News

Dump These Overblown Tech Stocks Before it’s Too Late

February 15, 2023

Tech stocks have come roaring back to start 2023. But after the stunning rebound, some tech names have little room to run. In addition to industry-specific concerns, the technology sector faces headwinds from rising interest rates and a central bank that hasn’t finished its fight against inflation. As such, now seems like a good time to lock in gains on certain tech stocks that have rallied sharply to start the year. In particular, these three tech stocks look vulnerable and may see severe downside in the coming weeks.

SoFi Technologies (SOFI)

SOFI has stacked on 50% in 2023, but the rebound may be fleeting. Shares have already started to fall back toward pre-earnings price levels. In the months ahead, if current economic challenges worsen or if further challenges arise regarding student loans, the impact on revenue could place additional pressure on the stock.

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Uber Technologies (UBER)

Uber shares surged higher immediately following its Feb. 8 earnings call. The ride-share giant reported strong numbers, and management provided an upbeat outlook for the current quarter. However, the stock has already given back some of those gains amid recession concerns. UBER’s current valuation may be overly optimistic about subsequent quarterly results. Another big run may not be in store for the ticker anytime soon.

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Bigbear.ai Holdings (BBAI)

In 2023, BBAI stock is up a startling 645%, with shares advancing from penny stock territory to more than $5/share today. But the current hype cycle around consumer AI products isn’t likely to move the needle for Bigbear.Ai’s business, considering that it’s far from a consumer-facing product like ChatGPT. The company has historically struggled to reach profitability from its operations, and the stock’s recent run seems dramatically overblown.

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Three Stocks to Watch for the Week of February 13th

Editorial Staff

February 11, 2023

The market rally this year has been impressive. However, last week uncertainty and volatility returned to markets. The S&P 500 was down 1.1% on the week, its worst week of the year thus far. The Nasdaq posted a steeper decline of 2.4%, while the Dow slipped about 0.1%. Markets seem to be approaching somewhat of a crossroads: Does the rally continue unabated, or does volatility build?

The latest inflation reports will be in the spotlight this week. A Consumer Price Index report scheduled for release on Tuesday will show whether the recent moderation in inflation extended into January. In December, inflation rose at an annual rate of 6.5%, marking the smallest year-over-year increase since October 2021. Earnings season will continue to wind down with reports from The Coca-Cola Company, Airbnb, DoorDash, Marriott International, Cisco Systems, and Paramount Global, among others.

Gold prices have ripped higher over the past few months, and experts expect momentum to continue amid heightened recession concerns. It may be a bumpy year, but the overall outlook for gold in 2023 is positive. Investors looking to expand their precious metals position would do well to include operations with smaller market caps for their growth potential and as portfolio diversifiers. Our first recommendation for the week is low-priced gold stocks that seem well-positioned for the next leg up.

Centerra Gold Inc. (CGAU)

Centerra Gold Inc. operates, explores, develops, and acquires gold and copper properties in British Columbia, Canada, and Turkey. As of Dec. 31, 2021, the company had roughly 4.9 million ounces of gold reserves. Centerra said it produced almost 244,000 ounces of gold in 2022. CGAU has a trailing twelve-month P/E ratio of just 5.6.

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Value will likely continue to outperform growth in the near term as the Fed continues down its rate-hiking path. Today’s featured stock is a discerning selection from the materials sector that boasts an outstanding track record and seems significantly undervalued compared to peers.

CF Industries Holdings, Inc. (CF)

CF Industries is a major distributor of North American nitrogen fertilizer products. Disruption in fertilizer supplies caused by the war in Ukraine has sent fertilizer prices soaring to record highs. CF is generating plenty of cash flow to achieve a net cash position, buy back an estimated $1.5 billion in stock in 2023, explore targeted acquisitions, and invest in clean nitrogen projects. CF is a good value at 5.2 times earnings compared to the US Chemicals industry average of 14.5 times earnings. With its low 9.1% payout ratio, CF’s 1.9% dividend is reliable and thoroughly covered by earnings.

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Pure Storage (PSTG)

Software stocks were among the market’s biggest losers in 2022 amid drastic shifts in Fed policy. But amid signs of cooling inflation over the past few months, the pace of interest rate hikes has slowed. With inflation collapsing, it seems likely that interest rates will continue falling through 2023. If they do, then it could be up, up, and away for certain software stocks, such as our next recommendation.

The next-generation data storage market is predicted to grow by 8.5% to $81 billion by 2025. All-flash data storage hardware and software products developer Pure Storage has upward solid top and bottom-line results, a healthy balance sheet, and growing cash flow. PSTG investors benefit from its subscription-based model, which is now at over $1 billion in annual recurring revenue. With a growing customer base in a market with substantial long-term growth potential, investors may want to take a bullish stance on this company.

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Three Stocks to Avoid or Sell Next Week

Editorial Staff

February 11, 2023

Seeking out great stocks to buy is important, but identifying quality investments is only half the battle. Many would say it’s even more essential for investors to know which stocks to steer clear of. A losing stock can eat away at your precious long-term returns. So, determining which stocks to trim or eliminate is essential for proper portfolio maintenance.

Even the best gardens need pruning. Here we’ll cover three stocks that seem like prime candidates for selling or avoiding next week.

Black Hills Corporation (BKH)

Natural gas producer Black Hills Corporation reset its growth outlook lower after reporting disappointing Q4 results, slashing its 2023 EPS view to $3.65-$3.85 from $4.00-$4.20. The revision was driven by a rapid shift in macroeconomic factors, including elevated natural gas price volatility and higher natural gas demand driven by winter storm Elliot in December 2022. With elevated natural gas price volatility, higher interest rates, and general inflationary pressures forecasted through 2024, Black Hills is only expected to grow earnings by 2% in 2024 and 4% in 2025.

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Funko Inc. (FNKO)

This week pop culture consumer products company Funko, Inc. announced a set of leadership changes that include a C-suite management shakeup, a COO role creation, and the introduction of an execution consultant following several missteps over the last two quarters. The changeover in management could take several quarters to reset and could present challenges in building investor confidence. FNKO shares currently trade at a premium to its historical averages and near the high end of its relative valuation range versus the S&P 500. The stock’s rich valuation seems unwarranted, considering the high degree of execution risk.

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Carvana (CVNA)

Used car prices skyrocketed coming out of the pandemic. However, it looks like the used car market is entering a correction, with some analysts calling for an impending collapse. The Manheim Used Vehicle Value Index showed that used car prices sank 14.9% year-over-year in December 2022, the largest annualized price decline in the 26-year history of that index.

Due to the steep decline in used car prices, Carvana stock has lost 95% of its value over the last 12 months. The company’s profit per vehicle was lower by 25% in 2022. Meanwhile, its total debt stands at $9.25 billion, with only $650 million of cash on hand. There have also been confirmed media reports that the company’s creditors have signed an agreement on handling negotiations with Carvana if it goes bankrupt. That’s not a good sign.

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Three High-Yielding Dividend Stocks for Steady Profits This Year

Editorial Staff

February 10, 2023

Amid unrelenting inflation and a strong potential for a recession, volatility is widely expected to continue in 2023. A logical move in times like these is dividend stocks, which pay you just to hold them. Dividend-paying companies regularly reward investors directly with a portion of the cash flow. The most desirable dividend stocks have a history of raising payouts over time as the company’s profits grow.

In addition to the potential for capital gains, the stocks covered in this list also offer sizable dividend yields. Moreover, these three companies seem likely to continue increasing their yields moving forward.

Pioneer Natural Resources Company (PXD) has long viewed sustainability as a balance of economic growth, environmental stewardship, and social responsibility. Its emphasis is on developing natural resources in a manner that protects surrounding communities and preserves the environment.

In the wake of the pandemic, when energy prices were, cheap PXD struck an almost perfectly timed agreement to buy fellow Permian Basin producer Parsley Energy for $4.5 billion. If you’re wondering how PXD managed to finance that transaction, the answer lies in the fact that it was an all-stock deal that ensured Pioneer didn’t have a new giant debt load hanging over its head. The fact that Parsley operated primarily in the same region of West Texas, where Pioneer had both expertise and existing staff, has paid off over time.

That deal was a coup for Pioneer shareholders, built on the fact it was large and well-capitalized at a time when stressed and debt-reliant shale plays were looking for a white knight. On top of that acquisition, PXD also boosted its dividend by 25% at the start of the year as further evidence of its strong balance sheet.

Investors can look forward to upcoming tailwinds, including Pioneer’s recently announced partnership with the world’s largest renewable energy producer, NextEraEnergy (NEE), to develop a 140-megawatt wind generation facility on Pioneer-owned land. The project will supply the company’s Permian Basin operations with low-cost, renewable power and is expected to be operational next year.

In the second quarter, revenue was up 22% YOY to $6.09 billion, smashing the consensus estimate of 4.57 billion. The company reported earnings of $7.48 per share, beating consensus expectations of $7.27 per share. So far, in 2022, the company has rewarded its investors handsomely with $20.73 per share through its generous 10.78% cash dividend. Even after gaining 30% this year, Pioneer shares likely still have valuation upside in addition to their tremendous dividend income potential.

Boston-based, Information management services company Iron Mountain Inc. (IRM) provides information destruction, records management, and data backup and recovery services to more than 220,000 customers in 58 countries. The company has around 1,500 leased warehouse spaces and underground storage facilities worldwide.

As a testament to Iron Mountain’s leadership in its core storage business, the company serves 225,000 customers, including about 95% of the Fortune 1000 companies. As for what the company stores, the wills of Princess Di and Charles Darwin are housed in their facilities, as well as the original recordings of Frank Sinatra and Bill Gates’ Corbis photographic collection.

The need for Iron Mountain’s physical facilities will likely never disappear. Still, as digital storage becomes more widely adopted, the company should continue to grow along with its global data-center business, contributing 8% of adjusted earnings in 2021. It continues to generate over $2 billion per year in revenue from its core storage business while strategically growing its data center portfolio, which is an optimistic sign for steady growth in the coming years.

IRM has maintained a $0.62 per share quarterly dividend since 2019 as it has been focused on steadily recovering its payout ratio from the pandemic. The AFFO came in at $0.93 for the second quarter, a 9.4% year-over-year improvement. The company uses its recurring income to pay an attractive dividend — it currently yields 4.68%. Management’s target for a low to mid 60’s percent dividend payout ratio seems to be quickly approaching, after which they see the dividend increasing.

It should be no surprise that the defense giant Lockheed Martin (LMT) has outperformed the market this year. There are obvious geopolitical implications with the war in Ukraine. When Russia decided to invade its neighbor, both U.S. and European forces rushed in to help Ukraine. It may be some time before LMT stock pops again, as it did at the onset of Russia’s invasion of Ukraine. However, its order books are likely to improve due to rising defense budgets in the U.S. and abroad. Along with Lockheed providing support to Ukrainian resistance fighters, the looming uncertainties in Russia could lead to massive economic problems and gaps in power in former Soviet Union-controlled areas.

Given the recession-proof nature of defense contracting, Lockheed Martin should continue reporting positive results and rewarding shareholders through its quarterly 2.7% forward yield. In other words, even if the market dives again, LMT will likely stand firm. The company runs a P/E ratio of 24 times, below the sector median of 28.3 times. As well, LMT features excellent longer-term growth and profitability metrics.

Three A.I. Stocks With Upsides of 40% or More According to Analysts

Editorial Staff

February 7, 2023

A huge buzz has been forming around AI stocks lately alongside the viral chatbot, ChatGPT’s fervent rise in popularity. Launched in November, the Microsoft-backed AI language model reportedly reached 100 million monthly active users in January. Its meteoric rise has sparked much interest in artificial intelligence technology stocks, as evidenced by the recent performance of the $1.59 billion Global X Robotics & Artificial Intelligence Fund, which is up more than 17% YTD.

Investors have been pouring into rapidly developing AI tech names over the past few months, and this is likely just the beginning. According to Grand View Research, the global artificial intelligence market reached a valuation of $136.55 billion in 2022. It’s projected that by 2030 the industry will command a revenue of nearly $1.9 trillion.

Anyone looking to profit from the paradigm shift may wonder which companies stand to gain the most as breakthrough advancements are made in the industry. Here we’ll look at three Buy rated standouts from the burgeoning AI group with average projected upsides of 40% or more.

CrowdStrike (CRWD)

With cyber threats materializing all the time, cybersecurity technology specialists, CrowdStrike (CRWD), is one of the most relevant AI stocks to buy. After losing nearly half of its value in 2022, CRWD is up 6% this year. Of 37 analysts offering a recommendation for the stock, 33 have an optimistic view, yielding a consensus Strong Buy assessment. In addition, their average price target stands at $162.59, implying an upside potential of over 40%. Therefore, CRWD is one of the top AI stocks to buy.

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Luminar (LAZR)

Luminar (LAZR) is at the forefront of lidar technology development with products that integrate sensors with AI, giving cars autonomous safety features to support a human driver. After losing more than 70% of its value in 2022, LAZR is up nearly 50% this year. The stock garners a solid Buy rating from the 12 analysts offering recommendations. An average price target of $12.50 represents a 76% upside from the current price.

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Brekshire Grey (BGRY)

Small-cap Brekshire Grey (BGRY) leans to the speculative side of the scale, but according to certain Wall Street pros, BGRY has the potential to reward investors with a more than 80% projected upside. The American tech company develops integrated artificial intelligence and robotic solutions for e-commerce, retail replenishment, and logistics and has been gaining investor attention. Share price is up a whopping 150% YTD and may have plenty of room to run if the 2 analysts offering recommendations are correct.

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Three Disruptive Names Warren Buffett is Buying

Editorial Staff

February 5, 2023

Warren Buffett is one of the most successful investors on Wall Street. The Berkshire Hathaway CEO is known for a long track record of market-beating returns, evident in the exemplary gains in Berkshire’s Class A shares since 1965. Over the past 57 years, the widely followed Berkshire Hathaway portfolio has generated returns of over 3.64 million percent. In other words, if you had invested $100 in Berkshire in 1965, that investment would be worth more than $3.64 million today. That works out to be an increase of around 20% compound annually, more than twice that of the S&P 500 over the same period. That stellar performance is why investors may want to take a page out of Buffett’s playbook and consider striking up a position in some Berkshire-held potential long-term winners.

The 92-year-old investing legend maintains the same buy-and-hold investment philosophy that has defined much of his success over the past six decades. Historically, the Oracle of Omaha has favored reliable blue chips in industries like healthcare, consumer goods, financials, and energy and tended to avoid unprofitable, speculative, high-growth potential stocks. However, that doesn’t mean there aren’t any growth stocks in Buffett’s collection. In this list, we’ll look at three disruptive, high-growth names Buffett sees as fit for adding to Berkshire Hathaway’s $700 billion portfolio.

It should be no surprise that Buffet owns a significant stake in Apple (AAPL) stock, considering its strong earnings, returns, and management. As the Number 1 stock in Berkshire’s portfolio by market value (worth a whopping $123.66 billion at the end of September), Apple makes up nearly 41% of Berkshire’s total equity portfolio.

In the third quarter of 2022, Buffet added to the firm’s tech investment with a sizeable stake in the world’s largest contract chipmaker Taiwan Semiconductor (TSM). Also known as TSMC, Taiwan Semi is at the top of the list when it comes to the semiconductor manufacturing group. The company makes chips for the likes of AMD (AMD), Nvidia (NVDA), and Qualcomm (QCOM), and it’s a key chip supplier to Apple.

After hitting a two-year low due to a sharp slowdown in global chip demand, TSM’s share price jumped when Berkshire disclosed its more than $4.1 billion position in the stock. Still down more than 40% from its January 2021 peak, anyone on the sidelines might consider now an appropriate time to strike. “Only a small number of companies can amass the capital to deliver semiconductors, which are increasingly central to people’s lives,” said Tom Russo, a partner at Gardner, Russo & Quinn in Lancaster, Pennsylvania, who is bullish on Berkshire Hathaway and TSM.

U.S. investors have been cautious when betting on the Taiwan-based chipmaker as it would lose all Western contracts in the event of a Chinese takeover of the island. However, the company is working to reduce its geopolitical risk with a new $40 billion foundry in Arizona, expected to be operational by 2024. The investment has Washington’s support as it comes amid a U.S. push to boost domestic supplies of semiconductors and Congressional passage of the $52 billion CHIPS and Science Act.

Taiwan Semi reported earnings of $1.79 per share from $20.23 billion in revenue in the third quarter, surpassing consensus expectations of $1.41 EPS from revenue of $19.96. Management reiterated its outlook of Q4 revenue in the range of $19.9 billion to $20.7 billion. Gross profit margin is expected to be between 59.5% and 61.5%. Operating profit margin is expected to be between 49% and 51%.

TSM has a 90% Buy rating from the 38 analysts offering recommendations and zero Sell ratings. Anyone on the sidelines may want to consider striking up a position in this Buffet stock and holding on for years.

At the end of the third quarter, Berkshire also disclosed its position in the leading Brazilian fintech company StoneCo Ltd. (STNE). The firm reported owning close to 10.7 million shares, currently valued at more than $110 million, amounting to a roughly 3.4% stake in the company.

Stoneco provides back-office software, loans, and other financial services to small and medium-sized businesses with a focus on reinvesting the cash it generates to acquire or build new financial products for its customer base. Since early 2019, the company has grown the number of small and medium business clients by 3x, revenue by 2.3x, and net income by 2.2×.

Stoneco has developed a range of payment solutions utilized by e-commerce for businesses and merchants all over Latin America. In the third quarter, the company reported about $390 million in revenue and earnings. Small and medium-sized businesses using the platform surpassed 2.3 million, and total payment volume in the quarter grew to nearly $14 billion.

Stoneco stock is down close to 47% this year on news of rising interest rates, macroeconomic risks in Brazil, and some operational blunders. But base interest rates in Brazil seem to have peaked. A potential decline in the second half of 2023 is expected as Brazil’s inflation normalizes, reducing the margin pressure from rising financial expenses. Meanwhile, StoneCo’s revenue growth should benefit from increasing digitization of payments, higher take rates, and elevated growth in banking and software. STNE stock currently trades at roughly 1.4 times projected forward revenue and 33 times forward earnings, which seems fair for a disruptive, fast-growing company in a developing market.

Buffet isn’t the only institutional investor who’s recently raised an investment in StoneCo. Cathie Wood’s Ark Innovation fintech exchange-traded fund (ARKF) owns roughly 2.55 million shares of the payments company valued at more than $26.5 million. STNE has a Hold rating from the pros who cover it and a median target price of $12.20, representing a 19% increase from Wednesday’s closing price.

Snowflake provides cloud-based ways for companies to better utilize their data over the internet. The company offers cloud-based data storage and analytics, generally termed “data-as-a-service.” Snowflake’s platform offers Data Cloud, an entire ecosystem that enables customers to consolidate and share data. They also provide a tailored version of their Data Cloud, explicitly aimed at the media and advertising industry.

Although Snowflake is a minor constituent of Berkshire Hathaway’s portfolio, the stock has the qualities investors look for in a potentially parabolic stock. The company provides customers with crucial tech infrastructure, and its share price has plunged 65% from its peak last year.

For the third quarter, Snowflake’s revenue surged 67% year over year, driven by the healthy growth in its customer base and increased customer spending. The company reported a 34% year-over-year spike in the total number of customers. Moreover, the number of customers who have spent more than $1 million on Snowflake products over the past year nearly doubled. The company’s pipeline of contracted future revenue that is yet to be realized also shot up 66% year over year to $3 billion. Snowflake should sustain such impressive growth, with addressable market management claims could be worth $248 billion by 2026.

Analysts are expecting 295% annual revenue growth over the next five years. However, investors will have to pay a rich 25 times sales to own shares of SNOW. But that represents a considerable discount from last year’s price-to-sales-ratio of 97. Investors on the hunt for high-growth-potential stocks that the Oracle of Omaha owns may want to give SNOW some thought.

Three Stocks to Avoid or Sell Next Week

Editorial Staff

February 3, 2023

Seeking out great stocks to buy is important, but many would say it’s even more essential to know which stocks to steer clear of. A losing stock can eat away at your precious long-term returns. So, determining which stocks to trim or eliminate is essential for proper portfolio maintenance.

Even the best gardens need pruning, and our team has spotted a few stocks that seem like prime candidates for selling or avoiding. Continue reading to find out which three stocks our team is staying away from this week.

Moderna (MRNA)

Heading into 2023, Moderna is still relying on its covid vaccine to bring in the lion’s share of its income. Generating its income from a single drug (Spikevax) is a risk no $70 billion company should take. With the worst of COVID-19 behind us, Moderna’s sales could plunge by 25% to 68% this year based on analyst expectations. The consensus of $8.74 billion represents a valuation of 9 times sales, which is quite pricey within the biotech space.

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Lucid Group Inc (LCID)

Lucid shares are down more than 80% since the November 2021 ATH, and there’s little to indicate that the stock will rebound. Amid Increasing competition in the EV space, the company could struggle to recover from headwinds like overvaluation, supply chain concerns, and inflation. The company produced only 7,180 vehicles in 2022 and delivered only 4,369 of them. Lucid continues to be unprofitable, and analysts are expecting that to continue into the current quarter as well.

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Opendoor Technologies (OPEN)

Opendoor Technologies (OPEN) aims to revolutionize the home-buying process with its automated solution for a smoother, quicker, and more convenient buying experience. Investors piled into OPEN during its market debut in 2020. However, OPEN stock has lost nearly 80% of its value over the past year, with expectations building that more pain could be on the horizon due to the widespread decline in the real estate market. Redfin anticipates that there will be a 16% year-over-year decline in the number of existing home sales in 2023, making OPEN an ideal stock to sell.

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Three Bargain Priced Energy Stocks With Plenty of Room to Run in 2023

Editorial Staff

February 3, 2023

2022 was a massive year for energy stocks, but so far, in 2023, the sector’s performance has been underwhelming. The energy sector underperformed the broader market in January, with the Energy Select Sector SPDR Fund (XLE) returning just 2.8%. February is off to a bad start, with the fund falling more than 2%. However, several Wall Street pros say the bull market for energy stocks still has room to run after some cyclical funds saw investors pull out cash last year.

“Despite stellar returns in 2022 (+65%), energy sector ETFs still saw -$1.6bn in outflows. We have a favorable view based on valuation, light positioning, and strong commodity & equity fundamentals,” said Bank of America investment strategist Jared Woodard.

With the current conditions in mind, many market participants are seeking to beef up their position in energy with some undervalued names. In this list, we’ll look at three stocks from the energy sector, currently trading at a discount compared to industry peers.

Matador Resources (MTDR)

Matador Resources shareholders can take confidence from the fact that EBIT margins are up from 36% to 60%, and revenue is growing. Earnings are expected to grow by 6.21% per year over the next ten years. MTDR is a good value with a PE ratio of 6.5 times compared to the US Oil and Gas industry average of 7 times.

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HF Sinclair Co. (DINO)

Most recently, HF Sinclair Co. reported quarterly earnings at $4.58 per share, surpassing the consensus estimate of $4.20 per share. HF Sinclair had a return on equity of 27.56 percent, while their net margin was 6.59 percent. Cash flows well cover the stock’s 2.8% dividend with a low payout ratio of 18%. DINO is a good value with a PE ratio of 5 times compared to the US Oil and Gas industry average of 7 times.

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Coterra Energy (CTRA)

Coterra Energy has become profitable over the past five years, growing earnings by an average of 54% each year. CTRA is a good value at five times earnings compared to the US Oil and Gas industry average of 7 times. With its reasonably low payout ratio (42.8%), CTRA’s impressive 10.9% dividend payments are well covered by earnings.

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Surf the Upcoming Wave of International Growth With These Stocks

Editorial Staff

January 31, 2023

Expanding international economies, increasing productivity, and improving standards of living are the first indicators of the rise of a new global middle class. Indeed, it seems as if the world’s most dramatic economic growth over the next century will occur outside the U.S.

Market participants looking to strengthen their portfolios through diversification or create new avenues to substantial growth would do well to consider winning stocks from international markets. Continue reading for three tickers that are well-positioned to benefit from the oncoming wave of global growth in 2023.

Taiwan Semiconductor’s (TSM) share price has been on the rise after hitting a two-year low in October due to a sharp slowdown in global chip demand. Still down more than 35% from its January 2021 peak, anyone on the sidelines might consider now an appropriate time to strike. “Only a small number of companies can amass the capital to deliver semiconductors, which are increasingly central to people’s lives,” said Tom Russo, a partner at Gardner, Russo & Quinn.

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MercadoLibre (MELI) is a leading provider of e-commerce and fintech services in Latin America. The company operates an e-commerce marketplace that has a dominant presence in some of the most populous nations in the region, including Brazil and Argentina. MercadoLibre has continued to increase sales at a rapid clip despite macroeconomic headwinds, and the business’s forefront positions in online retail and fintech point to huge expansion potential as these services become more popular in Latin America.

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As a major player in the digital payments space, India’s largest private sector lender, HDFC Bank (HDB), is in a favorable position to benefit from “the war on cash,” as the country’s economy continues to develop. The company has over 6,300 branches across more than 3,100 cities and towns. HDFC is also a player in the digital payments space and appears poised to benefit from “the war on cash.”

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Three Stocks to Watch for the Week of January 30th

Editorial Staff

January 29, 2023

Stocks rebounded last week, bouncing back from the worst week of the new year. The Nasdaq surged 4.3% for its fourth positive week in a row. Meanwhile, the S&P 500 and the Dow posted smaller gains, rebounding from declines the previous week. With only two trading sessions left in January, the Nasdaq was on track to record its strongest monthly result since July.

The week ahead will be eventful, with the FOMC’s policy meeting taking center stage. At its meeting ending on Wednesday, the U.S. Federal Reserve is expected to lift its benchmark interest rate again. Market participants are also looking forward to earnings from some of the largest companies in the world, including big tech firms Apple, Amazon, Google, and Meta Platforms.

Software stocks were among the market’s biggest losers in 2022 amid drastic shifts in Fed policy. But amid signs of cooling inflation over the past few months, interest rate hikes have slowed. With inflation collapsing, it seems likely that interest rates will continue falling through 2023. If they do, it could be up, up, and away for software stocks, such as our first of three recommendations for the week ahead.

The next-generation data storage market is predicted to grow by 8.5% to $81 billion by 2025. All-flash data storage hardware and software products developer Pure Storage (PSTG) has upward solid top and bottom-line results, a healthy balance sheet, and growing cash flow. PSTG investors benefit from its subscription-based model, which is now at over $1 billion in annual recurring revenue. With a growing customer base in a market with substantial long-term growth potential, investors may want to take a bullish stance on this company.

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StoneCo Ltd. (STNE) provides back-office software, loans, and other financial services to small and medium-sized businesses with a focus on reinvesting the cash it generates to acquire or build new financial products for its customer base. Since early 2019, the company has grown the number of small and medium business clients by 3x, revenue by 2.3x, and net income by 2.2×. Stoneco stock lost 53% of its value in 2022 on rising interest rates and macroeconomic risks in Brazil. But base interest rates in Brazil seem to have peaked, and a potential decline in the second half of 2023 is expected as Brazil’s inflation normalizes, reducing the margin pressure from rising financial expenses.

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Drugmaker, Viatris’ (VTRS) is profitable and looking for more growth. The company is trimming its less-profitable operations, including its biosimilars, women’s health division, and over-the-counter drugs. In its place, it is adding an ophthalmology franchise through the $750 million acquisitions of Oyster Point Pharma and Famy Life Sciences. The deal is expected to close in the first quarter of 2023. Management expects the acquisition to generate at least $1 billion in sales by 2028.

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SoFi Technologies (SOFI)

Uber Technologies (UBER)

Bigbear.ai Holdings (BBAI)

Centerra Gold Inc. (CGAU)

CF Industries Holdings, Inc. (CF)

Pure Storage (PSTG)

Black Hills Corporation (BKH)

Funko Inc. (FNKO)

Carvana (CVNA)

CrowdStrike (CRWD)

Luminar (LAZR)

Brekshire Grey (BGRY)

Matador Resources (MTDR)

HF Sinclair Co. (DINO)

Coterra Energy (CTRA)

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