Here’s What I know

  • I know robots are here to stay. Exchanges are using them to cut costs and improve efficiency, doctors are using them to do surgery (isrg). They’re even cleaning our floors for us and picking up bombs in Iraq, but by iRobot’s (irbt) stock performance you couldn’t tell. Who makes the robots that make cars? We all know that people are leaving the assembly line…
  • I know that goods are moving around the world, to every corner of every market. UPS (ups) should benefit from this, as should Expeditor’s Int’l (expd). This story isn’t going away any time soon, the growth in emerging market’s and increased outsourcing/offshoring will mean that every thing from gold to oil to Dell computers are being shipped overseas as we speak.
  • I know that the global investment market is strong, both for professional’s and “retail” investors. Look at FactSet (fds) to see the strength in the investment bank (not to mention Goldman Sachs (gs)). Did anyone see the strength in Schwab (schw) recently?
  • Emerging markets show no sign of slowing. Look for those who supply both what the citizens of these markets need and want. For the former, look at AES (aes), who supplies power in 26 countries. For the latter, look at NII (nihd), which is Nextel International, a major cell phone provider in Latin America. Also Turkcell (tkc) is a good play on the growth in the middle east.
  • Internet valuations are more than twice the market’s across the board. I think the best buy’s are the niche players who control their markets. Look no further than Blue Nile (nile) for online jewelry, Bankrate (rate) for online mortgages, The Knot (knot) for weddings, and CNET (cnet) for tech news. I think that they’re the best positioned to benefit from ads moving online, not Yahoo! or Google. The Cisco’s of the world might be good too, but I don’t understand the business enough. Online brokerages, such as OptionsXpress (oxps) also benefit from the growth in broadband.
  • Companies are outsourcing everything but core competencies. Paychex (payx) and ADP (adp) are best positioned to benefit from the outsourcing of HR, and Cognizant (ctsh) and Accenture (acn) should win the IT war.

That’s it for now. Stay tuned for “Here’s What I Don’t Know.”  Any other themes you’re looking at? Tell me in the comments!

Full disclosure: I own shares in AES and OXPS. 

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