Blowout earnings last week from Nvidia Corp (NVDA) should have sent shares of NVDA soaring, with other semiconductor chip, tech, and A.I.-related stocks coming along for the ride - but that didn't happen. Instead, NVDA gave back all its overnight gains and is now trading below where it closed prior to releasing its Q2 2023 results.
At this point, the market looks like it's running out of gas and needs a catalyst before it can breakout to new highs.
With inflation still well above the Fed's 2% target, and the Central Bank floating another potential rate hike, we're likely not going to see that catalyst come by way of the Fed lowering rates.
Because of that uncertainty, and the lack of a catalyst on the horizon, it's important to have income in your portfolio to help offset any pullback in stocks.
This week I'm watching Neuberger Berman Next Generation Connectivity Fund Inc (NBXG), a closed-end fund that invests in equity securities issued by U.S. and non-U.S. companies that demonstrate significant growth potential related to the fifth generation (5G) mobile network and future generations of mobile network connectivity and technology.
By this point, everyone has heard about 5G, but I'm not sure everybody really recognizes the profit potential in the 5G space.
Global 5G services market size was valued at USD 60.61 billion in 2022 and is expected to expand at a compound annual growth rate (CAGR) of 59.4% over the next seven years to a massive $2.21 trillion by the end of 2030, according to Grandview Research.
Those are serious numbers and they're going to play into the strength of NBXG's portfolio composition in which information technology and communications represent the top two sectors with weightings of 61.4% and 6.8%, respectively.
Regarding the holdings, 78.3% of the NXBG portfolio is made up of public stocks, 15% of the portfolio is comprised of private/restricted assets, and 19.4% of the portfolio is in overwritten options.
Speaking of the options, NBXG uses a defensive option-income strategy, which brings in income by writing options against its stock portfolio positions. That's where it gets a lot of the income that it can then pass along to shareholders.
As I write this, NXBG is trading at a significant 18.38% discount to its NAV - and it's delivering a very healthy 11.59% yield.
I like that. It means you get to invest in the multi-year 5G trend at a significant discount, and get paid while we hold shares.
One of the reasons why it's so important to have exposure to mobile network infrastructure is because that's one of the industries where demand is poised to skyrocket as A.I. adoption becomes more prominent.
And it's moving faster than anyone realizes. In fact, experts are predicting that in as little as 3 months, the A.I. models we're familiar with could be totally blown away by the next generation of A.I., which is estimated to be thousands of times more powerful.
Expensive tech stocks like Microsoft, Google, and Nvidia will likely benefit, but that's not where the biggest profit potential is. There's a completely different way to invest in tomorrow's A.I., in little-known industries with shares selling for up to 97% less than the big names, but with the same growth potential as A.I. itself.
I've put all the details in this video. This may be your last, best chance to get in before the new A.I. launches, so don't miss it.
The post The Best Income "Safety Stock" to Buy Right Now appeared first on Total Wealth.
About the Author
Shah Gilani boasts a financial pedigree unlike any other. He ran his first hedge fund in 1982 from his seat on the floor of the Chicago Board of Options Exchange. When options on the Standard & Poor's 100 began trading on March 11, 1983, Shah worked in "the pit" as a market maker.
The work he did laid the foundation for what would later become the VIX - to this day one of the most widely used indicators worldwide. After leaving Chicago to run the futures and options division of the British banking giant Lloyd's TSB, Shah moved up to Roosevelt & Cross Inc., an old-line New York boutique firm. There he originated and ran a packaged fixed-income trading desk, and established that company's "listed" and OTC trading desks.
Shah founded a second hedge fund in 1999, which he ran until 2003.
Shah's vast network of contacts includes the biggest players on Wall Street and in international finance. These contacts give him the real story - when others only get what the investment banks want them to see.
Today, as editor of Hyperdrive Portfolio, Shah presents his legion of subscribers with massive profit opportunities that result from paradigm shifts in the way we work, play, and live.
Shah is a frequent guest on CNBC, Forbes, and MarketWatch, and you can catch him every week on Fox Business's Varney & Co.