This past year (and then some) has been a whirlwind of emotion for investors. We’ve gone from melt-up to an everything bubble to a crash to a recovery to inflation to short squeezes to tech crashes… only to arrive in what looks like a second melt-up.
Well today’s chief absurdity, brought to you by the “everything bubble,” centers around — and I honestly can’t believe I’m writing about this — joke cryptocurrency Dogecoin.
Before I get into the thick of this article, let me start by saying this…
For the love of all that is holy — no matter what the internet tells you — do not buy it.
Well, to pump Doge to the moon of course!
To probably no one’s surprise, the DogePump died a death, and the crypto-meme is down roughly 13.3% on the day.
But I have to give credit where credit is due.
In the process of this ridiculous 9,700% run — yes, you read that right — Dogecoin’s market cap went from around $500 million to a completely stupid $50 billion, making it the fifth-largest cryptocurrency.
To give you an idea of how significant that is…
At the beginning of the year, Dogecoin was already worth more than 25% of all U.S. stocks.
But adding a couple of zeroes to that valuation pegs this meme-driven cryptocurrency as worth more than all but 200 U.S. companies.
That’s more than Ford, Marriott, Dow Chemical, Kimberly-Clark, Chipotle, or eBay.
That’s more than Clorox and Cathie Wood’s Ark Innovation ETF combined.
While that valuation is hardly a joke, the nature of the Dogecoin “market” sort of is.
First off, unlike Bitcoin or Ethereum, the supply of Dogecoin is unlimited, and it is comparatively easy to mine.
As such, anyone who already has the (incredibly expensive) mining equipment is already likely participating.
However, we know from past peaks that once the joke wears off, the trading volume dies down… And the price goes with it.
So if we were forced to take sides in the epic Battle of 4/20 — pitting the scrappy Dogecoin Detachment against the mighty Cannabis Combat Command — it behooves us to take our cues from the Technoking of cannabis culture himself.
We got some fantastic economic data last week.
Specifically, month-on-month retail sales posted blowout numbers, up 9.8% on the month versus 5.8% expected.
To put that move in context, it’s the second highest increase in history.
Despite that news, a few of the retail companies we have been following have pulled back into a range where they look really attractive.
One of them is Jay-Z affiliated California Cannabis Kings TPCO Holding Corp. (OTC: GRAMF).
There is a marked lack of financial analyst coverage on the cannabis space, and GRAMF has fallen victim to being out of the media spotlight for some time.
We know that’s going to change at some point, as New York State just legalized recreational cannabis, and TPCO/GRAMF plan to capitalize on Jay-Z’s brand-building prowess to dominate those markets.
We’re covering this one for the long haul, and a 31% discount off the SPAC price, plus a market cap ($635M) nearly equivalent to the amount of cash on hand ($582.6M) is just too good of an opportunity not to pick up a quarter-tranche here.
Smoke if you got ‘em.
The other retail-related stock we want to flag is Spirit Airlines Inc. (NYSE: SAVE) — down 5% on United Airlines’ worse-than-expected quarter and the State Department announcement urging U.S. citizens to refrain from international air travel.
We get it — COVID-19 is running rampant through a handful of countries.
But international travel only represents about 11-12% of its overall revenue under normal conditions, so we don’t see that as a headwind at all. Domestic flights are going to increase this year — period, stop.
I think it goes up from here, but I would be comfortable with setting two limit orders for a quarter-tranche apiece around $33.50 and $31.50 per share.
If they get filled, great.If not, no big deal.
This is a longer-term play on reopening, and there’s no reason to sweat the short-term profit taking of a handful of hedge funds.
Although TSA throughput has stalled just a little, we fully expect to get back to around 75-80% of pre-pandemic levels by mid-summer.
There are tons of people out there ready to fly the friendly skies again… your humble narrator chief among them.
All the best,