New Trade for October 7th, 2020

Futures rebounded late last night after ending the previous session down due to the president’s announcement that he plans to end stimulus bill negotiations until after the election.  Later, the president seemed to walk back his earlier statement in a series of late night tweets which offered hope of piecemeal support including aid to airlines and small businesses.  

The plot thickens as election day draws near.  There is the potential for massive disruptions as leadership changes hands in the Senate and the White House.  These disruptions include potential for huge corporate tax increase as well as the end of certain regulatory reforms.  And of course, perhaps the biggest risk is we will not see results on Nov. 3 or even Nov. 4.  We might see the process of ballot counting for days and weeks.  Unsurprisingly, both sides have lawyered up and are ready to contest each and every ballot around the nation.    

Consider preparing for volatility by positioning yourself in this heads-you-win, tails-you-win stock.

5G stocks are doing well under current leadership — and are set to cash in perhaps even further with a change in leadership. 

To make 5G work, the number and locations of antennae is going to be vastly greater than for the previous generations.  Furthermore, 5G networks will utilize higher frequency airwaves in urban areas.  As a result, they require more equipment – a long-term bullish sign for network gear makerTelefonaktiebolaget LM Ericsson (ERIC).

The Ericsson network segment provides hardware, software and related services for radio access and transport, as well as related services such as design, tuning, network rollout and customer support.  Ericsson offers a relatively direct play on 5G infrastructure and it is trading at just 20x forward earnings.  That means there’s a path for ERIC to show market-beating returns in the next couple of years. The Swedish company is executing well ahead of 5G demand tailwinds and continues to build its market share lead.