It’s practically raining money on this industry’s shareholders. Are you getting your share?

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Today’s issue in preview:

• It’s practically raining money on this industry’s shareholders. Are you getting your share?

• Stocks for investing in a bull market with years to go

• Some of the world’s best investors are accumulating this high-quality stock for the long-term

• Our extraordinary track record gets even better: Our thematic trends in biotech, genomics, and oil deliver further gains.

• Learn our Top Themes to buy now

It’s practically raining money on this industry’s shareholders. Are you getting your share?

Credit: Ridofranz

This morning, anyone who followed our recommendation to get long biotech, genomics, and healthcare in general received wonderful news.

An experimental personalized cancer vaccine from Merck (MRK) and Moderna (MRNA) showed encouraging results in its first late-stage trial, the companies announced Wednesday. The fresh results brought the firms a step closer to filing for approval of the treatment option.

The news sent Moderna shares skyrocketing more than 120% and Merck shares up 11%. It also gave the entire biotech/genomics/healthcare complex a big shot in the arm. The sector-wide power today is something to behold:

• The world’s largest healthcare stock ETF – the Health Care Select Sector Fund (XLV) leaped 3.6% to a new all-time high.

• The S&P Biotech ETF (XBI) jumped 4.3% to a new all-time high.

• The ARK Genomic Revolution ETF (ARKG) jumped 6.7% to a new all-time high.

• The iShares Nasdaq Biotechnology ETF (IBB) jumped 5.3% to a new all-time high.

• The Invesco Dynamic Pharmaceuticals ETF (PJP) jumped 2.7% to reach a new all-time high.

• Shares of GLP-1 drug giant Eli Lilly (LLY) jumped 5% to reach a new all-time high.

• The healthcare/biotech/genomics complex is dominating the new one-year highs list, with at least 33 stocks from this sector reaching new highs today.

For more than three years, I’ve made “Boomer health care” one of my highest conviction long-term investment themes. This means I’ve been bullish on biotech, genomics, and healthcare in general. Throughout more than 20 Money & Megatrends research notes over the past year, we’ve written very bullishly on the stocks and ETFs above.

Regular readers are familiar with the bull case here. More than 10,000 Americans reach retirement age every day. The U.S. population aged 80 and older is projected to roughly double, from 14.7 million in 2025 to 29.4 million by 2045.

This is the enormous Baby Boom generation entering the phase of life where health care and longevity spending skyrockets. For many boomers, a typical month involves going to see at least one doctor to have something looked at, removed, or treated.

This means many health care businesses are experiencing huge demand now – and will for at least the next decade. It means boom times ahead for many “ology” businesses, stocks, and careers. Dermatology. Cardiology. Radiology. Oncology. Anesthesiology. Ophthalmology. The list goes on.

Investing in many healthcare businesses over the next decade will be investing with a gale-force tailwind at your back. If you’re a parent and worried about your child getting a job, just point them to the booming healthcare industry.

The giant business, tech, and demographic trends that shape our world tend to play out in five or more years, not five months. This means the stock market trends they manifest play out over the same time periods.

With this trend truism in mind, I once again remind you that if you like money, keep it invested in health care.

Stocks for investing in a bull market with years to go

Credit: ssuaphoto

This week, the bull case we’ve been making for oil stocks got a lot stronger.

The boost came in the form of new all-time highs for the State Street Energy Select SPDR Fund (XLE).

XLE is not your standard under-the-radar ETF that few people follow.

Instead, XLE is very much “above the radar.”

You could even say that when it comes to oil stocks, this fund IS the radar.

XLE is the world’s largest and most widely traded ETF focused on the oil and gas industry. It has more assets under management than the next four U.S. listed oil equity ETFs combined. When Wall Street strategists and money managers talk oil and gas stocks with clients, the performance of XLE is often cited.

The fund’s holdings are a who’s who of oil and gas. Major components include ExxonMobil (XOM), Chevron (CVX), ConocoPhillips (COP), SLB (SLB, formerly Schlumberger), Marathon Petroleum (MPC), and Phillips 66 (PSX).

Last September, I made the case for going long the emerging uptrend in oil and gas stocks: As the global economy grows, oil demand will remain solid. However, importantly, U.S. shale oil production growth appears to be peaking.

Flatlining supply from this region would remove a critical and reliable source of production growth that has been in place for more than a decade. Plus, oil was very cheap relative to gold and other assets, indicating good value.

With all that in mind, we’ve written frequently and bullishly about owning Canadian oil giant Suncor (SU), ExxonMobil, and oilfield service stocks like those in the SPDR S&P Oil & Gas Equipment & Services ETF (XES).

Both SU and XOM are up more than 40% since our September call. XES is up 68%.

As detailed earlier this week, when I recommended oil and started trading it from the long side, I did not factor in the potential bullish driver of the Iran War. That’s been a “bonus” driver of gains in oil stocks. Sometimes, the dice rolls in your favor.

Although positive news related to the Iran War could emerge at any time and trigger a short-term correction in oil and oil stocks, the long-term picture remains bullish. I see three reasons why this is the case.

One: Critical oil infrastructure in the Middle East has been damaged. Oil flows will not return to pre-war levels for possibly over a year. This supports oil prices north of $80 per barrel, which supports large cash flows for oil and gas firms.

Two: Most countries maintain substantial above-ground “buffer” supplies of oil and refined petroleum products in the event of market disruptions such as the Iran War. Over the past five months, much of these buffer supplies have been depleted to compensate for the loss of Middle Eastern flows. They must be replenished.

The coming restocking of buffer supplies will support oil prices north of $80 per barrel… which, again, supports large cash flows for oil and gas firms.

Three: Although oil stocks have enjoyed a large run since our September call, they aren’t up much over the past ten years. Adjusted for dollar debasement over the past decade, key oil and gas ETFs XLE and XES are down significantly. This is not an aging bull market that has attracted too many fans and too much capital. It is the opposite of that.

Avid Money & Megatrends readers know that I like to know both the bull and bear cases for any trend… but I care a lot more about what the market thinks of those cases than anything else. You can be bullish on an industry or theme all you like, but if the market is going against you, then your bullish thesis isn’t worth much.

As for the bull case for oil stocks, the market is enthusiastically supporting it. XLE just reached a new all-time high. North American industry leaders ExxonMobil, Chevron, Suncor, Cenovus (CVE), and Canadian Natural (CNQ) are all at or near all-time highs. Our guidance remains: Stay long oil stocks.

Some of the world’s best investors are accumulating this high-quality stock for the long-term

Credit: Wachiwit

Last week, 13F filings for the world’s largest money managers were made public. This means it is “13F analysis” season, a time of year that can lead to big investment returns. Here’s why…

The SEC likes to keep tabs on large money managers to ensure markets are reasonably stable and working reasonably well. In pursuit of those goals, the SEC requires large money managers to report their public-market positions via “13F filings.”

Those filings are made every quarter and are public. 13F filings essentially let you look over the shoulders of top investors, which is often useful for spotting trends and good stock ideas.

Top money managers typically spend fortunes on industry and stock research. They can hire teams of very smart analysts that work 80+ hours a week researching stocks. They can pay big bucks to hire industry experts and get specialized, insider knowledge. They can pull strings to get access to privileged information. They will go to the ends of the earth to get an information edge that helps them pick stocks.

After all, there are literally billions of dollars on the line. Spending $5 million to research an industry can yield a hedge fund $500 million or more in profit.

And through 13F filings, we can see exactly how all their hard work, time, and money invested is translating into stock positions. It’s like accessing millions of dollars of stock research for free.

This week, our 13F analysis turned up a handful of interesting stocks and market positions. There’s a lot of information and ideas here, so we will be publishing them in a series over the coming weeks.

We kicked off our series on Monday by detailing how the master “quality” investor Chris Hohn has accumulated stakes in construction aggregate giants Vulcan Materials (VMC) and Martin Marietta (MLM). In the past, I’ve highlighted how these two stocks are excellent “inflation defense” assets.

Quality investors like Hohn are cut from the same cloth as legendary investor Warren Buffett. They aim to invest in entrenched, dominant world-class businesses with rare attributes that make them very difficult to compete with. These attributes can take the form of excellent brands, economies of scale, intellectual property, network effects, and high switching costs.

Today, we highlight how a group of respected “quality” investors recently bought shares of entertainment streaming giant Netflix (NFLX).

On July 21, I looked at beaten-up Netflix shares and came away thinking the stock was about to enjoy a big “relief” rally.

My bullish stance wasn’t based on what I know about Netflix’s business. It was based on what I know about what other people know about the business.

Netflix is a growing, profitable business trading for around 22 times earnings. Plus, with a market cap of $294 billion, it is an enormous company. Thus, Netflix currently has a rare set of qualities that large money managers are constantly looking for: It’s a great business trading for a reasonable price, and very importantly, it is large enough for them to buy.

This combination of qualities is rare in the stock market. And so, I ended the analysis by saying I expect to hear news that some large investors piled into the beaten-up stock.

Well, it didn’t take long for that news to hit. Recent 13F filings show that respected quality investors Bill Ackman of Pershing Square, Terry Smith of Fundsmith, and the firm of Gardner Russo & Quinn all purchased Netflix shares during the second quarter. The approval of this group is a very bullish signal for the stock.

Ackman, in particular, made a big splash in the stock market. He disclosed a huge 13 million-share position worth over $900 million… and publicly praised the business’s position and its reasonable valuation. This news has helped propel NFLX shares 19% higher since our bullish note.

A gain of 19% in a month is good work when you can get it. And we bet this gain figure runs higher over the next six months.

Market Notes

• Travel and hospitality giant Airbnb (ABNB) reached a new one-year high today. The new high is indicative of a strong travel market and a strong consumer.

• Our recommendation to invest in Canada continues its winning ways. Canadian oil giant Cenovus (CVE) reached a new all-time high today.

• The bull market in Colombia continues. The country’s oil giant Ecopetrol (EC) reached a new all-time high today.

• Our recommendation to invest in the health care diagnostics megatrend remains a winner. Diagnostics giant Quest Diagnostics (DGX) reached a new all-time high today.

• The offshore drilling megatrend continues to create winners. Offshore drilling services provider Tidewater (TDW) reached a new all-time high today.

• The bull market in transportation, in general, and maritime transportation specifically, continues. The SonicShares Global Shipping ETF (BOAT) reached a new one-year high today.

Regards,

Brian Hunt
Editor, Money & Megatrends

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