3 Investments to Ring in the New Year

Actionable Market Insights for Investors

Dec 19, 2021

At the end of the year life speeds up, and the stock market is no exception. Don’t let uncertainty in your investments beat out a solid plan.

The S&P 500 was up 3.8% two weeks ago, led by a 6.0% increase in Information Technology. This past week, it was down 1.9% led by Energy (-5.1), Consumer Discretionary (-4.3), IT (-4.0), and Industrials (-2.8).

Cyclicals got whacked, while Defensive sectors outperformed. Health Care (2.5), Real Estate (1.6) Utilities (1.2), and Consumer Staples (1.2) all turned out positive.

While we don’t approach the portfolio from a sector viewpoint, current sector activity does show that what has worked in the past may not work in the future.

As an optimist investor we believe there are new opportunities in strong fundamental companies.

The S&P 500 peaked at a record high of 4712 a week ago Friday. It was down every day this past week, except for a big jump on Wednesday, almost back to Friday's high.

Putting it all together

I’ve handpicked 3 actionable investing insights for you to consider before the end of the year ball drops.

Smith & Wesson Brands, Inc (SWBI)- Not many stocks under $100 a share are making over $5.50 sales/share for the last 4 qtrs. The company was founded in 1852, a central player in the firearms space and over $1(B) in revenues. Management has been paying down debt at a blazing pace. Interest expense (how much is paid in interest for debt) was cut down by 2x, $466 from $1,490(ths). Specifically at a P/E (TTM) of $3.31 vs. industry average of $27 this company is probably in the top 10 of the most undervalued stocks in the market. P/E ratios sourced from NYU Stern. A key risk is future laws banning the sale of firearms.
Renewed Interest in Renawables- On the private investment side, I have been working on a project for Betavoltaic cell batteries. I am no expert, but I can see the market opportunity for companies who can figure out how to turn nuclear waste into a safe, self-sustaining micro battery in everyday electronics. Companies like Nano Diamond Battery and Arkenlight are looking to revolutionize the space. So far, the biggest hurdle to mass production is increasing the power output and efficiency of the batteries. Luckily ReJoule, a local company based here in Southern California, is improving diagnostics on the battery's health. I plan to continue to be in contact with NBD, Arkenlight and Rejoule, so stay tuned as things progress.
Housing- Newsom had to save face after the CA recall election, so he went on a bill signing binge. SB9 is a big bill to address the California housing crisis. Senate Bill 9, will allow California property owners to build more than one unit on lots previously reserved for single-family homes. This is a game changer and potentially an immediate way for some investors to create equity on land zoned for single homes. For this reason, I will continue to champion investments in afforadable housing. Boxabl is a Las Vegas company doing just that. For those paying attention, I wrote about Boxabl back in July, 2021 here. On the latest news front, the Las Vegas factory is rolling out production and recently produced “Casita” homes #23 and #24 here.