Our investing goal is to get in front of burgeoning, revolutionary trends that are in the sweet spot for long term growth. One such trend I have identified is the re-domestication of the supply chain, suggests Cody Willard, long-term growth investing expert and editor of Trading with Cody.
This onshoring revolution — for the lack of a better name — is real and is going to be worth trillions of dollars for investors in the next decade and we want to continue to figure out the best places to get in front of this trend.
Currently, the boards at every company on the planet that sources anything from China or the Middle East or Taiwan are talking about how they can bring as much of their supply chains and their factories and their logistics to their home country as possible. That means hundreds of corporations are going to spending trillions of total dollars building factories, distribution networks, and other supply chain services and products in the next decade.
My favorite stock for this onshoring revolution is Intel (INTC). It is the only company on the planet that can help the US and Europe try to create their own chip supply chains. The company will let governments pay for most of the fabs and they could be a monopoly in the West in the single most important supply chain for our economy — making chips.
I'd also mention that the company could be taking market share for the first time in a decade. If so, will probably keep taking share for the next decade. It is also trading at less than 7x 3 years out profits, less than 10x next year's estimates. And, it has as a rock star CEO that nobody wants to respect.
Looking at Intel’s latest quarter, I think the PC business is shrinking. The Mac business at Apple (AAPL) was down 13% year over year, for example. That said, the problem with a big miss like Intel had on earnings is that we have to question and/or lower our earnings estimates for the next few quarters.
Despite this short-term concern, Intel has a leadership position in a market with a potential trillion dollar business kicker — although we recognize that it will take at least another couple years for the markets to believe in them.
Yes, the INTC quarterly report was ugly. But I’m not changing my stance — I still have the same conviction that Intel is probably going to become a trillion dollar semiconductor fab business in ten years. I’ve said all along that I’d buy near $30 if we get the chance. I'm sitting tight for now, as the upside potential is still there.
