What Makes QV Alerts Useful And Fun

Aeons ago I was the editor of a publication called the IC [Investors Chronicle] Stockmarket Newsletter. My predecessor had received a service called Stockmarket Alerts which sounded exciting but proved disappointing. Each week I received an envelope containing five graphs of selected shares. There was no commentary and I never discovered what was the basis for choosing the shares.

I think a share should be alerted because there is a buy signal. Why else bother?

In the chart above, there is a buy signal for Bitcoin, but so far, it has been somewhat tentative. In pattern analysis, Bitcoin is making a line from which it will eventually break higher or lower. A line is a powerful pattern reflecting buyers and sellers in a temporary equilibrium. When the breakout comes, it can herald a big, even explosive move.

The buy signal we already have is the blue line (four-month moving average) turning higher. In the past, this has usually been a good time to buy.

Michael Saylor does not doubt that Bitcoin is the ultimate asset. He has complete faith. I am a prey to doubts. I struggle with an asset which only exists in cyberspace. What the heck is that? But something is amazing about Bitcoin. It is beyond the government’s control. It is a bit like the alien in the eponymous Ridley Scott film, perfect for what it does. A store of value which is in absolutely limited supply – and very limited supply – just 21m coins is nothing in a world where billions of investors could buy.

Since the 1930s the S&P 500 has climbed roughly 1000 times. I usually think that house prices have risen around 1000 times since the war. In the 1950s my father lived in a mansion with live-in servants on a salary of £2,000 a year. You might not need £2m a year to replicate his lifestyle but there are many people in the world who do earn £2m a year or much more.

I just Googled how many dollar millionaires are there in the world. The answer was 58m which is surely an underestimate. Everyone who lives in Kensington is a millionaire and that is just for starters. There must be at least 100m millionaires worldwide. This means they control wealth of at least $100T and that is just a small percentage of total global wealth..

Much of this vast increase in global wealth is a paper illusion. Since 1971 when the US broke the link between the dollar and gold politicians have been free to print money. They make a big song and dance about not doing so but it is obvious that they do and they will continue to do so.

Investors need to protect the real value of their assets. They can buy shares, they can buy gold, they can invest in property. But these assets are at the mercy of government interference. My children have appointed experts to find out how much inheritance tax they will have to pay on my assets and the answer is millions. It is outrageous. I am richer than my father but his lifestyle was more elitist than mine. Governments are using inflation and the tyranny of democracy to sequester large chunks of our assets and now they are threatening to do the same to wealthy foreigners who choose to base themselves in the UK but have global assets.

It is madness. We need these people. London has become a wonderful city because it is so cosmopolitan. In the 1970s it was rubbish, literally lying uncollected in the streets as Labour prime minister, James Callaghan, waffled about ‘a little local difficulty’.

The appeal of an asset that these b*****ds can’t touch keeps growing. Think of cryptocurrencies as assets with a financial structure beyond governmental reach and their appeal is real. Bitcoin has gone from valueless to $65,000 in two decades. Why should the next two decades not see the price go much higher when all the forces that brought the price here are at least as strong as ever?

There is a wonderful example from New York. A property was on sale in 2015 for $13m. At the time Bitcoin was at a low ebb. A buyer offered to buy the flat for 50,000 Bitcoin, worth $12m and was rejected. Those Bitcoin would now be worth $3.25bn. Which is the better store of value – apartments in New York or Bitcoin?

They say bull markets climb a wall of worry. Bitcoin is climbing a wall of scepticism. People cannot believe that something you cannot see or touch can be worth anything, let alone $65,000 or much more. But people like Michael Saylor of Microstrategy, who do believe, are making a fortune. Maybe there is a message there.

Bitcoin And Christianity

Look at Christianity. I am not a Christian. It is obvious to me that gods don’t exist. I can remember when this realisation hit me with blinding certainty. I was 12 years old. But there are a lot of Christians and that belief has grown from a standing start some 2,000 years ago to near-universal belief in the medieval period and still big numbers today. There are an estimated 2.4bn Christians in the world.

The progress of Bitcoin seems to me similar to the growth of belief in Christianity which also started small with a tiny sect drawing fishes on walls. Those early believers are like today’s Bitcoin whales even to the fishy symbolism.

Christianity was institutionalised by Constantine who adopted Christianity as the official religion of the Roman Empire in 313CE [Christian era]. in AD 30, or CE year 30, it is thought the number of Christians in Rome was in the hundreds and nobody would have imagined what would happen less than 300 years later. It supports my belief that maybe with Bitcoin we ain’t seen anything yet.

It makes great sense for subscribers to have some exposure to Bitcoin, IBIT or Microstrategy as part of a balanced portfolio and just accept the volatility.

This is a spectacular chart. Arista Networks is at the heart of the technology revolution.

As a pure-play networking innovator with greater than $70bn TAM [total addressable market] ahead of us, we are pleased with our superior execution this quarter. We delivered revenues of $1.69bn for the quarter, with a non-GAAP earnings per share of $2.10. Services and software support renewals contributed strongly at approximately 17.6pc of revenue.

Our non-GAAP gross margin of 65.4pc was influenced by outstanding manufacturing discipline realizing cost reductions. International contribution for the quarter registered at 19pc, with the Americas strong at 81pc. As we celebrated our 10th anniversary at the New York Stock Exchange with our near and dear investors and customers, we are now supporting over 10,000 customers with a cumulative of 100m ports deployed worldwide. In June 2024, we launched Arista’s Etherlink AI platforms that are ultra-Ethernet consortium compatible, validating the migration from InfiniBand to Ethernet.

This is a rich portfolio of 800-gig products, not just a point product, but in fact, a complete portfolio that is both NIC and GPU agnostic. The AI portfolio consists of the 7060X6 AI switch that supports 64 800-gig or 128 400-gig Ethernet ports with a capacity of 51 terabits per second. The 7800 R4-AI Spine is our fourth generation of Arista’s flagship 7800, offering 100pc nonblocking throughput with a proven virtual output queuing architecture. The 7800 R4 supports up to 460 terabits in a single chassis, corresponding to 576 800-gigabit Ethernet ports or 1,152 400-gigabit port density.

The 7700 R4-AI distributed Etherlink switch is a unique product offering with a massively parallel distributed scheduling and congestion-free traffic spraying fabric. The 7700 represents the first in a new series of ultra-scalable intelligent distributed systems that can deliver the highest consistent throughput for very large AI clusters. Let’s just say once again, Arista is making Ethernet great. First, we began this journey with low latency in 2009 time frame.

And then there was cloud and routing in the 2015 era, followed by WAN and Campus in the 2020 era, and now AI in our fifth generation in 2025 era. Our Etherlink portfolio is in the midst of trials and can support up to 100,000 XTUs in a two-tier design built on our proven and differentiated extensible OS. 

Our networking platforms are becoming the epicentre of all digital transactions, be they campus centre, data centre, WAN centers, or AI centres.

Jayshree Ullal, CEO, Arista Networks, Q2 2024, 30 July 2024

More Great Charts

Share And Crypto Recommendations (14 October 2024)

Bitcoin. BTCUSD

Microstrategy. MSTR

Arista Networks. ANET

Arm Holdings. ARM

Nvidia. NVDA

Evercore EVR

Impinj PI

Sprouts Farmers Market. SFM

United Rentals. URI

Texas Roadhouse TXRH

S&P 500 Information Technology Index. S5INFT

Strategy – More Names For The ‘Priceless’ List

I like to see shares with strong momentum. I also like shares, a variant on the same theme, which refuse to go down or at least to stay down. Arm Holdings is a case in point. Most people can see that Arm is on a demanding valuation yet selling is not a good idea because time and again the shares bounce back. Nvidia has enjoyed an incredible run to make it the second most valuable company in the world. It is tempting to take profits but there may still be substantial gains to come.

Every time I look at Nvidia I think – what an incredible business!

You don’t need to be an analyst to figure out what the future may hold for Nvidia, you need to be a visionary and something similar applies to Arista Networks and Arm Holdings.

Strong Financial Markets Good For Investment Banks

Evercore is an investment bank doing all the things investment banks do. A strong economy and a buoyant stock market create powerful following winds for such businesses.

Business is good.

Impinj is new to Quentinvest

The company is trading strongly.

Our second quarter results were strong, setting several new records. Revenue topped $100m and adjusted EBITDA topped $25m, both well above our guidance. Free cash flow topped $40m. Multiple trends drove that outperformance including apparel and footwear strength, early signs of retail rebuying, steady growth in general merchandise, continued secular growth including a long tail of specialty applications and strong demand for our products and platform. We expect these same trends to drive solid third quarter product revenue growth.

Chris Diorio, CEO, Impinj, Q2 2024, 24 July 2024

There are plenty of opportunities ahead.

Touching now on growth opportunities, we see food tagging expanding, including in-store item-level pilots where the volumes are really large. In apparel, we see increasing supply chain usage driving demanding readability expectations, benefiting our higher-performing M800. In general merchandise, we see market expansion as retailers piggyback on the pioneering work of the large North American retailer. And we see growth in specialty applications, for example one I had the opportunity to see in-depth during a recent trip to Japan, in which a consortium of four Japanese publishers are tagging books, magazines and comic books to better match store inventory to consumer demand.

Chris Diorio, CEO, Impinj, Q2 2024, 24 July 2024

Sprouts Farmers Market does what it says on the tin.

The business is in great shape.

For the second quarter, total sales were $1.9bn, up $201m or 12pc in the same period last year. This increase was driven by comparable store sales growth of 6.7pc and the addition of new stores. For the quarter, we had a healthy balance across all of our key comp drivers; traffic and ticket, e-commerce and brick and mortar, new and older stores, as well as strong results in all geographies. E-commerce sales also increased by 30pc, representing 14pc of our total sales for the quarter, highlighting our commitment to meeting the evolving needs of our omnichannel customers, however they choose to engage with Sprouts. In addition, Sprouts brand contributed 22pc to our total sales for the quarter.

Curtis Valentine, CFO, Sprouts Farmer Market, Q2 2024, 29 July 2024

United Rentals is like an all-American Ashtead so focused on equipment rental but with a greater weighting to the oil patch.

In line with everything that is happening to the US economy, business is buoyant.

We saw growth in both our general and Specialty businesses. And within specialty, we continue to see growth across all product offerings. In fact, even excluding the benefit of Yak, Specialty rental grew 18pc year-over-year.

Additionally, we opened 27 Specialty cold starts, which puts us at 42 year-to-date, and we remain on track to open at least 50 this year. By vertical, we saw growth across both construction, led by non-res, and our industrial end markets, with particular strength in manufacturing. It’ll come as no surprise that we saw multiple new projects in the quarter across data centers, utilities, healthcare, battery manufacturing, and infrastructure. And if you’re a soccer fan, you’ll be excited to know that Freedom Park in Miami kicked off as well.

Additionally, the used market remains healthy, allowing us to sell a second quarter record amount of OEC [equipment at cost]. We believe that demand for used equipment will remain strong and still expect to generate around $1.5bn of proceeds this year.

Matthew Flannery, CEO, United Rentals, Q2 2024, 25 July 2024

Fast Casual Dining Booms

Texas Roadhouse, Inc. is a growing restaurant company operating predominantly in the casual dining segment. Our late founder, W. Kent Taylor, started the business in 1993 with the opening of the first Texas Roadhouse in Clarksville, Indiana. Since then, the Company has grown to three concepts. As of June 25, 2024, the Company and its franchisees operate 762 restaurants system-wide in 49 states, one U.S. territory, and ten foreign countries, including 703 Texas Roadhouse restaurants, 48 Bubba’s 33 restaurants, and 11 Jaggers restaurants.

Texas Roadhouse, website

The business is on fire.

Results for the 13 weeks ended June 25, 2024, as compared to the prior year as applicable, included the following:

• Comparable restaurant sales increased 9.3pc at company restaurants and increased 8.3pc at domestic franchise restaurants;
• Average weekly sales at company restaurants were $158,991 of which $19,975 were to-go sales as compared to average weekly sales of $146,727 of which $18,496 were to-go sales in the prior year;
• Restaurant margin dollars increased 32.7pc to $242.6m from $182.8m in the prior year primarily due to higher sales. Restaurant margin, as a percentage of restaurant and other sales, increased to 18.2pc from 15.7pc in the prior year driven by higher sales. The benefit of a higher average guest check and improved labor productivity more than offset wage and other labor inflation of 4.4pc and commodity inflation of 0.4pc;
• Diluted earnings per share increased 46.4pc primarily driven by higher restaurant margin dollars partially offset by higher general and administrative expenses and higher depreciation and amortization expenses;
• Six company restaurants and three franchise restaurants were opened; and
• Capital allocation spend included capital expenditures of $77.8m, dividends of $40.7m, and repurchases of common stock of $26.2m.

I am adding all these shares to the priceless list if they are not already there. The strategy with Priceless is to buy whenever, hold and buy more unless they come off the list. There is no specific selling strategy.