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     Three Surprising Stocks to Watch This Earnings Season

    By
    Editorial Staff
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    Earnings season is in full swing, and as financial giants like JPMorgan, Netflix, and Procter & Gamble report their results, it’s a great time to assess where opportunities lie. The second-quarter earnings season set the bar high, with 79% of S&P 500 companies beating expectations. This quarter, many are hoping for similar surprises, especially with certain stocks already up significantly in 2024.

     We’ve identified three stocks that could have a lot more room to run based on a variety of catalysts and fundamental strength.

    3M Co. (MMM) – Industrial Giant with Margin Growth Potential

    Shares of 3M have already surged 47% year-to-date, but analysts see room for more. According to analysts, 3M could rally nearly 20% from its current levels, targeting a price of $162. The company, known for its Post-it notes and various industrial products, has seen a solid recovery, although it’s no longer the deep value play it was just a few months ago.

    The company’s margins could surprise to the upside this quarter, thanks to steady top-line growth, operating leverage during a seasonally strong quarter, and lower restructuring charges. Despite the macro challenges for industrials, 3M’s ability to control costs and improve margins might allow it to outperform expectations.

    Around 40% of analysts now rate 3M as a buy, a sharp increase from just 5% in March.

    Oracle (ORCL) – Riding the AI Wave

    Oracle has been one of the top performers in 2024, with its shares up 67%. Analysts believe the stock could climb another 19%, with a price target of $210. What’s fueling this optimism? Oracle’s aggressive expansion into cloud services, particularly its Oracle Cloud Infrastructure (OCI), which has seen growing demand, especially as artificial intelligence (AI) continues to drive new opportunities.

    OCI’s success has provided Oracle with a strong new growth engine, which could last for years. The company’s top-line growth has been robust, and operating leverage from scaling OCI should translate into better margins and earnings in the quarters ahead.

    While Oracle’s stock may seem expensive to some after its significant gains this year, the company’s positioning in the rapidly expanding cloud and AI markets could help it maintain upward momentum. Most analysts covering the stock are optimistic, with many seeing further gains ahead.

    Target (TGT) – A Turnaround Story in the Making

    Target’s stock has had a modest year so far, up 11%, but analysts believe the retailer could see even bigger gains. At it’s high end, a price target of $200 implies an additional 25% upside over the next 12 months, driven by a combination of rising revenue and expanding profit margins.

    Target’s net sales grew by 2.3% in the third quarter, and Wall Street expects this momentum to carry into the second half of the year. The company has faced easy year-over-year comparisons, and its turnaround strategy seems to be gaining traction. As its strategy plays out, Target is likely to experience positive earnings momentum, making it an attractive buy ahead of earnings.

    With more than half of the analysts covering Target rating it as a buy, there’s a growing consensus that the stock has significant upside potential as the company’s turnaround story continues to unfold.

    As earnings season progresses, it’s essential to stay ahead of the curve and look for stocks where the market’s expectations might be too low. 3M, Oracle, and Target are three names that stand out for their potential to surprise to the upside. Whether it’s 3M’s margin growth, Oracle’s cloud success, or Target’s turnaround, these stocks have a lot to offer for investors willing to bet on their continued success.

    Three Strong Conviction Buys for the Week Ahead

    By
    Editorial Staff
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    0

    In the ever-shifting landscape of the stock market, separating the wheat from the chaff is no easy feat. It’s a world where the wrong picks can erode your hard-earned gains, but the right ones? They have the power to catapult your portfolio to new heights. With thousands of stocks in the fray, pinpointing those poised for a breakthrough can feel like searching for a needle in a haystack.

    This is where we step in. Every week, we comb through the market’s labyrinth, scrutinizing trends, earnings reports, and industry shifts. Our goal? To distill this vast universe of stocks down to a select few – those unique opportunities that are primed for significant movement in the near future.

    This week, we’ve zeroed in on three standout stocks. 

    The New York Times (NYT) – Thriving Subscription Business with AI Potential

    The New York Times (NYT) is standing out in the current media landscape, largely thanks to its strong subscription model and emerging opportunities within artificial intelligence. With a robust digital-first approach, NYT continues to grow its user base, even while many traditional publications are shrinking or struggling. In fact, The Times is on track to reach its target of 15 million total subscribers by 2027, aiming for an annual growth rate of around 10%.

    Beyond just subscriptions, NYT has been actively diversifying its offerings through new content formats like podcasts, video, and expanded cooking and game services. These efforts have played a key role in driving user engagement, as well as boosting its total addressable market. This, combined with its pricing power and strong advertising growth, positions the company well for future gains.

    A significant reason to keep an eye on NYT is its push into artificial intelligence. The company has been building internal AI capabilities, with opportunities to further monetize its vast content archive through licensing agreements and potential partnerships. Analysts see AI as a key driver that could enable double-digit growth in adjusted operating profit, while also creating opportunities for additional capital returns to shareholders.

    In terms of stock performance, shares of NYT have climbed nearly 12% so far in 2024, following a strong 50% gain in 2023. Deutsche Bank’s price target of $65 suggests the potential for nearly 19% upside from current levels, signaling there may still be plenty of room for growth.

    Chewy (CHWY) – E-Commerce Platform with Long-Term Growth Potential

    Chewy (CHWY) is currently trading at around $30 per share, having risen approximately 65% from its price a year ago and 36% year-to-date in 2024. The company’s rapid growth is driven by its e-commerce platform, which offers thousands of pet products, including its own private-label brands. But that’s just the surface of Chewy’s long-term strategy.

    A significant part of its expansion lies in diversifying its revenue streams. Chewy’s online pharmacy service includes compounding medications for pets, while its telehealth platform offers on-demand vet services. These healthcare options, combined with the launch of a pet insurance plan, aim to deepen customer engagement. The recent addition of a sponsored ads program is expected to contribute 1% to 3% to the company’s net sales by the end of 2024.

    Chewy’s push into physical locations is also notable. So far in 2024, the company has opened six Chewy Vet Care clinics, which have exceeded expectations in new customer acquisition. Impressively, about 50% of customers who visited a clinic have subsequently placed orders on Chewy’s e-commerce platform, proving that these brick-and-mortar expansions complement its online presence.

    Financially, Chewy posted strong results in Q2 2024, with net sales reaching $2.9 billion, up 2.6% from the previous year. What’s more, its net income skyrocketed by an impressive 1,380% to $299.1 million compared to just $20.2 million in Q2 2023. A significant portion of sales came from recurring customer purchases, with its Autoship program contributing to 78% of all net sales. Non-discretionary spending, such as healthcare and essential pet items, accounted for 85% of total spending.

    While Chewy’s revenue growth rate was moderate, the company’s profitability surged, signaling that it’s making the right moves in expanding both its customer base and its product offerings. Long-term investors may want to keep an eye on Chewy as its combination of recurring revenue and new initiatives could continue to drive its performance in the years ahead.

    Cloudflare, Inc. (NET) Cloudflare’s AI Ambitions Are Gaining Traction

    Cloudflare has made impressive strides in the AI space, positioning itself as a potential leader in cloud-based AI infrastructure. Traditionally known for its cybersecurity solutions, Cloudflare is now leveraging its global infrastructure to provide AI-powered solutions. The company’s Workers AI platform, introduced last year, enables developers to build and deploy AI applications using Cloudflare’s network without having to purchase costly hardware like GPUs.

    The most compelling aspect of Cloudflare’s recent strategy is its deployment of Nvidia GPUs across 180 cities globally, with plans to expand further. This infrastructure gives organizations access to powerful AI tools without the associated capital expenditures. As the AI and cloud computing markets continue to grow, this positions Cloudflare to capture a significant portion of the $580 billion IaaS market by 2030.

    Additionally, the company’s new AI Audit tool, aimed at content creators, could generate additional revenue streams by allowing websites to monetize how AI bots use their content. These initiatives add to Cloudflare’s already strong growth trajectory, with revenue up 30% year-over-year in its second-quarter results. With analysts projecting Cloudflare’s earnings to grow at an annual rate of 62% for the next five years, the stock looks like a promising opportunity for investors looking to capitalize on AI-driven growth.

    Bear Watch Weekly: Stocks to Sideline Now

    By
    Editorial Staff
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    0

    The right stocks can make you rich and change your life.

    The wrong stocks, though… They can do a whole lot more than just “underperform.” If only! They can eviscerate your wealth, bleeding out your hard-won profits.

    They’re pure portfolio poison.

    Surprisingly, not many investors want to talk about this. You certainly don’t hear about the danger in the mainstream media – until it’s too late.

    That’s not to suggest they’re obscure companies – some of the “toxic stocks” I’m going to name for you are in fact regularly in the headlines for other reasons, often in glowing terms.

    I’m going to run down the list and give you the chance to learn the names of three companies I think everyone should own instead.

    But first, if you own any or all of these “toxic stocks,” sell them today…

    Boeing (BA) Tax Loss Selling Pressures and Ongoing Struggles

    As the end of the year approaches, investors are reviewing their portfolios to balance gains and losses. Tax-loss selling is a popular strategy that allows investors to offset capital gains by selling stocks that have underperformed. With the broader market up over 20% in 2024, many investors are looking to dump underperformers to reduce their tax bills. October is a key time for this as we move toward the year’s final quarter.

    Boeing (NYSE: BA) has had a rough 2024, with shares down over 40% year-to-date, making it a prime candidate for tax-loss harvesting as investors look to offset gains elsewhere in their portfolios. This significant drop comes as Boeing grapples with several challenges, including supply chain issues, production disruptions, and most recently, a machinist strike in the Seattle area that could further weigh on deliveries.

    Despite ongoing demand in the aerospace sector, Boeing’s operational setbacks—like the 737 Max 9 door incident and delays in key programs like the 777X—have hampered its recovery. Bank of America analyst Ronald Epstein recently reiterated a neutral rating on the stock, lowering his price target to $170 from $200, citing concerns over potential cash burn and defense program inefficiencies.

    With the broader market up for the year, Boeing’s continued weakness makes it a prime candidate for tax-loss selling pressure. Investors may consider taking a step back from Boeing, especially with the company’s road to recovery looking prolonged and uncertain.

    Paramount Global (PARA) Facing Uncertainty Ahead of Earnings

    With earnings season ramping up and Paramount Global set to report later this month, now might be the time to reconsider this stock. Despite a modest 4% gain over the last month, shares are still down around 29% in 2024, reflecting a turbulent year for the company. Paramount’s recent moves—like its upcoming merger with Skydance and a second phase of U.S. layoffs aimed at cutting $500 million in costs—signal a company in flux. Investors may see volatility around the upcoming earnings release as there is significant uncertainty around whether the company can meet expectations.

    Given the failed merger talks with Warner Bros. Discovery earlier in the year and the subsequent 5% drop in July, there are concerns that Paramount may struggle to stabilize. Add to that the ongoing cyclical challenges facing the media industry, and this stock looks risky for anyone seeking stability during earnings season.

    Another factor to consider is the market sentiment around the stock. While some analysts hold a neutral stance, 10 out of 27 analysts covering the stock maintain an underperform or sell rating, signaling caution. For those looking to trim their portfolios ahead of more volatility, Paramount could be a name to avoid as we head deeper into Q4.

    Nordstrom (JWN) Uncertain Outlook Despite Takeover Offer

    While Nordstrom has shown some positive momentum this year with shares up over 19%, recent developments raise red flags. The company is scheduled to report its earnings in November, but recent performance indicates it could face headwinds. In early September, Nordstrom’s founding family made an offer to take the retailer private at $23 per share, valuing the company at $3.8 billion. However, in the last month, Nordstrom’s stock has fallen more than 3%, raising questions about its near-term outlook.

    The takeover bid might provide some short-term support, but long-term growth concerns remain. The broader retail sector is facing significant challenges, including rising inflation, shifting consumer spending, and increased competition. Analysts remain largely neutral on the stock, with 13 of the 19 analysts covering it issuing hold ratings. This cautious outlook and potential downside in the upcoming earnings report suggest Nordstrom is another stock to watch carefully—and possibly avoid—this season.

    Warren Buffett’s Best: Three Value Stocks to Consider in October

    By
    Editorial Staff
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    Warren Buffett has built a legendary investing career by following a disciplined approach to value investing. Under his leadership, Berkshire Hathaway has delivered an annual return of nearly 20% since 1965, more than doubling the S&P 500’s growth rate over the same period. As Buffett famously said, “Price is what you pay, value is what you get.” His ability to navigate market downturns and stay patient during crises has helped him consistently outperform the market.

    Buffett’s investment style is focused on long-term growth, finding companies with strong fundamentals that are undervalued by the market. Here are three Warren Buffett-backed stocks that stand out for October and could be great additions to your portfolio.

    Visa (NYSE: V)

    Digital Payments Leader Positioned for Long-Term Success

    Visa is another Warren Buffett favorite, with Berkshire holding a $2.3 billion stake in the global payments giant. While Visa’s position in Berkshire Hathaway’s portfolio is relatively small, the company’s potential for growth is immense. As the world continues to shift away from cash, Visa’s digital payments platform is positioned to thrive.

    In recent years, Visa has expanded its services to help governments and merchants build digital ecosystems, positioning itself at the center of the digital economy. The company posted a 10% revenue growth year-over-year in Q3, driven by a 7% increase in payment volume. With analysts predicting that Visa’s top-line growth will continue for years to come, this stock offers strong long-term potential for investors looking to capitalize on the shift to digital payments.

    Nu Holdings (NYSE: NU)

    A Fintech Star in Emerging Markets

    Nu Holdings, a digital bank serving Latin America, may not be as well-known as some of Buffett’s other holdings, but it has tremendous potential. With over 100 million customers in Brazil, Mexico, and Colombia, Nu Holdings is positioned to take advantage of the growing demand for digital banking services in the region. The company’s revenue surged by 65% last quarter, driven by its rapid expansion and the rise of mobile-first consumers in Latin America.

    As Latin America’s digital economy continues to grow, Nu Holdings could see substantial growth in the coming years. The fintech company is a strong pick for investors looking to tap into emerging markets and take advantage of digital banking’s explosive growth.

    Occidental Petroleum (NYSE: OXY)

    Energy Giant with Long-Term Growth Potential

    Occidental Petroleum has been a consistent holding for Buffett’s Berkshire Hathaway. Despite the rise of renewable energy sources, Buffett remains confident in Occidental’s long-term potential. Currently, oil and gas account for about 60% of U.S. power production, and this is unlikely to change in the near future. The U.S. Energy Information Administration projects that crude oil will remain a significant global power source well into 2050.

    Buffett’s investment in Occidental is worth around $13 billion, making it one of Berkshire’s largest positions. The company’s strong management team, led by Vicki Hollub, and its ability to extract oil efficiently are key reasons for Buffett’s continued confidence. With energy demand remaining strong and oil prices expected to recover, Occidental is a solid long-term play in the energy sector.

    Bear Watch Weekly: Stocks to Sideline Now

    By
    Editorial Staff
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    0

    The right stocks can make you rich, but the wrong ones? They can drain your wealth, fast. While the mainstream financial news is often filled with optimistic stories about certain companies, the reality is that some stocks pose serious risks right now.

    Here’s a rundown of three stocks that investors should consider steering clear of. These companies have become “portfolio poison” for reasons ranging from sky-high valuations to deteriorating fundamentals.

    Costco Wholesale Corporation (COST) Overvalued and Vulnerable to a Pullback

    Costco has been one of the best performers this year, but at this point, the stock looks overvalued. Hitting all-time highs has triggered some alarm bells, especially with its price-to-earnings (P/E) ratio sitting well above the industry average. According to analysts, Costco is now one of the most overbought stocks, with a 14-day Relative Strength Index (RSI) reading of 81.7, signaling a potential pullback is ahead.

    While the company itself is strong, the stock’s current valuation could make it volatile, and analysts are advising caution. Market consensus shows a price target only 1% above its current level, which doesn’t leave much room for further growth in the near term​.

    Marriott International (MAR) Overbought with Limited Upside

    Marriott has enjoyed a stellar run, with its stock trading near an all-time high. However, a high RSI suggests the stock is overbought, and this could signal an upcoming downturn. Options traders have taken a bearish stance, and analysts are split, with many holding neutral ratings on the stock.

    With Marriott’s strong performance potentially cooling off, a number of analysts are highlighting limited upside from here. The stock’s rally could be losing steam, making it a candidate for those looking to lock in gains before a potential pullback​.

    Harmony Gold Mining (NYSE: HMY) Mounting Headwinds for Gold Mining Operations

    Harmony Gold Mining has been under intense pressure. Rising operational costs and declining gold prices have severely hurt the company’s prospects. Analysts have become overwhelmingly bearish, with no buy or hold ratings currently on the stock. Instead, the consensus is to sell, with a price target suggesting more than a 50% downside.

    Recent reports from JPMorgan have only deepened the gloom, lowering their price target to $4.80 from $5.80, citing ongoing cost challenges and inefficiencies. For investors, Harmony Gold looks increasingly like dead weight in the portfolio, especially if gold prices continue to fall.

    Solar Stocks Watchlist: Eyeing the Charts as Election Buzz Fuels a Renewed Upswing

    By
    Editorial Staff
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    Solar stocks have been under pressure for most of 2024, but recent political developments have triggered a notable shift. With the upcoming U.S. elections and renewed optimism surrounding renewable energy, particularly under a potential Kamala Harris administration, solar stocks have jumped back onto investors’ radars. While the broader sector has struggled, down over 25% year-to-date compared to the S&P 500’s +14%, some individual names are showing strong technical setups. Let’s dive into two key solar companies that could offer compelling opportunities based on their recent chart action.

    First Solar Inc. (NASDAQ: FSLR) Consolidation Phase, but Potential Breakout Ahead

    First Solar has had a turbulent year, starting with an impressive outperformance against the S&P 500 and reaching a high just above $300 back in June. However, the stock has since cooled off, dropping to find new support around the $210 mark. Since then, FSLR has been trading within a range between $200 and $240, which interestingly aligns with previous resistance levels from 2023.

    This consolidation phase suggests that a potential move could be on the horizon. Typically, when a stock is trapped in a well-defined range like this, it’s best to wait for a confirmed break above resistance before considering a buy. For FSLR, a breakout above $240 would indicate the start of an upside rotation, potentially setting the stage for a retest of its 2024 high around $300. Keep a close watch on that $240 level—breaking through it could signal a significant bullish shift for First Solar.

    Sunrun Inc. (NASDAQ: RUN) In an Uptrend, with Ideal Entry Point Emerging

    While First Solar remains in a consolidation phase, Sunrun offers a more attractive technical setup at this moment. RUN is in a confirmed uptrend, with a pattern of higher highs and higher lows firmly established. The stock found key support around $9 in late 2023, retested that level earlier this year, and has been on a steady climb since.

    What makes RUN particularly interesting right now is its pullback to the 50-day moving average this week, which has served as a reliable support level during its uptrend. Stocks in an uptrend often offer solid entry points during pullbacks like this, as they set the stage for the next leg higher.

    That said, investors should note that Sunrun faces some overhead resistance in the $20-24 range. Historically, the stock has struggled to push past this level, so it’s worth keeping that in mind as a short-term target. However, if Sunrun can break through the $24 mark, it would suggest clear skies ahead from a technical perspective, opening the door for significant further gains.

    As the election season heats up and solar stocks get renewed attention, these two names are worth watching closely. Both First Solar and Sunrun offer unique opportunities, but the technical setups highlight different strategies for entry—whether waiting for a breakout or taking advantage of an uptrend pullback.

    Enphase Energy Inc. (NASDAQ: ENPH) Technical Weakness, but Long-Term Potential Remains Strong

    Enphase Energy has had a challenging year in 2024, with its stock down significantly from the highs it reached during the solar boom of 2020-2022. ENPH has struggled with declining demand in the U.S. residential market, causing its stock to fall over 50% year-to-date. While this may seem like a negative, it presents a unique opportunity for long-term investors. The company remains a dominant player in the solar technology space, and its international expansion into markets like Europe and India could help drive future growth.

    Technically, ENPH is in a clear downtrend, currently trading below its 200-day moving average. However, it’s worth noting that the stock has recently found support around $110, a key level that has held multiple times since 2021. For investors with a longer-term outlook, this could represent a buying opportunity as the stock looks oversold. If Enphase can regain momentum and break back above its 50-day moving average, it could signal the start of a recovery.

    While the stock may not offer immediate upside like Sunrun’s uptrend or First Solar’s potential breakout, Enphase’s strong market position and growing international presence make it a compelling addition to a long-term solar portfolio.

    Stocks Poised to Thrive Now That the Fed is Cutting Rates

    By
    Editorial Staff
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    The Federal Reserve’s recent decision to cut interest rates by half a point marks the start of a new easing cycle, a move that has historically been a game-changer for certain stocks. When rates drop, borrowing costs decrease, stimulating economic activity and often providing a tailwind for specific sectors, particularly technology and consumer stocks. By examining past rate-cutting cycles dating back to 1984, we can identify which stocks tend to perform best in the months following the initial cut. Some companies, especially those with strong fundamentals and strategic market positions, have consistently outperformed during these periods, demonstrating their resilience and growth potential even when economic conditions are uncertain.

    This watchlist focuses on three standout names that have shown strong historical gains during previous rate-cut environments. As the market adjusts to this latest rate cut, these companies could be particularly well-positioned to capitalize on the lower borrowing costs, renewed consumer demand, and sector-specific tailwinds that often accompany such shifts. For investors looking to navigate this new landscape, these stocks represent a compelling blend of historical strength and future opportunity.

    Apple Inc. (NASDAQ: AAPL)
    Tech Giant Poised for Post-Cut Gains

    Apple is the only megacap tech stock that made the list of top performers following a Fed rate cut, and for good reason. Historically, Apple has shown resilience in these scenarios, with a median gain of about 16% in the three months after an initial cut, and an average increase of nearly 9%. Despite a recent pullback due to concerns about weaker demand for its new iPhone 16, Apple remains up 12% this year.

    The iPhone 16, which features advanced AI capabilities dubbed Apple Intelligence, was expected to drive new demand, but early reports suggest a slower start. Still, Apple’s track record following rate cuts suggests that any dip might be a buying opportunity. The stock has historically rebounded well, making it a solid pick as we head into this new rate-cutting cycle.

    Western Digital Corp. (NASDAQ: WDC)
    Storage Leader with Strong Rate Cut Performance

    Western Digital stands out as one of the best performers after a Fed rate cut, boasting a median gain of over 26% in the three months following an initial cut. The digital storage company has already rallied nearly 26% this year, bolstered by ongoing AI tailwinds that drive demand for its data storage solutions.

    The company benefits directly from increased storage needs fueled by AI and digital transformation trends. As the AI boom continues, Western Digital’s products remain essential for businesses, making it a strong contender for further gains in the coming months. Given its historical performance and current market position, Western Digital could see significant upside if the past is any indication.

    Lam Research Corp. (NASDAQ: LRCX)
    Semiconductor Equipment Leader Primed for Gains

    Lam Research, a key player in the semiconductor equipment space, has also shown impressive historical performance after rate cuts, gaining more than 22% on a median basis in the three months following an initial Fed cut. The company’s growth is closely tied to the semiconductor industry, which benefits from lower borrowing costs as companies ramp up investments in new technologies.

    With AI and other data-driven technologies driving increased demand for semiconductors, Lam Research’s role in providing the equipment that makes these chips possible positions it well for continued growth. The stock’s track record during easing cycles, combined with strong industry tailwinds, makes Lam Research a compelling choice for investors looking to capitalize on the Fed’s latest move.

    Three Strong Conviction Buys for the Week Ahead

    By
    Editorial Staff
    -
    0

    In the ever-shifting landscape of the stock market, separating the wheat from the chaff is no easy feat. It’s a world where the wrong picks can erode your hard-earned gains, but the right ones? They have the power to catapult your portfolio to new heights. With thousands of stocks in the fray, pinpointing those poised for a breakthrough can feel like searching for a needle in a haystack.

    This is where we step in. Every week, we comb through the market’s labyrinth, scrutinizing trends, earnings reports, and industry shifts. Our goal? To distill this vast universe of stocks down to a select few – those unique opportunities that are primed for significant movement in the near future.

    This week, we’ve zeroed in on three standout stocks. These aren’t your run-of-the-mill picks; they are the culmination of rigorous analysis and strategic foresight. We’re talking about stocks that not only show promise in the immediate term but also hold the potential for sustained growth.

    Corebridge Financial (NYSE: CRBG) A Low-Profile Insurance Stock with Strong Buyback Potential

    Corebridge Financial, a recently spun-off entity from AIG, is a solid stock to consider for its significant buyback potential and undervalued position. Despite its relative anonymity, Corebridge operates as a $15 billion retirement services and life insurance company, trading at approximately $28 per share. What’s catching our attention here is the company’s strong fundamentals and the ability to grow its book value significantly—up to $50 per share by 2025, according to our estimates, which would place it at four to five times earnings.

    One of the most compelling reasons to consider Corebridge is its aggressive share buyback strategy. The company has the potential to repurchase 20% of its stock per year, which could help lift the share price even without widespread investor recognition. This approach allows the company to take matters into its own hands, reducing the float and boosting shareholder value over time. It’s not a name you’re seeing splashed across headlines, but that’s exactly what makes it intriguing—this is an under-the-radar stock with strong fundamentals and a solid plan to return value to investors.

    If you’re looking for a value play outside the dominant tech sector, Corebridge offers a rare opportunity to get in on a stock that doesn’t need to rely on outside hype to grow its price.

    ASML Holding (NASDAQ: ASML) Tech Giant with Strong Upside Potential

    ASML, a leader in high-tech machinery for chip manufacturing, is a standout stock that’s currently “on sale.” The stock is down roughly 20% to 25% from its highs, presenting a buying opportunity in a company that sits at the heart of the global tech trade. ASML’s advanced lithography machines are critical for the world’s top chipmakers, making it a key player in the ongoing semiconductor boom driven by AI and advanced computing.

    Year-to-date, ASML’s shares are up about 5.1%, but analysts see much more room to run. The stock has a consensus price target of 1,057.52 euros ($1,170), suggesting a potential upside of 46.2% from current levels. Out of 38 analysts covering ASML, 29 have a buy or overweight rating, highlighting strong market confidence in the company’s growth prospects.

    With its cutting-edge technology and strategic position in the semiconductor industry, ASML is well-poised to benefit as AI continues to transform businesses worldwide. The current dip offers a great entry point for investors looking to gain exposure to a tech stock that’s essential to the future of chip manufacturing. If you’re looking for a tech name that combines innovation with a significant upside, ASML is one to keep on your radar.

    DraftKings (NASDAQ: DKNG) Sports Betting Leader with Big Growth Potential

    DraftKings is one of those stocks that many investors might be underestimating right now, especially given the current market environment. Despite the Federal Reserve’s recent rate cut signaling economic uncertainty, there are compelling reasons to consider adding DraftKings to your portfolio. Here’s why this online sports betting company is worth a closer look.

    DraftKings’ stock is still trading well below its peak, down 46% from its 2021 highs and currently 16% off its 52-week high set in March. This pullback presents a unique entry point, especially considering that analysts are still optimistic. The average 12-month price target is $49.62, suggesting a potential upside of nearly 25% from current levels.

    DraftKings isn’t just about sports betting anymore. The company has expanded into online casino games, offering another revenue stream that complements its sportsbook business. This move opens up a second profit center, providing a broader base for growth. The online casino market itself has been gaining traction, with revenues up 32.5% year-over-year as of July. Despite only being live in seven states, the online casino segment is already making a dent in traditional brick-and-mortar gambling, which could drive even more growth as more states consider legalization.

    Growth prospects for DraftKings remain robust. Last quarter, revenue surged 26% year-over-year, and the company raised its full-year guidance, expecting revenue growth of 38% to 43% in 2024. DraftKings also anticipates EBITDA of between $340 million and $420 million this year, with a target of up to $1 billion next year. As DraftKings continues to establish itself in new markets, profitability tends to improve as marketing costs decrease and customer loyalty builds.

    Looking ahead, the broader industry outlook is also promising. Goldman Sachs estimates that the U.S. sports betting market could grow from $10 billion today to $45 billion at its peak, while the online casino market in the U.S. is expected to grow to $13.7 billion by 2027, surpassing the U.K. as the world’s largest.

    While DraftKings may not be a core holding for every portfolio due to its relative newness and volatility, it presents a strong growth opportunity for those looking to add some upside potential. With expanding markets, multiple revenue streams, and a stock that’s still trading at a discount, DraftKings is well worth considering.

    Bear Watch Weekly: Stocks to Sideline Now

    By
    Editorial Staff
    -
    0

    The right stocks can make you rich and change your life.

    The wrong stocks, though… They can do a whole lot more than just “underperform.” If only! They can eviscerate your wealth, bleeding out your hard-won profits.

    They’re pure portfolio poison.

    Surprisingly, not many investors want to talk about this. You certainly don’t hear about the danger in the mainstream media – until it’s too late.

    That’s not to suggest they’re obscure companies – some of the “toxic stocks” I’m going to name for you are in fact regularly in the headlines for other reasons, often in glowing terms.

    I’m going to run down the list and give you the chance to learn the names of three companies I think everyone should own instead.

    But first, if you own any or all of these “toxic stocks,” sell them today…

    Microchip Technology (NASDAQ: MCHP)

    Time to Take Profits Amid High Valuation

    Microchip Technology has had a solid run, but now might be the time to take some chips off the table. While the company’s fundamentals appear to have bottomed, the stock is currently trading at a historically high price-to-earnings (P/E) ratio, raising concerns about valuation. With the broader semiconductor sector facing a less optimistic outlook, MCHP’s premium valuation could limit further upside in the near term.

    Truist Securities recently downgraded Microchip from Buy to Hold, slashing its price target from $89 to $80. This new target reflects a 24x multiple on revised 2025 EPS estimates of $3.33, down from $3.69. The downgrade highlights concerns that the recovery anticipated in 2025 is already priced into the stock, making significant gains from current levels more challenging.

    Considering these valuation concerns and the tempered outlook on the semiconductor sector, it may be prudent to reduce exposure to Microchip Technology until there is clearer evidence of sustained growth.

    Plug Power (NASDAQ: PLUG)

    Struggling to Turn Promise into Profits

    Plug Power has been making headlines with its ambitious goal to build the first commercially viable market for hydrogen fuel cell technology. However, the financials paint a much bleaker picture. In the second quarter, Plug posted revenue of $143.3 million, a significant drop from $260.1 million in the same period last year. Even more concerning is the company’s continued struggle with profitability, reporting an operating loss of $244.6 million—slightly worse than the $233.8 million loss a year ago.

    Plug’s losses came in at 36 cents per share, a sign that despite deploying over 69,000 fuel cell systems and establishing more than 250 fueling stations, the company is far from being a viable business. Their projected full-year revenue range of $825 million to $925 million suggests little to no growth compared to last year’s $891 million, highlighting just how challenging the path ahead could be.

    PLUG stock has tumbled 54% this year, reflecting market skepticism about the company’s ability to turn its technology into a profitable business. Until Plug Power can demonstrate a clear path to profitability, it may be best to avoid or sell this stock.

    Analog Devices (NASDAQ: ADI)

    Valuation Concerns and Slowing Growth Expectations

    Analog Devices is another semiconductor stock that looks overvalued given the current market dynamics. The company’s fundamentals are thought to have hit a low, with a recovery projected for 2025. However, much of this anticipated growth seems to be baked into the current stock price, which is trading at a lofty 28x CY25 EPS—close to peak levels for the company.

    Truist recently downgraded ADI from Buy to Hold, reducing the price target from $266 to $233, based on a 28x multiple that reflects a traditional 7x discount compared to its analog peers. Analysts note that while a significant recovery in revenue and EPS growth is expected in 2025, the market is already forecasting this recovery, leaving limited room for upside.

    With the broader semiconductor sector entering a period of slower growth and ADI trading near peak valuation multiples, this could be a good opportunity to trim positions. Waiting for a better entry point or clearer growth signals could be a more prudent approach for long-term investors.

    Tesla’s Upcoming Catalysts: Time to Buy?

    By
    Editorial Staff
    -
    0

    Tesla (TSLA) is gearing up for a series of key events that could significantly impact its stock price in the coming months. Despite facing challenges over the past few years, including compressed margins, intense competition, and corporate shake-ups, the electric vehicle leader has some major opportunities on the horizon that could shift the narrative. Here’s what investors need to keep an eye on as we move into October.

    Robotaxi Event: A Potential Game-Changer

    On October 10, Tesla will host its highly anticipated Robotaxi AI event, which has the potential to redefine the company’s future. Investors are eagerly awaiting the unveiling of Tesla’s purpose-built, fully autonomous vehicle prototype, known as the Cybercab. Elon Musk is expected to provide updates on regulatory approvals and timelines for rolling out the Robotaxi service, which could unlock a multitrillion-dollar market opportunity.

    Estimates for the autonomous taxi market vary widely. MarketsandMarkets predicts the market will be worth $45.7 billion by 2030, but Cathie Wood of Ark Investment Management sees an even larger opportunity, projecting a market size between $8 trillion and $10 trillion. Wood believes Tesla could capture up to 50% of this market, potentially driving a tenfold increase in its stock price. While these figures may seem ambitious, Tesla’s ongoing advancements in Full Self-Driving (FSD) technology and its vast trove of driving data position it uniquely to capitalize on this growth.

    Q3 Delivery and Production Numbers

    Before the Robotaxi event, Tesla will report its third-quarter delivery and production data on October 2. Analysts expect the company to deliver approximately 460,000 vehicles, in line with current consensus estimates. This data will provide investors with insight into Tesla’s ability to maintain its production momentum amid rising competition from rivals like BYD.

    Tesla’s Q3 results will also serve as a critical checkpoint for understanding how the company is managing operational challenges, including supply chain issues and recent price adjustments. Any positive surprises in the delivery numbers could act as a catalyst for the stock, while in-line results would keep the market’s focus on the upcoming Robotaxi announcements.

    Interest Rate Cuts: A Tailwind for Demand and Margins

    The Federal Reserve recently cut interest rates by 50 basis points, marking the first reduction since the pandemic began. Lower interest rates can be particularly beneficial for Tesla, as they reduce the cost of financing for consumers, making EV purchases more affordable. With further rate cuts expected in 2024, Tesla could see a boost in demand without needing to lower vehicle prices further, helping to improve its profit margins.

    While Tesla continues to face competition in the EV space, it maintains a slight edge, having delivered 443,956 vehicles in Q2, narrowly outpacing BYD. With the benefit of rate cuts, Tesla can focus on maintaining its market leadership while exploring new growth avenues.

    Expanding Energy Storage Business

    Tesla’s energy business remains an underappreciated part of the company’s overall strategy. In the second quarter, Tesla reported record energy storage deployments and profits, with plans to further ramp up production at its U.S. facilities and a new Megapack factory in China. As demand for renewable energy storage solutions grows, Tesla is positioning itself as a leader in this space, which could add another layer of growth to its already diverse business model.

    Valuation and Market Sentiment

    Currently, Tesla’s shares trade at 8.8 times trailing-12-month sales, below the historical five-year average of 9.7x. While not the cheapest, the valuation is more reasonable given Tesla’s long-term potential and recent market correction. For investors considering whether to enter or expand their positions, these upcoming catalysts could serve as pivotal moments that drive the stock higher.

    Bottom Line

    Tesla is heading into October with multiple events and updates that could reshape investor sentiment. From the unveiling of new autonomous technologies to solid delivery figures and supportive macroeconomic conditions, the next few weeks will be crucial. For those looking to capitalize on potential stock movements, now might be the time to watch Tesla closely.

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