Companies are on sale right now! In this episode I dive into why I made these these picks, and how you can, too. (You may recognize some of the names).
My book, “Building Indestructible Wealth: The Six Figure Earners Guide to a Multimillion Dollar Portfolio,” launches today! Get your print and audiobook copies and a few other timely insights into what to invest in right now at this link: https://bit.ly/3xjGFQ7
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About Indestructible Wealth: I’m Jack Gibson. I’m your wealth strategist and I’m here to help you make some money. The Indestructible Wealth Podcast is for young entrepreneurs who want to make, keep and grow wealth to enjoy now, and for years to come.
Episode #82 – Invest in Companies You Love! Three of my BEST Picks
Podcast Episode Transcripts:
Disclaimer: Transcripts were generated automatically and may contain inaccuracies and errors.
There are 2 rules if you follow you will see some extraordinary wealth over your lifetime.
Live on much less than you earn
Invest the difference into assets you understand, and hold them for a long time
There are 3 companies that I KNOW you love, that due to the recent market pullback is giving us an opportunity to invest in them at safe valuations, meaning the companies stocks are not overpriced, but actually at a discount to what they traditionally trade at.
For one company, I’ve been to their theme parks many times. I’ve watched their movies, probably hundreds of times. I watch their shows on their relatively new streaming app.
For another, my kids play their gaming system pretty much every day. I wear their headphones every day to the gym. They are definitely higher quality, better than Beats, and it’s not even close.
For the third, I’ve been wearing their gear, and their shoes since I was six. I didn’t even realize I was wearing their logo on the shirt I had on. This morning, my son who rarely complements me for anything, said “Dad, I love this shirt you have on. It’s so cool.” Their basketball star endorsements are two of the greatest of all time. Gosh, even my Pastor wears their signature shoes up on the Church podium, and then again on the golf course.
I guarantee that you have purchased products from all 3 of these companies, you understand what they produce and what the brand represents. I’d be surprised if you didn’t like any of these 3 companies. I’d be surprised if you didn’t love them, like our family.
On a show like this, I want to help you make safe, smart bets with the bulk of your portfolio. I want to help you invest into things you understand.
These will be 3 companies that you will be a proud owner of, that you know will have long term potential. But now, they are about to unlock a treasure trove of digital assets that could send their stocks soaring over the next 3-5 years. Even if these don’t pan out, you are still buying companies that are under valued and will rise regardless.
NFTs Will Turn Blue-Chip Companies Into Growth Engines
Companies are realizing NFTs will allow them to unlock billions of dollars’ worth of IP sitting on their balance sheets.
So they’re diving into the NFT space as aggressively as they did in the early days of the internet.Yet most investors don’t recognize how transformative this will be over the next several years.
As a simple example, just consider a firm with many digital images that can be turned into NFTs. This could be anything from comic book art and magazine covers to famous photographs and movie posters.
The value of those digital assets is not currently sitting on the company’s balance sheet. They are intangible items that are part of a firm’s intellectual property. And each of those images can now be monetized in a very specific new way through the NFT process. So unlocking these assets will be wildly profitable for companies that own treasure troves of them.
To better understand just how much money the process can generate, I learned that creating NFTs can carry profit margins anywhere from 90% to 99%. In addition, the digital smart contracts can also generate royalties worth 10% of all future sales of the same NFTs.
In essence, NFTs represent a new way for companies to unlock real value from intangible assets – immediately and at very little cost. Then, these newly created NFTs can continue generating perpetual revenue streams going forward as well.
This is actually much better than finding a company with undervalued real estate or some other tangible asset sitting on its books. The company doesn’t have to disrupt its core businesses or spin off units to unlock this value…
It doesn’t have to sell a flagship building or other important physical asset…And it can keep earning more money through royalties even after the initial value is unlocked.
Once investors fully grasp the potential, there is no doubt they will start factoring this into their assessments of these large publicly traded companies.
So we want to make sure you get ahead of the trend right now, while all of this extra value still remains hidden.
To identify the best candidates, we started with a list of terrific companies with large brand portfolios that could easily be turned into NFTs.
And to make sure that value had a high chance of getting unlocked, we only considered firms that were already testing the NFT waters with actual offerings. Then, we made some very conservative assumptions to understand each company’s short-term NFT profit potential.
We started by looking at each company’s total brand value as measured by global consulting firm Interbrand… and assumed some part of that value could get unlocked through the NFT process over the next three years.
And given the extremely low costs involved with creating these NFTs, it’s safe to say that almost all that money would flow straight to each firm’s bottom line.
That alone implied big upside for our favorite picks.
Of course, we also know that NFTs often sell for big premiums over their physical counterparts.
For example, Mattel signed a partnership with WAX Blockchain to launch NFTs of its Hot Wheels Garage brand last October.
It minted 40 types of NFT Hot Wheels cars and sold them at a starting price of $15… even though a regular Hot Wheels car generally sells for $1 in stores.
That means Mattel got 15 times the revenue and didn’t even have to spend any money manufacturing the cars. It will also make an additional 8% on secondary market sales of the NFTs.
To help account for this dynamic, we assigned a very conservative 3x multiple to the earnings potential of each company’s NFTs.
Each one is a solid long-term holding even without the hidden NFT potential. But as you’ll see, that potential could send each of them up very sharply over the next several years, even though they are all big, “boring” companies.
That’s the beauty of discovering hidden assets before the rest of the world – you end up buying relatively safe investments with the kind of upside usually reserved for much riskier plays.
So without further ado, let’s look at each of these recommendations in greater detail…
NFT Play No. 1: Disney (DIS)
In addition to its theme parks, Disney (DIS) operates a wide range of media companies, including ESPN, Marvel, Pixar, Lucasfilm, ABC Television, and 20th Century Fox.
According to Interbrand, that gives Disney the 10th-most valuable brand portfolio in the world – worth an estimated $44.2 billion.
And the company has continued to steadily monetize those brands through a wide range of activities – including movies, television shows, comic books, and merchandising.
But the real growth engine will be technological innovation, which is one of the three major initiatives under new CEO.
Disney’s Hidden NFT Potential
Disney has already begun selling NFTs through a partnership with Veve, a digital collectibles company. Many of these NFTs relate to the company’s marquee characters across the Disney, Marvel, Pixar, and Star Wars brands.
Just to give you some real-world examples:
An NFT of Jafar, the villain in Aladdin, dropped for $20. It’s now being resold for around $60. That’s a nearly 300% increase.
A Donald Duck NFT is on sale for $169.
A “golden” image of the “Partners” statue of Walt Disney with Mickey Mouse dropped for $333. Its floor price is currently $11,000. That’s a 3,203% increase.
While these are just a small sample of Disney’s NFT offerings, it’s important to understand that it doesn’t cost much to make them. Disney can churn out as many NFTs as it wants. And it has a gold mine of intellectual property it can mint.
In addition to its traditional Disney characters, the company also owns multibillion-dollar franchises like Star Wars, Marvel, the Simpsons, and Family Guy. You can begin to see the potential here.
With the wealth of IP it owns, it’s no surprise Disney is actively hiring for a digital experiences team to lead its NFT efforts.
Disney was also awarded a patent for technology capable of tracking mobile devices and creating personalized 3D overlays on walls, spaces, and objects. It will be part of Disney’s metaverse plan, and it can clearly be used as a way to bring more digital interaction into their physical theme parks.
[The metaverse is the name given to a virtual world where people can interact with one another in the form of digital avatars. It will be an immersive experience in which we interact with the internet and each other in sensory-rich environments delivered to us via cutting-edge devices.]
While NFTs aren’t explicitly mentioned in the patent, there’s no doubt they can be integrated into the park-going experience.
It’s easy to imagine the day when customers will purchase NFT tickets to a physical theme park… experience a blend of real-world and digital content during their visit… and also make related purchases across both of those layers as well.
Add it all up… and the future profit potential is absolutely massive.
What It’s Worth
Based on Disney’s recent performance, the stock has historically traded at an average price-to-earnings (P/E) multiple of 29.06.
[The P/E ratio represents what an investor is willing to pay for $1 of a company’s earnings. For example, at a P/E ratio of 20, an investor is saying they’re willing to pay $20 for $1 of its earnings. It’s calculated by taking a company’s share price and dividing it by its earnings per share.]
Looking ahead, Just based on its fundamentals and its average P/E multiple of 29.06, we believe Disney’s stock could rise approximately 135.8% over the next three years… without any substantial NFT income at all.
However, Disney’s brand value could reach $56 billion by 2025. That’s based on it continuing to grow at the same annual pace of 6% as it has over the past 10 years. If Disney can monetize just one-tenth of that brand value as NFTs, while also earning our conservative 3x multiple on top of that brand value, it could add an extra $16.8 billion to its net income by 2025 – almost doubling it.
Applying the same 29.06 multiple to the additional net income brings us to our price target of $542.70. This would imply a 367.1% gain from today’s stock price.
What’s more, if Disney is able to unlock more of its brand value through NFTs and/or earn better-than-expected returns from the process, its stock could soar much higher.
Remember, Disney’s total brand value is estimated at $44.2 billion. That’s a huge treasure trove of digital assets waiting to be unlocked.
Disney is a giant company, so it’s easy for Wall Street to overlook its hidden gold mine of digital assets. Fortunately, we can take advantage of this oversight and position ourselves before the market awakens to this hidden opportunity.
Action to Take: Buy Disney (DIS)
Buy-up-to Price: $141.66 per share
As an entertainment conglomerate, Sony (SONY) has businesses throughout the consumer electronics, entertainment, and telecommunications industries.
Its gaming division is its largest, mainly consisting of the PlayStation brand. But Sony also runs Columbia Pictures, which has developed franchises such as Spider-Man, Men in Black, and James Bond.
Plus, it owns CBS Record Group, which has music catalogs from artists such as Michael Jackson, Beyonce, and boy band BTS.
All things considered, Sony’s total brand value is estimated at $14.5 billion, which ranks it 41st in the world per Interbrand. That creates a lot of runway for digital projects that could unlock new profit streams.
Sony’s Hidden NFT Potential
As an early step into the digital world, Sony Music Entertainment and Universal Music have partnered with Snowcrash to release NFTs for legendary artists Bob Dylan and Miles Davis. (Each company owns segments of those artists’ musical libraries.)
Snowcrash is an NFT platform on the Solana blockchain. It specializes in digitizing the intellectual property of musical artists, brands, and gaming companies.
Now, Sony plans to go further with Snowcrash to “develop a range of opportunities for our recording artists with a focus on delivering accessible, user-friendly experiences for both creators and fans.”
Meanwhile, Sony Pictures recently partnered with AMC to offer 86,000 NFTs to members of its AMC membership programs. They were given to people who ordered advance tickets for the opening of the latest Spider-Man movie.
According to AMC’s CEO, it led to the company selling more tickets in a single night than ever before.
And these types of deals just scratch the surface.
Remember, Sony’s total brand value is estimated at $14.5 billion. So there’s a lot of hidden IP for it to monetize.
Just like Disney, the longer-term value here could be huge – especially when you consider the NFT potential related to the company’s gaming platform and music catalog.
What It’s Worth
That would equate to net income of more than $16.4 billion. Assuming the same number of shares outstanding and the P/E ratio mentioned above, we end up with a price target of $291.56 a share – 235.5% above today’s levels.
And as with Disney, these numbers could prove very conservative based on a number of factors… including how much brand value Sony can turn into NFTs and whether it continues to buy back shares over the next several years.
Sony has one of the largest multimedia catalogs in the world, including multibillion-dollar movies franchises… chart-topping musicians… and one of the best-selling video game consoles of all time.
It’s a no-brainer that the company will convert some of its digital assets into NFTs. That’s billions of dollars’ worth of content that Wall Street hasn’t accounted for.
By the time it wakes up, we’ll already be positioned for triple-digit gains in a safe, conservative blue-chip company. Don’t miss this opportunity.
Action to Take: Buy Sony (SONY)
Buy-up-to Price: $106.93 per share
According to Interbrand, Nike (NKE) ranks 11th in the world among global brand portfolios – with a total value of $42.5 billion.
Much of that is related to the company’s sneakers – everything from running shoes to the Air Jordan basketball brand.
Nike was growing consistently before the pandemic hit, with revenues rising an average of 7% for a full decade. Then, after a slight dip in 2020, the company had an extremely successful year in 2021.
This means Nike is once again more reliant on its equity to finance its business, rather than debt, which will help boost profits down the road.
Meanwhile, Nike has been trying to shift sales into the digital realm through its Nike and SNKRS app.
E-commerce sales now represent about 21% of Nike’s revenue. Increasing online sales has been a goal of CEO John Donahoe for several years. What’s more, online sales continue to grow rapidly – doubling since 2019. And almost half of those sales came through a mobile app.
All of this sets the stage for Nike to start capitalizing on the NFT trend in a major way.
Nike’s Hidden NFT Potential
Nike recently acquired Rtfkt, an NFT creator of digital sneakers and other collectibles, for an undisclosed sum. (Rtfkt was valued at $33 million after a funding round last May.)
Nike then moved to create a new business division called Nike Virtual Studios. It’s part of the company’s brilliant strategy to create a business solely on virtual products. The virtual goods market is expected to grow at a 22.3% growth rate over the next three years, reaching a potential valuation of $189 billion by 2025.
It has also filed seven trademark applications for the use of Nike and Jordan branding on digital goods, including headwear, eyewear, bags, backpacks, and sports equipment.
Players can wear the NFT versions of these items in video games such as Fortnite and Roblox. Nike already has a big presence on Roblox, with its merchandise up for sale there.
Nike’s virtual sneakers often sell for more than real ones…
Nike just launched its Nike Dunk Genesis CryptoKicks, a collection of 20,000 NFTs. Buyers have been shelling out between 1.5 and 3 ETH tokens for the shoes ($4,500 to $9,000). One pair sold for about $130,000. Here’s a photo of them:
This gives you an idea of how much future value Nike might unlock from its brands.
What It’s Worth
Nike is expected to record revenue of $61.7 billion by 2025, which would amount to almost $8 billion in net income.
That alone suggests a 112.3% in upside for the stock over the same timeframe, again with no NFT business factored in, and assuming the share count remains the same and factoring in its average P/E multiple of 41.06.
However, the company should also have grown its brand value from $42.5 billion to $47.3 billion by then, based on projections from Interbrand.
And given the fact that nearly a quarter of Nike’s business is already digital and growing rapidly… coupled with how aggressively Nike is pursuing NFTs… it’s easy to forecast the company will be able to convert more of its future brand value into NFT sales than Disney or Sony – we arrive at a $1,424.37 price target on Nike.
That suggests a 1,074% gain from today’s stock price… a number that could still be too conservative based on the type of value Nike is already unlocking from some of its early NFTs.
Nike became a multibillion-dollar global brand by partnering with legendary athletes such as Michael Jordan, Tiger Woods, and LeBron James. Its next great leap will be monetizing those icons and its world-famous Swoosh logo through NFT products.
Wall Street is sleeping on this giant. As the world enters the metaverse, Nike is positioned to profit handsomely. So act now. This opportunity won’t stay hidden much longer.
Action to Take: Buy Nike (NKE)
Buy-up-to Price: $149.41 per share