“This company will usher in a new age of online retail for used cars.”
That’s what some “experts” were saying about a company that sold used cars out of a giant PEZ dispenser just one year ago.
But where they saw game-changing innovation, all I could see was a new marketing gimmick … and a downright toxic balance sheet.
Despite that, it was a favorite of the pandemic-bubble speculators … and for all the wrong reasons.
If you know me, you know I’m no speculator. I’m an investor. So while the speculators were busy gawking at the PEZ dispensers … I was looking at the numbers.
And when I looked under the hood, it was clear this company was more story than business.
The company showed a loss of $280 million in 2019. It had no earnings … and was living on borrowed money.
That didn’t matter to the speculators. In March 2020, the stock was trading at $50 or so per share. A year and change later — after it posted a $460 million loss in 2020 — it surged up to $350 a share.
But I knew that 7X surge was based on story, not substance…
So I set my price target … at ZERO.
Today, the stock price is a lot closer to my target — trading around $5.
But it’ll only get worse from here.
Watch the video below to see the worst stock to own in 2023 … and find out which Alpha “A-team” Stock I recommended my subscribers buy instead:
If you prefer to read the transcript, click here.
It’s much easier to figure out the worth of a business than to try picking the latest “disruptor.”
The big money is made by sitting, not trading. Holding a handful of quality businesses, buying at bargain prices and then waiting.
Doesn’t get any simpler than that.
And this bear market is creating so many bargain opportunities for quality businesses.
So to me, this period of time is like manna from heaven. We get to buy more great stocks at even bigger discounts.
We recently added a company that:
Has a market share 5X bigger than its nearest competitor.
Generates $1 billion in free cash flow.
Is buying back shares.
And the stock market is offering us this business at a bargain price.
The tortoise beats the hare, and earnings beat stories.
To get my latest stock recommendation and invest like an owner, click here for the details.
Founder, Alpha Investor
P.S. I’d love to hear what you think!
Did you avoid the Carvana hype? What are you buying instead?
Let me know at BanyanEdge@BanyanHill.com.
P.P.S. If you didn’t catch the first episode of The Banyan Edge Podcast, do yourself a favor and check it out right here.
The big topic this week was the energy market, and I had some BIG thoughts about the con of the so called “Green Energy Revolution” being pushed by the Washington elites right now.
In short, I believe those calling for the death of fossil fuels are about to have a rude awakening.
We’re at the dawn of a multiyear bullish trend for oil that very few investors are prepared for.
My colleague Adam O’Dell is one of the rare exceptions.
He’s going live later this month with a prediction about oil that you might find interesting.
To make sure you see it the moment it goes live, click here and put your name down.
Market Edge: Is Inflation Really Trending Lower?
In case you missed it, the November consumer price inflation (CPI) numbers came out on Tuesday, and the news was a little better than expected. Prices were up 7.1% over the last year and 0.1% over the last month.
The consensus view by economists had the figure coming in at 7.3%.
Sounds good, but we really need to put this in context…
7.1% is better than 7.3%. Sure.
But the bigger story is that it appears … at least based on the past few months of data … that inflation really is slowing down. As recently as June, the number topped 9%.
CPI Inflation: All Items
(Click here to view larger image.)
That’s good. We’ll take it!
But it’s too early to really celebrate.
The Fed generally strips out food and energy prices when it gauges inflation. And while it takes a lot of abuse for that, as it sometimes looks like it’s trying to hide “real” inflation numbers, it’s the right move. Food and energy prices tend to swing wildly from month to month due to temporary supply issues, and including them can skew the numbers and obscure the real trends.
And about that…
Stripping out food and energy, there is much less of a defined trend. Core inflation has been bouncing around in a range of 6% to 7% for all of 2022 and isn’t showing much indication that it’s trending lower.
CPI Inflation: Excluding Food and Energy
(Click here to view larger image.)
Fed Chairman Powell has made it abundantly clear that he plans to keep raising rates until he sees real evidence that core inflation is heading back to the Fed’s long-term target of 2% per year.
As I noted yesterday, the Fed is not omnipotent and the tools at its disposal are not particularly effective in fighting all types of inflation.
They’re good at reducing aggregate demand with rate hikes or by selling bonds to push longer-term yields higher. But the Fed can’t snap its fingers and make new workers appear out of the woodwork, fix the supply chain mess that’s still coming out of China or create new production facilities. That’s what the free-market economy is for, and that battleship doesn’t turn on a dime.
Side note: The trend in energy markets throughout 2022 is similarly resilient, and several of our experts believe we’re only at the beginning of a long bull market in oil stocks.
Adam O’Dell is one of them, and he’s set to reveal a prediction about a handful of his favorite names later this month. To make sure you’re notified when he goes live with his prediction, click here.
Chief Editor, The Banyan Edge