Today’s issue in preview:
- How to earn big safe yields from the AI Boom
- You want to own this under-the-radar bull market
- A stock with two massive tailwinds pushing it higher
How to earn big safe yields thanks to AI Boom
When most people think about “investing in AI stocks,” they think about the potential for explosive capital gains. After all, AI stock leaders such as Palantir (PLTR) and NVIDIA (NVDA) are up more than 1,000% over the past three years.
But did you know there’s a way to generate steady investment income from the AI boom?
It might sound preposterous. Many AI-related stocks are high-risk, high-reward plays with a side of volatility. But, large amounts of safe and steady income are available by investing in natural gas pipelines right now.
Regular readers know power consumption is one of the AI megatrends’ largest and most profitable facets. Given AI’s enormous promise, the world’s largest and wealthiest companies are embarking on the biggest capex spending cycle in history. Giants such as Google, Meta, Microsoft, and OpenAI are spending hundreds of billions of dollars on data centers, AI chips, and other infrastructure components.
All that AI infrastructure is poised to consume vast amounts of electricity. S&P Global estimates that global electricity demand will increase by nearly 50% by 2040.
I’ve frequently mentioned how AI’s growing power demands are a bullish driver for natural gas. Natural gas is the preferred clean-burning fuel for power plants that support AI data centers. This is why I believe natural gas producers such as EQT (EQT), Antero (AR), Expand Energy (EXE), and Range Resources (RRC) are compelling long-term stock ideas.
However, all the natural gas in the world isn’t worth much if you can’t transport it to customers.
This is where America’s vast natural gas transportation, processing, and storage industry comes in. An extensive network of pipes crisscrosses America, allowing energy companies to transport natural gas from the wellhead to the power plant. If we get an AI-driven boom in natural gas consumption, then by default, we get a boom in natural gas transportation.
This is all great news for companies in the Alerian MLP ETF (AMLP). It’s the world’s largest pipeline operator-focused ETF. It holds the “who’s who” of American energy pipeline operators. The fund’s current yield is over 8%.
The typical pipeline operator is not your typical “high-risk, high-reward,” AI play. It’s not going to soar 500% in one year like some AI plays can.
Instead, it’s a boring and predictable business that generates regular cash flows and shareholder distributions. And it’s getting an AI boost that will last for years. Income-focused investors should take notice.
You want to own this under-the-radar bull market
It’s not getting much press, but the bull market in South America is one of the world’s strongest financial trends. Did you follow us into this profitable trade?
Back in November, we highlighted how South American stocks were outperforming their more popular North American cousins.
Bulls on the region point out how “left-wing, full-blown socialist” Latin American political parties look increasingly to be replaced by “less left-wing, not full-blown socialist” political parties. This should be good for the continent’s stock markets. It certainly has been for Argentina, which recently moved towards “less socialism” and saw its stock market soar 378% over two years.
Latin American stock markets are also heavily reliant on critical resource markets, including iron ore, agriculture, copper, and oil. The critical resources boom we’ve been covering is good for “LatAm” stocks.
Not long after our bullish piece, Trump & Friends forcibly removed South American dictator Nicolas Maduro from power in Venezuela. The market seems to like the idea of the U.S. exerting more influence and financial involvement on the continent. South American stocks have climbed since Maduro was removed.
For example, have a look at the strong uptrend and recent upside breakout in the Global X MSCI Colombia ETF (COLO). This fund is one of the few vehicles available to U.S. investors seeking to invest in Colombia, Venezuela’s neighbor.
With a P/E ratio of less than 10, Colombia is one of the world’s cheapest stock markets. Plus, it has reacted favorably to the Venezuela situation, rising 7%. It’s another sign the uptrend in Latin America is one you want to own.
It’s a bull market in South America
A stock with two massive tailwinds pushing it higher
Back in November, we highlighted the bull case in RBC Bearings (RBC) and named it as one of our favorite ways to invest in the robotics megatrend. We called it “a stock that sits at the nexus of the robotics boom and the U.S. manufacturing boom.”
Apparently, the market agrees with our take. RBC is up 13% since our note and just leaped to a new all-time high.
I often say you want to work and invest in booming industries that are enjoying such strong revenue growth… such huge investment flows… and have so much future demand… that financially, you’re essentially running downhill.
One of the only things better than having a megatrend working in your favor is to have two megatrends working in your favor.
This brings us to RBC Bearings.
RBC Bearings is one of America’s largest makers of ball bearings – critical components in complex machines such as aircraft engines and robots.
Regular readers know that the robotics megatrend is one of my highest conviction investment ideas. We are in the early innings of a robotics boom that will deliver advanced industrial robots, humanoid robots, autonomous vehicles, and autonomous air taxis.
Another megatrend I’m bullish on is the buildout in U.S. manufacturing capacity. Donald Trump and many business leaders believe that American economic security depends greatly on expanding the country’s manufacturing base. Trillions of dollars are set to flow into this megatrend.
At the nexus of these trends are companies that make critical components for industrial machines and robotics. Demand for their products is beginning to boom. RBC Bearings is one such company.
RBC currently sports top-tier earnings growth and is starting to catch the attention of investors seeking to position themselves in the megatrends outlined above.
These factors just boosted RBC to a new all-time high. We’re still bullish.
Market Notes
- Mega miner Southern Copper (SCCO) reached a new all-time high today. The bull market in copper continues.
- Leading gold miner Agnico Eagle (AEM) reached a new all-time high today. The stock is up 130% over the past year.
- Uranium mining giant Cameco (CCJ) reached an all-time high today. The nuclear energy bull market continues.
- U.S. trucking giant C.H. Robinson (CHRW) reached a new all-time high today. This is a bullish economic signal.
- The GX Robotics ETF (ROBO) reached a new all-time high today. The bull market in robotics continues.
- The Russell 2000 ETF (IWM) reached a new all-time high today. The small cap trade is starting to pay off.
