Commodities: The "Must-Own" Investment
Plus avoiding rate-cut roulette and why Walmart keeps winning ...
In this weekend edition of Stock Picker’s Corner (SPC) …
Why the Artificial Intelligence (AI) Era is supercharging commodities.
How to avoid “rate-cut roulette.”
And as higher prices are here to stay, Walmart Inc. WMT 0.00%↑ keeps winning.
💥What’s Powering the AI Era
Chief Stock Picker Bill Patalon thinks in terms of storylines — because the “best storylines” lead to the “best stocks.” And when storylines “intersect,” your opportunities only amplify.
Like the intersection of the AI Era and commodities.
Commodities “power” AI through such data-center “enablers” as:
The silver in the powerful semiconductors that act as their brains …
The steel-forming metallurgical (met) coal for the stainless tubing that shapes their cooling systems …
And the copper in the electrical wiring and transformers that direct power through their always-hungry energy grids.
So when we recently connected with ORO Capital CEO Danny Brody for a strategy session, Bill noted how more asset managers have shifted their view on commodities — from a simple diversification asset to an actual wealth-creating vehicle that adds “octane” to a portfolio.
With his role heading a team that’s financing a copper mine purchase, Danny has first-hand, “boots-on-the-ground” insights into the growing supply/demand imbalance that’s creating a massive opportunity here.
“As a part of any prudent asset allocation strategy, you have to have exposure to commodities,” Danny said. “They power the world — from oil to copper.”
We wanted to share part of that catch-up call in the three-minute clip below.
As mentioned earlier, following the right storylines lead to the best stocks, and knowing the AI and commodity storylines we’re following at SPC, these are a couple of stocks to consider for your investing research:
🔵Four copper stocks Danny is zeroed in on.
🔵Why Peter Krauth of the Silver Stock Investor likes Wheaton Precious Metals Corp. WPM 0.00%↑.
🔵And Matt Warder of The Coal Trader shares his intel on the coal royalty streamer Natural Resource Partners NRP 0.00%↑.
👀The Investing Do’s and Don’ts of Rate Cuts
When the consumer price index (CPI) for July rolled in on Wednesday, the closely watched indicator showed the pace of inflation had slowed to a rate of 2.9% — the slowest since March 2021.
The day the CPI numbers came out, the probability of a rate cut in September was 100%, according to the CME Group FedWatch tool.
In anticipation of a cut — and hunting for better returns outside of money markets, bonds, and CDs — some investors will fall into the traps of using options as an “income strategy” and buying dividend stocks without thinking about the “real yield” after taxes, market rates or inflation.
❌What Not to Do: Making moves solely based on projected rate cuts and agonizing over when they will happen.
“The Fed’s going to do what the Fed’s going to do. You don’t need to waste the energy trying to anticipate the next move,” Bill said.
✅What to Do: You can always start foundational positions in stocks and accumulate more shares on any pullbacks in price.
That’s how you build real wealth and become a Wealth Builder. You’re more likely than not going to become a Wealth Killer when you make short-term moves. Bill says to assemble a list of stocks you don’t own — but want to — or stocks you own, but would like more of. Then figure out when you want to go shopping — whether that’s through a consistent quarterly, monthly, or weekly purchase … or when prices retreat.
That’s because, over the long haul, U.S. stocks go higher.
We have a full report with two other tips, plus a stock generating a 13% yield to check out that’s available for all of our readers.
🛒No One Likes to Overpay
Earlier in the year, CFO John Rainey said that one of the biggest contributors to Walmart’s sales totals was from households that make more than $100,000 a year.
One of the “concerns” I saw about this newly-won clientele was whether Walmart could keep them shopping at its stores and online as inflation slowed.
But that wasn’t the right question to ask.
Slowing inflation doesn’t mean prices drop … it just means prices aren’t rising as quickly.
And no matter your income level, no one likes the feeling of overpaying.
So the real question to ask: Could Walmart attempt a balancing act between the lower prices it has been known for while still providing a perceived “up-scale variety” in things like the food aisle that it hasn’t been known for to keep those high-income earners coming back?
When Walmart launched its private-label “bettergoods” line, I wrote a report in May that this was a sign that Walmart not only understood the importance of finding that balance but was executing on it.
The lineup includes more variety at wallet-friendly price points:
Creamy Corn Jalapeno Chowder (under $4).
Oatmilk Non-Dairy Frozen Desserts ($3.44 a pint).
And a “Made Without” line featuring limited ingredients, like antibiotic-free chicken nuggets or its taco seasoning (under $2).
Walmart’s latest earnings report confirms that efforts like this are bringing people back to its stores and getting them to shop online.
The highlights include:
Earnings per share (EPS): 67 cents adjusted vs. 65 cents expected.
Revenue: $169.34 billion vs. $168.63 billion expected.
Full-Year Sales Forecast: Boosted to rise between 3.75% and 4.75% compared to a previous projection of 3% to 4%.
Online Sales: Jumped 22% globally and 21% in the United States.
The bottom line: Higher prices are here to stay, even if inflation is slowing. And Walmart has positioned itself to be one of the biggest winners in this new reality of “Higher for Forever” prices. For our paid-up members, we also just issued a report about Walmart’s sleepy ad business, which only generated $3.8 billion in revenue last year. In comparison, Amazon.com Inc AMZN 2.76%↑ hauled in $50 billion in ad revenue. But a pending acquisition by Walmart could soon change that, and SPC Premium members can access the full details below:
Enjoy your weekend,
