The Sleeper Industry You Can Dive Into

Letter from the publisher - July 25, 2021

The Sleeper Industry You Can Dive Into Author: Corey Snyder, Publisher "$200,000 in gold. It's yours... Just get me water." - Jackson/Bill Carson, The Good, the Bad and the Ugly (1966) My long-term investment interests have become "soaked" in water over the last several months. It sounds cheeky, but I can explain... My day-to-day tendency to trade rather than invest in a company has considerable overlap with what I choose to long. And by that I mean to hold for a time frame well beyond what would be considered an extended swing... What invariably happens is I'll find a stock that appeals to my criteria for a trade. Of course, my intentions are to offload it within a reasonably short period of time… One month… one week… one day… sometimes one minute… From time to time, there will be a company I only plan on "dating" before something about them speaks to me in a way that heightens my inclination to "see where this thing goes." And sometimes, one will win my devotion - at least for the foreseeable future. The same thing happens when it comes to specific industries... As you've been reading Dawn Report, it's reasonably apparent as to which sectors and industries are most appealing to me. And they're always subject to change. But the path of becoming an industry bull works the same way every time, at least for me. A flow chart might help: Research & Screen ↓ Short Term Trade ↓ Long Swing ↓ "The Smitten Moment" ↓ Investment ↓ Industry Bull Some like to hunt for the next industry poised for growth although it's far better when it comes to you. And there's one in particular that seems to call out to me like a siren from Homer's The Odyssey: Water. (Hopefully, it won't lead me to my peril.) "Oh, this is that whole Dr. Michael Burry/The Big Short 'thing'..." Not quite... but on the right track. Does it play a factor? Sure. If you were reading through 13F filings, would you ignore Ray Dalio's short position on ticker XYZ? Or would it flip a switch in your mind when considering the long position in your own portfolio? Bingo. But that's of little importance here... What happened is that I traded a ticker that led me down a rabbit hole where I unearthed just how integral water is in the overarching ESG theme that will be dominating the future... And what appears to be an untapped resource for massive returns in the near and far future. ESG ESG ESG "You drink it." Correct. You also swim and bathe in it and can use it to form temperature-cooling cubes in whiskey. This is about the extent of what comes to mind… ...Initially. But like most things, there's more complexity and, from an investing standpoint, it's far more profitable than you might expect… You see, the financial world has placed its attention almost entirely on ESG (Environmental, Social, and Corporate Governance) initiatives. Think about it... When your favorite show cuts to commercial, it's not uncommon to find your eyes gazing over clips of rolling, green hills decorated with wind turbines… iced coffees strategically placed beside paper straw dispensers… and the occasional young couple laughing together over bowls of fresh, organically-grown kale salad… Where's the water? Most of the ESG focus has been siphoned away from water and put towards trendy, much sexier industries like solar and wind power, electric vehicles, sustainable farming, or eVTOL… It seems that no one gives a damn about water... at least not on the retail side of the investing aisle. Perhaps this whole Dr. Michael Burry/The Big Short thing is nothing but an empty, BPA-free plastic bottle… But I disagree. For one, water is finite despite the fact that you can glide across your kitchen floor and press your drinking glass against a button to receive it at will. It's a resource that, like most commodities, matters very little in your mind until you're without it... Fidelity Investments portfolio manager Janet Glazer wrote an article in 2020 about water which perfectly illustrated just how finite it truly is: "Oceans account for 97% of Earth's water. Most, 2.5%, of the planet's fresh water, is locked in the polar ice caps, in the soil, or irreversibly polluted. That means, as of now, 0.5% of all the water on the planet is potentially usable by people, animals, and plants." ("Global water crisis: Investing in sustainable water" Fidelity, 2020.) Scarcity. This often forgotten concept learned in year one of undergraduate ECON escapes us at times despite it being where opportunity typically lies… And as aquifers dry up in both developed and underdeveloped countries with a worldwide population slated to grow to 10 billion by 2050, the demand for water will skyrocket. The big guns know this. Consider the following excerpt from Goldman Sachs' 2020 Sustainability Report: "We worked with Dropbox to create a customized portfolio made up of green, social and sustainability bonds that allows them to proactively tilt into targeted impact themes such as water and clean energy. . . . The portfolio we created includes issuances whose proceeds will fund clean-water projects, the development and operation of solar energy projects, and the expansion of renewable energy facilities." (Goldman Sachs 2020 Sustainability Report; emphasis added) These clean-water projects are emerging and expanding almost daily and each requires a substantial investment. But which way you go about investing in water depends on where you find the value… and there are more than enough options. Saturation Water seems to get into just about everything and this includes other industries… making an investment in water even more palatable. Just two Sundays ago, I was seated outside on the balcony while on the phone with Dr. Moors. As you'd expect, most of the conversation was based on the market, but we eventually made our way to talking about industries of personal interest… And ironically, I mentioned my bullish stance on water as I looked out over the lake. Kent quickly responded and filled me in on just how important it was in the energy sector, which was far more than I'd anticipated. From the actual drilling for oil even to the maintenance of tankers, clean water is a must and the number of companies specializing in these areas continues to grow. And this is only one way the demand manifests itself. Investors, though, may want to look for ways to capture the bigger picture. Sure, there's opportunity in retail with stocks like Alkaline Water Company (WTER) or Primo Water Corp. (PRMW)... But how can you capture the oncoming flood of demand? I mentioned above that the institutions were a step ahead, many of which have set up water ETFs. And they're performing well… The Invesco Water Resources ETF (PHO) has returned over 41.85% in the last year with minimal drawdown while the slightly less volatile Ecofin Global Water ESG Fund ETF (EBLU) has returned 42.21%. The charts are beautiful. There are others to consider, of course, and even more speculative companies to look at for game-changing returns… but they come with a fair amount of risk and require a strong stomach. Frankly, if the fundamentals are sound, the ensuing wave of water sustainability efforts will make their current share price look like pennies in the future… That means that, although investors have enjoyed the recent ESG rally, there's still more to come in an industry that won't be drying up anytime soon. Keep moving, The yearly market cycle can make trading simple... If you understand how to take advantage of it... Options Coach Chris Hood and Brian Jones break down what happens with the "seasons" and how to grab bigger profits. Click here now to watch Episode 32: "Choose the Right Options Strategy for the Right Makret" of Hood Talk with Your Personal Options Coach Chris Hood. FINAL PRINTS: The Major Indices Wrap-Up Index S&P 500 Dow Jones NASDAQ Russell 2000 Weekly +/- +84.63 +373.70 +409.75 +46.41 % Change +1.96% +1.08% +2.84% +2.15% Close 4,411.79 35,061.55 14,836.99 2,209.65 % YTD +17.46% +0.68% +15.12% +11.89% MARKET WHISPERS: The Weekend Scoop GM Is on Fire, Literally - U.S. President and "Car Guy" Joe Biden can't feel too confident in his recent EV endorsement after General Motors (GM) announced a recall on close to 70,000 Chevrolet Bolts. This marks the second time that the Bolt has required a do-over for a slight problem with the vehicle's battery. When parked, they sometimes catch on fire and have now caused two injuries. Completely made-up sources stated that the company is debating changing the EV's name to the Chevrolet Flame. 2-Day Shipping, Space, Crypto? - It's hard for a company to stay quiet about plans to take crypto as payment when you post a job opening for a "Digital Currency and Blockchain Product Lead" which is exactly what Amazon (AMZN) just did. The company said it was "inspired by the innovation happening in the cryptocurrency space." According to the job posting, candidates need at least an undergraduate degree and a "deep understanding of the digital / cryptocurrency ecosystem." They must not have checked Reddit. Get Ready for "Thiel Estate" - Famous venture capitalist and Roth IRA billionaire Peter Thiel is making headlines this weekend with confirmation that Singapore's PropertyGuru has agreed to go public via SPAC with Thiel and Richard Li's Bridgetown 2 Holdings (BTNB). The deal is slated to give the online real estate company $431 million with a valuation just shy of $1.8 billion and will list on the New York Stock Exchange. PropertyGuru's footprint covers a large portion of Southeast Asia and hosts over 2.8 million listings each month, according to Reuters. Good thing it's not a Chinese company. HIT OR MISS: Who's on Deck for Earnings Monday, July 26th - Tesla (TSLA), Lockheed Martin (LMT), Otis Worldwide (OTIS), Hasbro, Inc. (HAS), Check Point Software (CHKP), RPM International (RPM), Alliance Resource Partners (ARLP), Cadence Design Systems (CDNS), Alexandria Real Estate Equities (ARE), Ameriprise Financial Services (AMP), Lennox International, Inc. (LII), CRISPR Therapeutics (CRSP) Tuesday, July 27th - Apple (AAPL), Microsoft (MSFT), Alphabet, Inc. (GOOG/L), Visa (V), United Parcel Service (UPS), Starbucks Corporation (SBUX), Raytheon Technologies (RTX), 3M Company (MMM), General Electric (GE), Advanced Micro Devices (AMD), Stryker Corporation (SYK), Mondelez International (MDLZ), Chubb Limited (CB), Sherwin-Williams Company (SHW), Fiserv, Inc. (FSV), Boston Scientific Corp. (BSX), Ecolab (ECL), Waste Management (WM) Wednesday, July 28th - Facebook (FB), PayPal Holdings (PYPL), Pfizer (PFE), Thermo Fisher Scientific (TMO), Shopify (SHOP), QUALCOMM Inc. (QCOM), Boeing Company (BA), ServiceNow (NOW), GlaxoSmithKline (GSK, Lam Research Corp. (LRCX), Automatic Data Processing (ADP), CME Group (CME), Equinix (EQIX), Moody's Corp. (MCO), Norfolk Southern Corp. (NSC), Humana (HUM), Ford Motor Co. (F), General Dynamics (GD), Spotify (SPOT) Thursday, July 29th - Amazon (AMZN), Mastercard (MA), Comcast (CMCSA), Merck & Co. (MA), T-Mobile US (TMUS), AstraZeneca PLC (AZN), Royal Dutch Shell (RDS.A/B), Anheuser-Busch Inbev (BUD), Sanofi (SNY), American Tower Corporation (AMT), VALE (VALE), TotalEnergies (TTE), S&P Global (SPGI), Altria Group (MO), Gilead Sciences (GILD), Twilio (TWLO), Intercontinental Exchange, Inc. (ICE), Atlassian Corporation (TEAM), Northrop Grumman (NOC) Friday, July 30th - Procter & Gamble (PG), Exxon Mobil (XOM), AbbVie, Inc. (ABBV), Chevron (CVX), Linde (LIN), Charter Communications (CHTR), Caterpillar, Inc. (CAT), Enbridge Inc (ENB), Illinois Tool Works (ITW), Petroleo Brasileiro (PBR), IDEXX Laboratories (IDXX), Aon plc (AON), Johnson Controls International (JCI), LyondellBasell Industries (LYB), V.F. Corp. (VFC), Eversource Energy (ES), TELUS Corporation (TU), Weyerhaeuser Company (WY) Enjoying Dawn Report? Learn something, made some money? SHARE YOUR STORY WITH US OR TELL US HOW TO SERVE YOU BETTER. Let us know at info@rogueinvesting.com Copyright © 2020 Rogue Investing. 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