By Matt McCallSep 09, 2020
Summer is over. Wall Street is back to work. And school is back in session.
To borrow a phrase from the Beatles, it was a long and winding road to get there.
Some schools are back in person, and many others are virtual. It varies from state to state and even county to county.
I don’t have kids, but I’m an uncle, and I know how everyone was caught up in the question of whether kids should be in their schools or learning from home. The safety question is paramount, of course, but the impacts are much more widespread than at first glance.
And at the center of it is technology.
If you’re a regular MoneyWire reader, you know how much I focus on disruptions. Disruptions create opportunities. And in the ever-growing list of pandemic disruptions, education is at or near the top.
This is one of those disruptions we need to pay attention to. Especially what it means for the future and for our investments…
With so many kids attending classes online, this year’s back-to-school shopping was less about clothes and more about what was needed to learn at home. Not surprisingly, tech was high on people’s lists, with 63% of K-12 families expecting to buy computers or other electronics. That’s a sizable 54% jump over last year.
With this greater focus on technology, back-to-school spending is projected to be the highest ever this year. According to the National Retail Federation, parents with children in elementary school through high school are expected to spend $789.49 per family, up 13% from $696.70 last year.
In a survey by Bankrate, two-thirds of parents with kids ages five-10 said they expect to be negatively impacted financially. More than half of families with school-aged children said the pivot to remote learning is even causing them to reevaluate their finances and careers.
When back-to-school shopping hits record highs, you can be sure stocks are moving as a result.
Big retailers like Target (TGT), Best Buy (BBY), and Walmart (WMT) all benefit. Target’s strongest sales in the last quarter were in its electronics division, which grew revenue 70% over last year. TGT has bounced more than 60% off its April lows, including a 13% pop on August 19 after quarterly results were released.
Education companies offering online courses have done well, too, and they’re set up to continue doing well. Chegg (CHGG), for example, is expected to grow sales from $410 million last year to $1.2 billion by 2024. It’s more than tripled off its March lows.
(Disclosure: I own CHGG in my personal accounts.)
Many schools use Google Classroom and Zoom for their video sessions. Alphabet (GOOGL) is a $1 trillion company, so its needle doesn’t move as much. But Zoom Video Communications (ZM) has been unstoppable, up 475% in 2020.
This is all part of the “tele-everything” trend that is not going away. Telecommuting. Telehealth. Tele-education. Everything will now grow faster and quicker because of the pandemic.
The connection among all those industries is… well… the connection. To the internet and other devices.
And this connection is shaping up to be one of the most transformative and lucrative technological advances many investors are likely to see in their lifetimes.
The 5G network, which is rolling out as we speak, will support lightning fast internet connections – 100X what you’re used to today. Yes, it will be great for online classes, Zoom chats, streaming video, playing video games, and all those other things people are doing at home.
But that’s just the jumping off point.
Take the long-term view and you’ll see that it’s the life-changing technologies 5G will enable – thanks to practically real-time connections and low latency (the time it takes to transfer data from your device to the internet and back) – that blow my mind.
Robotic surgeries. Telehealth. Augmented and virtual reality. Self-driving cars. Smart cities. And trillions of connected devices known as the Internet of Things (IoT).
All told, we’re looking at breakthroughs and advances worth more than $56 trillion.
But there’s a problem.
A lot of talking heads are recommending plays on 5G’s “infrastructure” – the communications component makers, for instance. Problem is, that’s sort of a “once and done” revenue opportunity.
That’s good, but not great.
The real wealth-building opportunity is much, much larger. If you think of 5G as a new superhighway – and it is for all of our data – you can see how the huge, lifetime money is made not from its construction but by owning businesses that bloom and flourish for years and even decades after its built.
Think Netflix (NFLX) in 2007, when it popularized streaming and capitalized on the 4G network. Or Uber (UBER) in 2010, when it pioneered ride sharing based on smartphones… also thanks to the 4G network.
5G is setting up similarly incredible opportunities today.
That’s why I created the 5G Highway Portfolio filled with stocks set to capitalize for years to come. Six of the eight stocks are higher, with three of those up more than 60% over the last six months.
These are the “next booms” – lesser-known companies building businesses along the huge new 5G highway.
We’ll talk more tomorrow about a major turning point in 5G that’s right around the corner. The rollout has continued right through the pandemic, and the coming disruption is that much closer. Stocks are already moving, but there is still time to get in early and make the biggest profits in this transformative trend.
P.S. Companies like Microsoft (MSFT) capitalized on the internet and generated more than 18,000% profits.
5G is setting up similar opportunities today. But many investors are acting on bad information.
It’s maddening, and it’s why I just released the 5G Highway Super Portfolio. It is filled with stocks set to ride the wave higher, like the #1 5G medical robotics company or a company I’m calling the “Google of 5G.”
To learn more about the massive opportunity and the companies I’m talking about, click here now.
Click here to listen to Matt McCall’s MoneyLine podcast! This week, Matt talks about the cloud computing trend. It’s not a new idea, as the cloud powers the technological innovations that have been leading the market. However, now that the big tech stocks have pulled back, is cloud computing still a good investment? Matt gives you his thoughts on this and much more.
You can subscribe to this podcast on iTunes, Stitcher, Spotify, or wherever you listen to podcasts.
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