As Some Stocks' Rise Appears a Virtual Reality, This One Has a 'Special Purpose'

Love it or hate it, Tesla has detached from reality. There's no doubt the company is an innovator, and the CEO has learned how to manipulate and infuriate shorts while wearing a coat of Teflon. But this is really par for the course right now in this market. WiMi Hologram Cloud , a company 99.99% of traders and investors never heard of before late last week has gone from $4 to $25 because Alibaba star Jack Ma gave a holographic presentation. But this is an ad company, much like Nextech AR Solution . It's not as if Nextech has been forgotten either as the stock has soared 383% in the past month and moved higher by 61% over the past three days. Kopin should be where some turn next, but this wearable play that's focused on OLED microdisplays is different from WIMI or NEXCF. In reality, it is the company's military products that have kept it afloat and act as the revenue driver. This isn't a knock on Kopin, but more about knowing what you are trading or buying. I had a buy-and-hold on this forever, but I'm cutting my position on the big move Monday, as I don't think it is fundamentally based, but rather just chasers. Vuzix is another name in the space, but again, this is about wearables, which has not been able to catch on in the retail market. While Kopin is in the military space, VUZI is working with Verizon on a product for first responders and emergency services, while also working in the defense space though contractors. Again, this doesn't make it bad, but it's not WIMI. And the one thing WIMI has that neither KOPN nor VUZI has it an absolutely tiny float. That changes the upside potential even on momentum chasers. Ironically, WIMI isn't even what the Wimi people want to it to be. Traders have created a romanticized version of story lines. We're seeing the same thing in the special purpose acquisition companies as well. Spartan Energy ran hard into the anticipated buy of electric vehicle car builder, Fisker. Now that the news is official, the stock is up 8.4%. Yes, it was higher, but the bulk of the short-term gains came in the anticipatory run-up of shares. Churchill Capital Corp III announced a merger agreement with MultiPlan. MultiPlan is a picture of consistency in the health care payment processing space. The company has been growing at a compounded 8% per year for almost 15 years with a consistent earnings before interest, taxes, depreciation and amortization compound annual growth rate of around 13%. Valuation at $11 billion isn't unattractive, and from a buy-and-hold standpoint, this deal made sense. But bidders pushed this stock to the $13.50 level at the open, right in the range of my targeted $13.50 to $14 opening range as discussed on Twitter Sunday. The buying came in that this SPAC would be like every other and skyrocket. It made no sense. This isn't the sexy deal we've been seeing in the market. Instead, we get a logical one with a fair valuation. It's no surprise the stock has sold down, but shares are now up only 3.4% on the day at $11.16. If you are looking for exposure in the health care space, CCXX shapes up as a great buy and hold at these levels. I put the downside around $10.50 if the bearish momentum and trapped early day buyers along with dip buyers continue to stop losses, but at these levels, the risk-reward is favorable. At $13.50, the market priced the deal with too much risk for the reward, but with the stock close to $11, the picture has shifted with upside that should be about twice the downside. Action to take: Buy shares of CCXX up to $11.50

As Some Stocks' Rise Appears a Virtual Reality, This One Has a 'Special Purpose'

Let's review some names like TSLA, WIMI and NEXCF, and then eye a play for special purpose acquisition company Churchill Capital Corp III.

Columnist Conversation

Latest AAP Podcast With Portillo's CEO!

This Weekend on Real Money

Webinar Thursday After the Close: Option Spread Trading

COLUMNIST TWEETS

Please Join or Log In to manage and receive alerts.