​Trade Ideas: Oil, AT&T, LightPath Technologies

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There are three areas that we have generally been optimistic about or are interested in during the expected declines and/or doldrums this Summer: Oil, telecom (AT&T), the optical sector (LightPath Technologies), writes Gene Inger over the weekend in IngerLetter.com.

I have emphasized Oil (more so Oil itself than Oil stocks), but given gains as forecast that sector generally becomes a Hold more than a Buy now. I was bullish every time it dropped into the 40s. This is precisely opposite most of the commodity-crowd, who tended to talk it lower or dismiss the future due to changing power evolution, to which I said nonsense for now.

I did have a projected cap of the rally from the 40s/50s (per bbl. of WTI). I lifted that ahead of a potential conflict-related spike higher (with the realization if it were to suddenly thrust up we might be a seller).

Another area favored looking forward is selected telecom.

You know our assessment of AT&T (T) as more than a relatively safe holding (with the dividend being important to many). We’ve liked it in the low 30s while at 40 it was not seen as a Buy.

So now if the market tanks and it erodes to a lower level, that’s going to be a relatively safe (primarily domestic) investment again (new or to add as we have said in the past).

What’s of interest are the new government related security contracts that don’t seem considered by analysts, as well as the prospect of being the front-runner to establish a solid USA 5G foothold in the coming year.

Unlike Verizon (VZ) and T-Mobile (TMUS) they are better-able to put a combined super-fast internet, wireless, and DirecTV bundle together.

It will increasing be appealing as (or where) AT&T offers gigabit fiber, and as a transformative in the cloud version of DirecTV Now launched in the months just ahead. It will combine satellite with high-speed broadband.

So, sure, there are competitors, but AT&T doesn’t carry the multiple they do, which leaves room for a P/E expansion-based gain later this year and next, especially if T commands a multiple recognizing business changes.

Finally, we remain bullish on the optical sector, with a focus on LightPath Technologies (LPTH). It continues to shuffle along around the 2 area and might not be exciting until the sector and autonomous driving improvements are better recognized as forthcoming (not to mention their role if 5G as well).

In this case, with no particular debt challenges, insiders who buy not sell; and relationships seemingly-developing with companies like Luminar. (It’s not public but associated in unspecified ways, but probably LIDAR as the heart) and virtually all major commercial and military sensor customers.

I just see it as under the radar, but attracting gradually-rising institutional interest as well.

They probably prefer it’s not in-play until accumulation is greater over time. Many of the companies considered as optical stocks, are actually customers of LightPath for gradient glass, and both optical and infrared sensors.

Markets do not yet appreciate the impact sensors will have in automotive in the years ahead, nor the transformative nature of the automobile industry itself.

Besides going to a subscription basis we're expecting familiarity with vehicles will become less significant from what everyone has focused on: autonomous driving. I note that Mercedes plans that too, not just General Motors (GM) or Ford (F).

I suspect acceptance of future automobiles as technology platforms (not so much cars) is the evolving aspect. For now they worry about actual impact with tragic accidents, rather than aside from autonomous driving itself, focusing on where the industry is aiming with sensors, electronics, and safety gains, regardless who is the driver.

As to LightPath’s guidance last time, they estimated it would take maybe a quarter or two until new orders should become more evident, and for which LPTH has expanded facilities to be prepared to meet.

We see it as a short-term boring Hold for long-term gains of significance as I have consistently viewed it as an investment not a trading stock.

One day if it moves over 5, that’s when I’ll suspect we’ll see more excitement.

That may seem ridiculous. LightPath can move rapidly if there is a favorable report or news cycle, plus many funds simply won’t buy stocks under 5. So oddly they’ll likely pay more later. That's why I once said it probably will be easier to see it advance from 5 to 10; than from 2 to 5. We’ll see.

As for stocks we liked at a fraction of current prices, like Facebook (FB) or for sure Apple (AAPL) or somewhat lower, like Intel (INTC), IBM (IBM) or Exxon/Mobil (XOM) or even for an ongoing view of bitcoin (BTCUSD) for which I called a bubble to crash from 20,000 and a basing pattern in the 6,000s).

Gene Inger is editor of IngerLetter.com.

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Symbol Name Price Change % Volume
LPTH LightPath Technologies Inc. 1.75 -0.05 -2.78 106,210 Trade
TMUS T-Mobile US Inc. 67.62 -0.76 -1.11 3,013,958 Trade
VZ Verizon Communications Inc. 53.60 -0.13 -0.24 13,022,030 Trade
T AT&T Inc. 32.36 0.11 0.34 33,242,654 Trade


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