Here's Your Next-Pullback "Buy List"

In yesterday’s issue, I discussed some of the undercurrents that could spell trouble for the American economy, U.S. stocks — and the everyday investors who fail to see the big picture or play the long game.

Turns out that our research was pretty prescient.

Later in the day, the Commerce Department said the U.S. economy grew at a better-than-expected 3% for the second quarter — rebounding from the 0.5% decline in the first three months of the year. And when U.S. Federal Reserve policymakers held the line on interest rates, two of those folks dissented, the first time that’s happened since 1993. And the Federal Open Market Committee (FOMC) said uncertainty and inflationary threats remain elevated.

Here’s the great thing: No matter “what happens next,” we’ll be fine. We’ll find a way to profit, prosper and win.

I mean …

• If tariff worries ease, and the American economy continues to march higher, we’ll continue to profit from the stocks that are part of the Farm Team “Watch List,” the Model Portfolio and Special-Situation Portfolio — all special offerings created for our paid SPC Premium subscribers. (Even our free research has handed you folks some market-beating gains.)

• If the U.S. Federal Reserve cuts rates (it did not on Wednesday, but the CME FedWatch tool says there’s still only a 43% chance of a quarter-point cut in September), we’ll ride the reaction in stocks — even as we navigate the inflationary acceleration that’s likely to come, too.

• If the economy stumbles (as it eventually will, be it this year, next year or in 2027), we’ll use the likely pullback in stocks to go shopping for bargains. And then we’ll ride those new buys — along with the stocks we already own — as stocks rebound and surge to eventual higher highs. It doesn’t matter if that rebound takes one year, or two, or more: In the long run, stocks go up — which is why we’re “Next Bull Market Investors.”

Other scenarios are possible, too. Scenarios we can’t conceive of — because they’ll be ignited by “triggers” we don’t yet see.

It doesn’t matter. Wealth Builders are winners. Wealth Killers are losers.

Winners invest. Losers trade.

Winners act. Losers react.

Losers speculate. Winners “Accumulate.”

We buy more of the stocks we already own. And using our “storyline” approach as a macro “screener,” we find the stocks we want to buy next – creating a Wealth Builder Watch List to track them.

In yesterday’s issue, I promised we’d circle back to start an “Action-List/Watch List” for “Meme-Era Recession Stocks.”

I said that Wealth Builders act, while Wealth Killers react.

So let’s start with one “act-now stock” — before moving on to some “watch list” stocks for future pullbacks.

The “Act-Now Stock” You Want to Own

Really smart Wealth Builders look to directly capitalize on Wealth Killer miscues. One of those miscues speculative trading in stocks and options — which retail investors should avoid at all costs.

I call it the “DraftKings Mindset.” And one long-term beneficiary will be CBOE Global Markets $CBOE ( ▼ 0.58% )  inventor of the “Fear Gauge,” known to investment pros as the VIX. Here's the “kicker:” If we get the big volatility spike I just talked about, CBOE will be a short-term beneficiary, too. So why not own CBOE now?

You see, emotions and markets share one strong tendency — they both run in cycles: (fear → panic → calm → complacency). The CBOE “Fear Gauge” — the VIX — spiked to 45 before the historic two-day stock market wipeout of early April.

Now it’s back down to 15, near its 52-week low near 12.

While trouble bubbles on the peripheries, a lot of retail investors are complacent. Indeed, many retail investors are so complacent that they’re again speculating with meme-stocks, penny stocks, high-short-interest plays – and speculative options. Goldman Sachs just issued a warning on this. And if volatility spikes, so will options trading — and so will the VIX. Own CBOE now and profit when this happens —because it (eventually) will. For certain.

Get the full lowdown on CBOE in our report below.

The Strategic Materials Supply Shortfall

This isn’t your father’s commodities market.

A generation ago, commodities were “basic materials” — like coal, silver, gold, nickel, copper and more. Prices were hyper-cyclical, meaning you didn’t invest in commodities — you traded them.

(And if you didn’t trade them right, you got creamed.)

Thanks to the intersecting storylines of Deglobalization, the Commodities Supply Shortfall, the return of inflation and tech innovations for consumers, industries and the world’s militaries, we no longer talk about “basic” materials. We now refer to them as “critical materials,” meaning these are the “raw ingredients” for advanced economies — and we can no longer do without them.

That’s setting the table for a dynamic of growing long-term demand — overlaid with persistent shortages because of the long-lead times involved with new mines, new processing operations and the environmental and regulatory obstacles that bog down such projects.

And it’s Econ 101, folks: When buyers want more of something — and that “more” isn’t available — prices do one thing … they rise. Usually a lot.

I grant you, there will be volatility along the way as prices jitterbug above and below the trend line.

But costs will rise.

One of my new favorite ways to play this is titanium specialist IperionX Ltd. $IPX ( ▼ 4.47% ) . Titanium is crucial to defense, electric vehicles (EVs), medical devices and 3D printing. The Charlotte-based Iperion owns the Titan Project, a Tennessee mine that produces titanium, zircon, high-grade silica and other critical materials. And the company is developing low-carbon, fully recyclable titanium technologies. And its Titanium Production Facility (TPF) at the Virginia Titanium Manufacturing Campus will be key to this. Iperion’s 100% ownership of its reserves gives it control over supply. The stock has already surged from $30 a share to $38 — a 26% jump — since I told you about it in my second-half forecast report back on July 3. It’s high-risk/high-potential — a stock that could jump five or 10 times from here if everything goes well. Put it on your Watch List for a pullback. Or buy some here and look to Accumulate more if the market rolls over.

Then there’s Wheaton Precious Metals $WPM ( ▲ 2.74% ) , a Vancouver-based company that offers a unique way to invest in mining. Founded in 2004 as Silver Wheaton (it changed its name in 2017), it’s a company I’ve followed since I launched my first investment newsletter, Private Briefing, back in 2011. Traditional miners can have big appetites for upfront investment capital. Companies like Wheaton provide that money — which earns them the right to purchase specified amounts of the metals mined at highly discounted rates (maybe 15 cents on the dollar on gold and 17 cents on silver). Wheaton is nicely diversified across operating mines and development projects. And with three decades of “mine life,” you don’t have to worry about security. Silver and gold account for about 97% of the revenue, meaning it’s a play on critical materials and inflation. It can also serve as a great building block for your own precious metals strategy (for more on that, check out our detailed research report).

The “Let’s Make a Deal” King

It’s hard to bet against an investment bank that came out on the “right side” of the subprime mortgage crisis. (And by “right,” I mean “solvent and profitable,” not “pious and just.”)

In other words, Goldman Sachs Group Inc. $GS ( ▲ 0.09% )  avoided the “Boot Hill” burials of Lehman Bros. and Bear Stearns.

Say what you want about Goldman: It’s a winner. That’s one reason I labeled it a classic “Trump Trade” stock — and correctly, too: Goldman shares are up nearly 28% so far this year.

Two of Goldman’s core businesses are wealth management and dealmaking. And many of the storylines we watch here at SPC interconnect with each of those two — though they’re strong narratives all by themselves.

For instance, global assets under management (AUM) will grow from $126.99 trillion in 2023 to $205.6 trillion in 2032, projects Credence Research.

And you can expect dealmaking to accelerate as industries consolidate, new companies go public, and startups and private firms seek financing. Dealmaking is a key element of Goldman’s investment banking business — and would generate lucrative fees.

This could end up being a great “yield-on-cost” play. The payout has increased 400% since 2018: If you bought the shares five years ago, your yield on that original cost would be more than 8%. The firm just announced a 33% increase in the quarterly payout — from $3 a share to $4 a share — starting with the September quarter. That’s the biggest increase among major banks this year, takes the yearly payout from $12 to $16 and reflects Goldman’s terrific second quarter, and a reduced capital buffer following the Fed’s stress tests.

The New Stagflation Wave

Until the 1970s (1973-75/1979-82), economists believed inflation and unemployment were inversely related — meaning stagflation was impossible.

But oil shocks and policy miscues proved them wrong. I lived through it — it wasn’t fun. Inflation is working its way through the economy. A messy housing market, tough earnings comparisons, tariff shocks, job-market challenges, a pricey stock market and an economic cycle that’s grown long in the tooth pose major headwinds.

One company I really like is Costco Wholesale Corp. $COST ( ▼ 0.13% ) , which will win thanks to its membership model and sticky demand. When we last wrote about the company, we warned that the shares seemed rich. Costco shares have since skidded from $1,071 to about $926 — roughly a 14% drop. If Costco gets into the low-$800 range, you’re talking about a 25% correction and I know I’d be very interested. SPC Premium members can check out our share price forecast below.

Let me round this out with a handful of other worthy opportunities — stocks we’ve talked about and that we’d like even more at lower prices.

Stocks to research include chipmaker Broadcom Inc. $AVGO ( ▼ 0.12% )  (which I have talked up repeatedly); private-equity king Blackstone Inc. $BX ( ▼ 0.56% ) , whose alternative assets, private credit and infrastructure investments should do well in low-growth/high-inflation stretches; utility Southern Co. $SO ( ▲ 0.38% ), which has a predictable cash flow and a diversified energy base (including nuclear); Big Pharma leader AbbVie Inc. $ABBV ( ▲ 0.22% ), a company I’ve followed for years; and energy player Williams Cos. $WMB ( ▼ 0.45% ).

There you go, folks.

We’ll you next time;