Elon Musk is betting big on this industry. This stock stands to benefit.

Today’s issue in preview:

• A key stock market indicator is flashing bullish

• This industry is poised to be a huge winner… and you won’t buy it

• Elon Musk is betting big on this industry. This stock stands to benefit.

• Learn our Top Themes to buy now

This industry is poised to be a huge winner… and you won’t buy it

Credit: Oselote

Indifference and an uptrend.

It’s a beautiful set of qualities I like to see in an investment or a trade.

You’d stand a very good chance of consistently making large returns in stocks if all you did was invest in industries and asset classes that,

1. Are in strong uptrends, and 

2. Are viewed with indifference or distaste by the investment masses.

I often say that I could profitably trade stocks for the rest of my life by going long established market trends that the public is either indifferent to or hostile towards. It’s literally all I need to generate substantial returns.

This strategy is so effective and so broadly applicable across all asset markets that it is the Swiss Army Knife of trading. It works in every market for several reasons.

One, market trends tend to persist, and winners tend to keep on winning. This is one of the “Iron Laws” of business, markets, and life.

It takes an enormous amount of time, energy, and investment to get a big trend up and running. This goes for technological, business, and macroeconomic trends. Once trends achieve critical mass and develop momentum, they often become like snowballs rolling down a hill… gathering mass and speed in self-reinforcing cycles that last for years.

Second, an ignored market is usually relatively cheap… and often offers high upside potential.

When the public is indifferent towards a theme or asset class, that market will not be bid up to expensive levels. This means the trend could run higher for years. It has plenty of “valuation room” to grow into. Plus, some of the money on the sidelines could eventually pile into the market and drive prices higher.

My greatest investing “coach” – Steve Sjuggerud (pronounced “sugar-rude”) – is a master practitioner of this concept. He loved to find assets he said were “cheap, hated, and in an uptrend.” By applying this strategy repeatedly, Steve built an extraordinary track record and reputation.

These days, the biotech industry is my leading “pick to click” in the “ignored and in an uptrend” category.

On August 18, I sent a research note to colleagues outlining my bullish view of the biotech sector’s price action. Since then, I’ve written more than a dozen updates on the biotech bull market, as the SPDR S&P Biotech ETF (XBI) has outpaced the S&P by an incredible 54% to 17.4%. Today, a key biotech fund hit a new one-year high.

The biotechnology sector comprises companies working on cures and treatments for hundreds of diseases. When investors grow interested in this industry, the returns can be incredible. During the last biotech bull market, the sector soared 300% over four years.

Biotech performed poorly from 2021 through 2025, so most investors are indifferent to it. But I see major potential here. This industry is poised to generate many stock market doubles and triples over the coming decade.

The fusion of AI plus biology will generate dozens of compelling stock narratives over the coming years. Researchers running superintelligent AI programs will be able to run millions of digital simulations of drugs and treatments. This will put medical innovation into overdrive… and create many big stock market winners.

Companies that leverage AI to “crack the code” for various diseases, treatments and drugs will enjoy 100%… 500%… even 1,000%+ stock rallies.

In many cases, these rallies will happen thanks to stories and potential… rather than a company generating revenue or earnings.

Capitalizing on many of today’s biggest stock market trends means focusing on promise over profits.

The biotech sector holds the potential for both.

Investors with the time to spend on picking individual biotech stocks and managing the positions can generate large returns in a biotech industry uptrend. For example, over the past year, at least 11 companies with “therapeutics” in their names have delivered returns of 300%+ or more.

If you don’t want to spend time researching and managing individual biotech stock positions, ETFs can get you exposure to this industry. XBI and the iShares Nasdaq Biotechnology ETF (IBB), which focuses on giant biotech firms, are worth considering.

The biotech industry has tremendous price momentum working in its favor… plus the investment public is largely indifferent to its success. This is a powerful combination that makes more new highs a high-probability bet.

A key stock market indicator is flashing bullish

Credit: Art Wager

Do you hear all that money sloshing around?

I hope you do… because it’s good for the stock market.

This week, the iShares Global Financials ETF (IXG) – an ETF that holds the world’s largest financial firms – broke out to a new all-time high.

This is the market sending us a loud and powerful message: It’s a big bull market in global financial liquidity… and you need to be long stocks.

This week, stock market optimists were blessed with one of the largest and most varied lists of major banks and financial firms reaching new highs this year.

This list includes Citigroup (C), Goldman Sachs (GS), Morgan Stanley (MS), Banco Santander (SAN), Bank of Montreal (BMO), Toronto Dominion (TD), Bank of America (BAC), Royal Bank of Canada (RY, largest Canadian bank) Mitsubishi UFJ Financial (MUFG, largest Japanese bank), and UBS (UBS, largest Swiss bank).

These are among the world’s largest, most important financial companies. You can tell by their names that they operate across Europe, North America, and Asia. And they are all registering new highs. This is a big deal… one that powered IXG to a new all-time high.

I typically avoid individual banking stocks. Since I started trading stocks in 1997, I’ve seen too many seemingly strong and safe financial companies look good one day and then blow up the next day… with the investment community later finding out they were hiding or mismanaging liabilities.

However, I like to monitor the price action in broad groups of banking stocks. The health of a region’s financial system can serve as a good barometer of its overall economic health… or at least a good gauge of all-important financial liquidity, which has a huge influence on asset price movements.

The stock market is the world’s greatest forecasting mechanism. It tends to look ahead 612 months. When an industry is in a recession, its stock prices will rise before the news media announces it is recovering. When an industry seems to be doing well, its stock prices will decline before the news covers its downturn. This is often called “discounting” or “pricing in” the future.

Applied to banking, when a region is about to start doing well, its banks will rise in advance of the good times. When a region is about to struggle, its banks will plummet in advance of the bad times.

A list of banking stocks as large and varied as the one above, all hitting new highs, means there is tremendous liquidity sloshing around the world’s banking systems.

It means there’s plenty of money to fund new businesses, big real estate projects, and massive infrastructure projects. It also means there’s plenty of money that can flow into stocks and send them higher.

I know reading about bank stocks isn’t nearly as exciting as explosive sectors such as space and AI, but this surge in the world’s largest banks is hugely important.

Will the boom in global financial liquidity and stock markets come to an end someday? Sure. All booms eventually end. But for now, this very important trend is up. Position yourself accordingly!

Elon Musk is betting big on this industry. This stock stands to benefit.

Credit: EvgeniyShkolenko

The humanoids are coming.

The trend is already moving stock prices higher.

We believe there’s much more of that to come.

Are you prepared?

On February 5, we analyzed the emerging humanoid robot megatrend and presented a six-stock basket to play it. This technology is one of Elon Musk’s biggest business bets right now.

In January, Musk announced Tesla would phase out two car models to free up factory capacity to build its Optimus humanoid robots.

Humanoids are poised to become one of the most impactful, most popular innovations in history. Imagine millions of robots in our homes, factories, mines, and fields doing work most of us consider to be dirty, dreary, and dangerous.

The futurist I put the most stock in – Musk – says humanoids will be “the biggest product of all time.” Point taken.

In pursuit of humanoid market dominance, venture capitalists and large tech firms such as Tesla, Google, and Amazon are pouring billions of dollars into humanoid factories and related R&D. Over a dozen humanoid makers are competing for the title of “king of the humanoid market.”

In short, this is an enormous emerging megatrend… and a huge investment opportunity.

If I had to bet on one humanoid maker, I’d pick Tesla. Because Elon is Elon. He is the greatest high-tech manufacturer of all time.

However, rather than trying to pick a single winner of the humanoid war, I’d rather sell arms to all combatants… aka “sell highly specialized component parts to all robot makers.” This strategy is a safer, surer bet than picking a single winner.

Producing humanoid components is a difficult business. Robot joints, frames, gears, batteries, motors, and sensors must possess a very-hard-to-achieve balance of lightness, precision, durability, and functionality. This is ultra-high-tech manufacturing.

Plus, any big league humanoid component maker must be able to fill gigantic orders from the likes of Tesla. Producing 1,000 precision components is one thing. Producing 1 million of them is a different thing. Operating on this scale requires not only technical expertise but also sourcing expertise for vast amounts of raw materials.

Back in February, we detailed that most of the world’s key robotics component makers are based in China. Many U.S. investors are justifiably reluctant to buy China-listed stocks. However, we detailed six U.S. companies with exposure to the humanoid market poised to benefit from this emerging megatrend (and the broader robotics trend). They were Regal Rexnord (RRX), RBC Bearings (RBC), Ambarella (AMBA), Allient (ALNT), Teradyne (TER), and Vishay Precision Group (VPG).

Regal Rexnord is of particular interest this week. Regal Rexnord is a diversified industrial equipment firm that produces small motors, bearings, couplings, gear drives, and conveyor components. Said another way, RRX makes the “muscles and joints” of industrial machinery. Its customers include large defense firms, automotive firms, and robotics companies.

RRX’s exposure to the growing robotics market has it in many Wall Street “how to invest in humanoids” research reports.

As you can see in the chart below, the market is warming up to the bull case for RRX. The stock is up 61% this year and is poised to break out to a new all-time high. Given the company’s exposure to the U.S. manufacturing boom and robotics, we believe the breakout will happen soon.

Market Notes

• Our recommendation to ignore the AI bears and stay long AI infrastructurecontinues to pay off. Semiconductor supply chain names ASML (ASML), Lam Research (LRCX), and Applied Materials (AMAT) all hit new highs today.

• Our April 15th recommendation to own Nebius (NBIS) hit another new high today. It’s now up 76% since our call in April. 

• Our October 28th recommendation to own robotics supplier Teradyne (TER) just hit a new yearly high. It’s now up 400% over the last year. 

• Hotel giants DiamondRock (DRH), Park Hotel & Resorts (PK), RLJ Lodging (RLJ), and Pebblebrook Hotel Trust (PEB) reached new all-time highs today. These are bullish economic signals.

• Diesel engine manufacturing leader Cummins (CMI) reached a new all-time high today. The stock is up 132% over the last year. 

• Software giant Salesforce (CRM) reached a new one-year low today. Concerns that AI will disrupt the software industry are weighing heavily on the stock price.

Regards,

Brian Hunt
Editor, Money & Megatrends

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