplish that task rather easily and quickly. Languages such as AutoIt--which are very easy to learn--are what make video game playing bots (like in World of Warcraft) possible. For example, you leave the program running, and it boosts your character from level 10 to level 20 while you're sleeping.
The last time I was Weekend BLogger, I used autoIt to cast a thousand votes in my favor while I was sleeping. Using similar methods, it should be possible to automate the deletion of comments (provided that you have permission to delete them in the first place).
Last time tested, I read 850 wpm. In addition, I type much faster than all of you combined, blindfolded.
My "powers" are endless.
As for your post:
It was great, minus the queer shit at the end and the start, which reads: "Dear Internet."
*Type 300 wpm (blindfolded)
*Read 850 wpm (also blindfolded)
*Earn, at a minimum, 150% ROI during each year of particpation in the stock market
*Throw a 90 mph fastball (with his feet)
*Physically intimidate Kimbo Slice
Watch this 2 minutes amazing video. Aren't you impressed?
If you have any doubt, this video should remove your last thread of doubt, and convince you that cold fusion is REAL.
Why is it relevant? Cold fusion uses palladium? If this thing breaks through and become commercial, expect palladium price to go to a thousand times of gold!
And that means you could make money in SWC more than you would ever dreamed possible!
Technical indicators indicate that dragons will bring widespread destruction to our planet within the next week:
This event could have a negative impact on the market in general, and on SWC in particular. Dragons shit palladium.
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