Happy Sunday to everyone on The Street. 

I want to take the chance again this weekend to direct you to the post I wrote in our Last Cast Letter about Johnny and Matthew Gaudreau. I’ll be at their wake today so this weekend is dedicated to them. If you’re able, please consider donating. We’ll be back with our regular intro next week.

SPONSORED & WRITTEN BY INVESTORS ALLEY

This new income loophole could pay your bills every month

There's a new way to collect huge monthly income in retirement called Big-Tech's secret dividend.

But thanks to a brand new loophole... Tech titans like Apple, Microsoft, and Nvidia can now pay you huge dividend yields up to 12%!

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Shifting Gears

Valvoline Is Slimming Down

Valvoline (VVV) investors think too many people are looking the wrong way.

While many associate the company with physical products, like motor oil or antifreeze, those items are now held by a separate firm.

Valvoline sold off that part of its business last year. The company is now 100% focused on its brick-and-mortar division, which performs vehicle mechanic services.

Executives emphasized that the move should be a win for shareholders, saying its services side offers higher margins than its products arm ever did.

Expanding Reach

Valvoline has been moving quickly to add more locations. The company targets mom-and-pop shops and either buys or franchises the locations to bring the stores into its orbit.

The automotive services company has nearly doubled its total locations since 2017.

The Wall Street Journal recently published a positive piece on the company, touting its same-store sales growth. Valvoline is looking at 18 straight years of increased same-store revenue.

The WSJ believes Valvoline’s sales numbers and its growing number of locations give the stock room to run. Executives at Valvoline say the goal is 3,500 shops, and there are currently roughly 2,000 sites.

Slippery Roads Ahead

Nevertheless, there are still challenges ahead for Valvoline shares.

Building up its total maintenance service centers comes with higher capital expenditures, putting a strain on cash flows.

Additionally, the auto sector remains a competitive space with thousands of independent mechanic shops fighting for consumers' dollars.

In the long term, electric vehicles also pose a threat to Valvoline. The company’s service centers have less to offer car owners who don’t need an oil change.

Those in Valvoline’s camp are pushing these concerns to the side and putting their faith in the company’s ability to continue expanding locations and revenue.

The Tables Are Turning for AI Landlords

Flipping the Script

Tech giants have been a bit of a double-edged sword for data center owners. On one hand, they have a seemingly never-ending need for more space. On the other hand, their size and power give them substantial leverage when it comes to price negotiations.

Now it seems the tables could be turning. Available data center space is drying up and tech companies are beginning to compete, driving up prices.

No Vacancy

According to real estate service company CBRE, data-center vacancy rates in North America hit an all-time low of 2.8% in the first half of 2024. Meanwhile, rents for hyperscale tech tenants jumped 19% over the same period year-over-year, according to datacenterHawk.

As companies like Amazon (AMZN), Microsoft (MSFT), and Meta (META) pour funding into data centers, landlords such as Equinix (EQIX) are positioned to benefit. The data center operator is seeing an influx of demand from tech titans and small corporate and government customers alike.

The Need for More Space

Equinix recently lifted its profit guidance after a 17% jump in its adjusted EBITDA. The stock is essentially flat this year and up about 5% over the past twelve months. Analysts have given it an average price target of $914.22, and an average rating of overweight. For context, shares closed at $817.96 this past Friday.

As companies race to develop AI, they need massive amounts of space to house all of that computing power. There’s only so much of it to go around, and it seems that the tides might have turned in favor of the landlords, which is good news for Equinix and stocks like it.

Batteries: But for Big Rigs

Commercial Charging

According to Bernstein, battery demand for commercial vehicles has been rising lately. This is largely due to a drop in battery prices.

Analysts believe that demand for these types of batteries could match today’s EV levels by early next decade, jumping 70%. While that would still only represent 5% of the entire battery market, demand for commercial batteries is already outpacing EV battery demand.

This type of demand is what we look for in this newsletter.

China, with its efforts to electrify light-duty commercial vehicles, has been a major driving force. Bernstein has identified three stocks it thinks will have a 50% (or more) upside as a result.

CATL

The first pick is the Chinese battery maker Contemporary Amperex Technology (SHE: 300750). CATL currently commands around 65% of the commercial battery industry and has beaten out all of its competition so far this year.

Analysts are giving it an overweight rating with around 72% upside. Investors can access the stock through the Shenzhen Stock Exchange, the Amplify Lithium & Battery Technology ETF (BATT), and the KraneShares MSCI China Clean Technology Index ETF (KGRN).

Samsung & LG

Bernstein analysts also hold overweight ratings on Samsung SDI (SSDIY) and LG Chem (LGCLF). Analysts have given the stocks upsides of 52.2% and 64.4%, respectively.

Both stocks trade on the Korea Exchange and can be accessed by American investors via ADRs.

The world, and especially China, is going to great lengths to electrify its commercial vehicle fleets. Demand is up and prices are down, which could bode well for these stocks.

SPONSORED & WRITTEN BY INVESTORS ALLEY

This new income loophole could pay your bills every month

There's a new way to collect huge monthly income in retirement called Big-Tech's secret dividend. But thanks to a brand new loophole... Tech titans like Apple, Microsoft, and Nvidia can now pay you huge dividend yields up to 12%! It's the best income opportunity I've ever seen, and yet NOBODY seems to know about it. That changes today with my brand new special report.

Grab your FREE copy here.

August 18th Poll Results

Which stock will perform best in 2025?

🟩🟩🟩🟩🟩🟩 Eli Lilly (LLY)

🟨🟨🟨⬜️⬜️⬜️ Novo Nordisk (NVO)

Which stock do you think will outperform over the next 12 months?

🟩🟩🟩🟩🟩🟩 Apple (AAPL)

🟨🟨🟨⬜️⬜️⬜️ Netflix (NFLX)

🟨🟨⬜️⬜️⬜️⬜️ Uber (UBER)

Are you bullish or bearish on Intel (INTC) over the next 12 months?

🟩🟩🟩🟩🟩🟩 Bullish 🐂 

🟨🟨🟨⬜️⬜️⬜️ Bearish 🐻