Seven stocks to profit from a powerful side effect of AI adoption

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Today’s issue in preview:

• Seven stocks to profit from a powerful side effect of AI adoption

• While tech stocks suffered, this strong investment trend reached an all-time high. More gains are ahead.

• Learn our Top Themes to buy now

Seven stocks to profit from a powerful side effect of AI adoption

Credit: Maksym Belchenko

On a typical weekday, it’s common for an adult in a “white collar” business to spend more than six hours in front of a screen, working with AI, spreadsheets, software, email, Word documents, and PDFs.

After work, the last thing many people want to do is go home and sit in front of another screen. Instead, we want to go to the pool, to a concert, to a restaurant, a gym, a park, anything involving some “real world experience.”

In a nutshell, this is the bull case for “real world experience” businesses like cruise line operators, concert venues, ski resorts, pro sports franchises, golf courses, and waterparks.

As technological innovations such as AI programs and robots perform more “basic” tasks, people will have more time for leisure, entertainment, and wellness. This will not be a big change in how our world works… but will instead be the continuation of a 400-year trend.

That’s the bull case for “real world experience (RWE)” stocks.

However, avid Money & Megatrends readers know I care much more about what the market thinks of a bull case than what any one person thinks (including me).

In the case of RWE stocks, the market approves. Many of the top RWE businesses I track are posting strong results and enjoying stock uptrends. This is a long-term trend with momentum on its side.

Compelling RWE businesses worth knowing about include:

Entertainment Properties Trust (EPR) is a specialized REIT focused on experiential real estate – properties where consumers spend money on leisure and entertainment rather than traditional retail. Its portfolio includes movie theaters, Topgolf venues, ski resorts, waterparks, family entertainment centers, fitness facilities, casinos, and cultural attractions.

VICI properties (VICI) is one of the world’s largest experiential real estate investment trusts (REITs), owning some of the most iconic casino resorts on the Las Vegas Strip and across the U.S. Its portfolio includes properties such as Caesars Palace, MGM Grand, The Venetian, and Mandalay Bay, along with regional casinos, entertainment venues, and golf courses.

VICI is working to diversify its business by doing deals with wellness firm Canyon Ranch and waterpark operator Great Wolf Resorts.

Vail Resorts (MTN) is the world’s largest owner and operator of destination ski resorts, with a portfolio that includes Vail, Beaver Creek, Breckenridge, Park City, and Whistler Blackcomb. The company generates revenue from lift tickets, its popular Epic Pass season-pass program, ski schools, equipment rentals, lodging, dining, and retail operations.

Live Nation Entertainment (NYSE: LYV) is the world’s largest live entertainment company, operating across concerts, ticketing, and venues. Through its Ticketmaster division, the company sells hundreds of millions of tickets annually, while its concert promotion business organizes tours for many of the world’s biggest artists. Live Nation also owns or operates a large portfolio of music venues, amphitheaters, and festivals.

Lindblad Expeditions Holdings (NASDAQ: LIND) is a leading operator of premium expedition cruises focused on adventure travel to some of the world’s most remote destinations, including Antarctica, the Galápagos Islands, Alaska, the Arctic, and the South Pacific. Through its long-standing partnership with National Geographic, the company offers educational, small-ship voyages led by naturalists, scientists, and photographers.

Seaport Entertainment Group (NYSE: SEG) is an experiential real estate company formed from the 2024 spin-off of Howard Hughes Holdings. The company owns and operates a collection of entertainment assets centered around New York City’s Seaport district and Las Vegas. Its portfolio includes restaurants, retail, event venues, Pier 17, a stake in Jean-Georges Restaurants, the Las Vegas Aviators Triple-A baseball team, Las Vegas Ballpark, and development rights near the Las Vegas Strip.

Formula One Group (FWONK) is a Liberty Media tracking stock that reflects ownership of Formula 1, one of the world’s premier motorsport businesses. The business generates revenue from race hosting fees, global media rights, sponsorships, and hospitality experiences, while benefiting from the sport’s rapidly growing international fan base. Since Liberty Media acquired Formula 1 in 2017, the company has expanded its audience through new races, digital media, and the Netflix series Drive to Survive.

Over the next 10 years, AI and robotics will take on many of the jobs and tasks humans perform now. This will free up our time to pursue leisure, entertainment, and wellness interests. This trend will benefit the “real world experience” businesses detailed above.

The more time we spend interacting with AI, the more we’ll crave experiences that no algorithm can replicate. Think of the RWE megatrend as an indirect way to profit from the proliferation of AI.

While tech stocks suffered, this strong investment trend reached an all-time high. More gains are ahead.

Credit: oversnap

Over the past two weeks, many technology stock sectors have suffered giant declines and extraordinary volatility. Owning high-profile tech leaders such as Intel (INTC), Coherent (COHR), and Micron (MU) has given roller coasters a run for their money.

Meanwhile, one of our top investment destinations – Canada – is quietly and steadily marching to new all-time highs.

We close out today’s issue with a look at the bull market in Canada.

Over the past ten months, I’ve made the case that we are in a favorable environment for critical resources… one in which many individual resource sectors will generate strong returns.

Critical resources are the building blocks of the economy. Think raw materials like crude oil, natural gas, iron ore, copper, uranium, corn, and cotton.

Even today’s high-tech world of AI, apps, email, and Zoom calls is built on a “low-tech” foundation of steel, concrete, copper, lumber, and aluminum. Every day, our cars, trucks, and airplanes consume millions of barrels of fuel. Our lights turn on because we burn coal and natural gas.

Mining, extracting, planting, harvesting, processing, refining, and transporting critical resources is a multi-trillion-dollar business that affects every area of your life.

During this time, I’ve highlighted Canada as an excellent place for investment capital. Canada is the second-largest country in the world by total area, after Russia.

This means there’s plenty of area to hold big oil and natural gas deposits… huge tracts of timberland… giant mineral deposits… and enormous farms. Canada is a major player in oil and natural gas production, ranking in the world’s top five producers for both. It’s also a world leader in the production of fertilizer, uranium, aluminum, gold, lumber, and platinum.

Canada’s massive resource endowment also makes it a beneficiary of the war in Iran and its consequences.

As I’ve covered this year, for many countries and businesses, the war in Iran is a brutal reminder: If your survival or smooth operation depends on uninterrupted resource flows from the often-unstable Middle East, you are in a dangerous, vulnerable position.

No politician, CEO, or major shareholder wants their business to be in that position. No citizen wants their country to be in that position. Many powerful and influential people are realizing this is a big risk that must be mitigated if humanly possible. Executives and politicians will get fired for not addressing it effectively.

This means building and buying as many forms of “not Middle Eastern” resource supply chains as possible economically… like those from safe, resource-rich Canada. I can state with confidence that no caribou will ever strap on an explosive vest and attack a local oil refinery… and no grizzly bear will send a kamikaze drone flying into a natural gas pipeline.

As you can see in the chart below, the bullish factors above are driving a steady uptrend in the iShares Canada ETF (EWC). This week, as many tech sectors suffered huge selloffs, EWC reached a new all-time high.

Canadian stocks had strong tailwinds before the Iran War. They will have even stronger tailwinds after it. Let’s remain bullish on Canada.

Market Notes

• Genetic diagnostics firm Illumina (ILMN) reached a new one-year high today.

• Electric power generation and infrastructure firm Brookfield Infrastructure (BIP) reached a new all-time high today.

• HVAC equipment manufacturing giant Lennox (LII) reached a new one-year low today.

• Giant banks HSBC (HSBC) and Banco Bilbao Viscaya Argentaria (BBVA) reached new all-time highs today.

Regards,

Brian Hunt
Editor, Money & Megatrends

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