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    Three High-Yield Stocks for October and Beyond

    By
    Editorial Staff
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    0

    With the Federal Reserve recently cutting rates for the first time in four years, dividend stocks are looking increasingly attractive. Lower rates make high-yielding stocks even more appealing, especially those with solid fundamentals like low debt levels and strong growth potential. We’ve identified a few standout names that not only offer generous payouts but also have the potential for significant price appreciation in the months ahead. Let’s dive into three high-dividend stocks that could benefit from the upcoming rate cuts.

    Exxon Mobil (NYSE: XOM) Energy Giant with Strong Dividend and Growth Potential

    Exxon Mobil stands out as a top pick in the energy sector, combining a solid dividend yield with low debt and significant upside potential. Currently, Exxon boasts a 3.37% dividend yield and one of the lowest debt-to-equity ratios in its peer group at 16%, highlighting the company’s strong balance sheet. Exxon’s stock has performed well this year, up 14% year-to-date, outperforming many of its energy peers.

    Analysts see even more room for growth, with consensus price targets suggesting a potential gain of over 17% in the next 12 months. Morgan Stanley’s Devin McDermott, who recently maintained his overweight rating on Exxon, sees a potential upside of 28%, citing the company’s resilient operations and integrated business model that can weather lower commodity prices. Exxon’s global presence and diversified energy portfolio make it a reliable choice for dividend investors looking to hedge against economic uncertainties.

    Devon Energy (NYSE: DVN) High Yield and High Upside Despite Recent Struggles

    Devon Energy is another high-dividend name worth considering, particularly for those seeking higher yield opportunities. Devon’s dividend yield is the highest on our list at 5.05%, offering substantial income for investors. While the stock has struggled this year, down about 11% year-to-date due to operational missteps and integration challenges, analysts believe there’s significant upside ahead. Consensus estimates point to more than 40% potential gains, making Devon a compelling pick despite its recent hurdles.

    Devon’s commitment to returning capital to shareholders through dividends remains strong, and the company’s robust capital return program helps offset some of the recent volatility. As the rate-cutting cycle begins, Devon’s high yield combined with its growth prospects could present a lucrative opportunity for investors willing to look past short-term setbacks.

    Hewlett Packard Enterprise (NYSE: HPE) Steady Returns and Compelling Valuation

    Stepping outside the energy sector, Hewlett Packard Enterprise offers a tech play with a solid dividend and growth outlook. With a 3% dividend yield and a forecasted upside of over 20% according to analysts, HPE provides a balance of income and growth potential that’s hard to ignore. The stock is up 6.2% this year and recently gained traction after Bank of America’s Wamsi Mohan upgraded it to a buy, citing an attractive valuation at current levels.

    Mohan raised his price target to $24, implying nearly 39.3% upside, highlighting HPE’s potential to deliver steady returns even in a shifting economic environment. As the tech sector continues to benefit from a lower cost of capital due to rate cuts, HPE stands out as a reliable option for dividend-focused investors looking for exposure to technology.

    Small-Cap Stocks Set to Benefit from the Fed’s Rate Cuts

    By
    Editorial Staff
    -
    0

    With the Federal Reserve recently cutting interest rates by an oversized half-percentage point, small-cap stocks are positioned to outperform. Lower rates make borrowing cheaper, particularly benefiting companies with high levels of floating-rate debt. This dynamic has already started to lift small-cap indexes, like the Russell 2000, which rose 2.1% in the past week alone. We’ve identified three small-cap stocks that not only have significant upside potential but also stand to gain the most from this new rate environment due to their high debt loads and solid analyst support.

    Civitas Resources (NYSE: CIVI) Undervalued Energy Stock with Cash Return Potential

    Civitas Resources is an energy producer that has faced some challenges in 2024, with the stock down about 21% year-to-date. However, the company’s fundamentals remain solid, and nearly all analysts covering Civitas are optimistic about its prospects—94% rate it as a buy. The company’s total debt stands at 79% of its equity, positioning it to benefit from reduced borrowing costs as rates decline.

    Analysts see Civitas trading at a discount compared to its peers, which could mean significant upside ahead. JPMorgan recently initiated coverage with an overweight rating and set a price target of $67, implying a potential 23% gain from current levels. One of the key attractions of Civitas is its revamped cash return program, which now prioritizes share buybacks, potentially boosting the stock’s valuation and providing a pathway for further gains.

    Chart Industries (NYSE: GTLS) Energy Equipment Manufacturer Poised for a Rebound

    Chart Industries, a manufacturer of engineering equipment for the energy sector, has seen its stock fall 10% this year, but the outlook remains positive. The company’s debt load—1.4 times its equity—makes it a prime candidate to benefit from the recent rate cuts. Analysts are upbeat, with 74% rating the stock a buy and forecasting an average upside of 49%.

    Morgan Stanley recently upgraded Chart Industries to overweight, highlighting its attractive valuation and strong positioning in the natural gas, energy transition, and renewables markets. Analyst Devin McDermott sees the stock climbing to $175, which would represent a 43% increase from current levels. Chart’s exposure to high-growth energy sectors and its ability to benefit from lower interest rates make it an intriguing pick for investors looking to capitalize on the evolving energy landscape.

    Sarepta Therapeutics (NASDAQ: SRPT) Biotech with Big Upside on New Drug Launch

    Sarepta Therapeutics, a biotechnology company specializing in gene therapies, is one of our top picks in the small-cap space. The stock has gained 32% this year, and analysts see even more potential ahead. Sarepta’s total debt is currently more than one-and-a-half times its equity, meaning it stands to benefit significantly from lower interest rates.

    Analyst sentiment is highly favorable, with four out of five analysts rating it a buy, and a consensus price target suggesting a potential upside of 52.5%. A key catalyst for Sarepta is its recent launch of Elevidys, a gene therapy for Duchenne muscular dystrophy. While expectations for the drug’s ramp-up have been adjusted to 2025 and beyond, Evercore ISI recently upgraded Sarepta, citing a good entry point for the stock. Analyst Gavin Clark-Gartner set a price target of $179, approximately 41% higher than current levels, underscoring Sarepta’s potential as a strong growth story in the biotech sector.

    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.

    Exxon Mobil (NYSE: XOM)
    Solid Dividend and Strong Upside Potential

    Exxon Mobil is one of the standout picks in the energy sector, particularly as the Federal Reserve kicks off its rate-cutting cycle. The stock combines an attractive dividend yield of 3.37% with a low debt-to-equity ratio of 16%, making it a reliable choice for investors seeking both income and growth. Exxon’s stock has gained 14% this year, outpacing many of its energy peers, and analysts are bullish on its future prospects, with a consensus price target suggesting more than 17% upside in the next 12 months.

    One of the key reasons to consider Exxon is its resilience in volatile markets. The company’s strong balance sheet, integrated global operations, and focus on cost management provide a cushion against lower commodity prices. Morgan Stanley’s Devin McDermott remains particularly optimistic about Exxon, maintaining an overweight rating and forecasting a potential 28% upside. McDermott notes that Exxon and other major energy companies offer more stability thanks to their diversified business models, which help mitigate the impact of market fluctuations.

    With the energy sector lagging the broader market by about 10% in the third quarter, Exxon’s defensive characteristics and solid dividend make it an appealing option for investors looking to hedge against potential economic slowdowns. As the Fed’s rate cuts start to impact the market, Exxon’s combination of income and growth potential positions it well for continued gains.

    Chart Industries (NYSE: GTLS)
    Strong Upside Potential as Rates Fall

    Chart Industries is an interesting small-cap play that stands to benefit significantly from the Federal Reserve’s recent rate cut. The company, which manufactures equipment for natural gas, energy transition, and renewable energy applications, has seen its stock drop about 10% this year. Despite this pullback, there’s a lot to like about Chart’s potential upside in the current market environment, especially as lower interest rates make it cheaper for companies like Chart to manage their floating-rate debt and refinance at better terms.

    The optimism around Chart is supported by a positive outlook from analysts, who see an average upside of 49% for the stock. Currently, about 74% of analysts covering Chart rate it a buy, reflecting a strong belief in the company’s ability to rebound and capitalize on its core markets. Morgan Stanley recently upgraded the stock to overweight, highlighting its attractive valuation and positive risk-reward profile. Analyst Devin McDermott set a price target of $175, which implies a potential gain of 43% from recent levels.

    What makes Chart particularly compelling is its diversified portfolio, focused on growth areas like natural gas and renewables. This strategic positioning aligns well with the broader shift towards energy transition and could drive long-term value for shareholders. As the rate-cutting cycle kicks in, companies like Chart that are positioned within growth markets and have the potential to refinance debt more cheaply could see significant tailwinds, making this a stock worth watching.

    Best Buy (NYSE: BBY)
    Benefiting from Rate Cuts and Competitive Pricing

    Best Buy is looking like an attractive pick right now, especially as the Federal Reserve begins its rate-cutting cycle. The stock is up 24% this year, and there are several factors that make it a standout in the retail sector. As interest rates drop, we expect to see increased demand for big-ticket items like appliances, which tend to sell better when consumers feel more confident and housing turnover picks up.

    What sets Best Buy apart is its ability to compete effectively with e-commerce giants like Amazon. According to a recent pricing study, Best Buy’s prices are within 1% or better of Amazon’s on nearly nine out of every ten items, particularly in key categories like televisions, home theater, and accessories. This competitive pricing strategy helps Best Buy maintain market share against online retailers while continuing to drive foot traffic into its stores.

    Additionally, Best Buy’s shares remain undervalued compared to its sector peers, which offers an intriguing buying opportunity for investors looking to capitalize on the company’s robust positioning. As the rate cuts begin to take effect, Best Buy is poised to benefit from both improved consumer sentiment and increased spending on big-ticket electronics, making it a solid addition to any portfolio in the current environment.

    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…

    Dollar Tree (DLTR)

    Dollar Tree (NASDAQ: DLTR) has had a tough year, and the stock’s recent 22% drop following a cut in its full-year outlook has raised even more concerns. The retailer blamed weaker sales for its downgraded guidance, and analysts have taken note. In 2024, Dollar Tree is down nearly 53%, making it a prime candidate for tax-loss selling.

    With half of the analysts covering Dollar Tree rating it as a “hold,” there’s not much optimism for a near-term turnaround. BMO Capital Markets recently downgraded the stock, citing the company’s uncertain outlook and dropping its price target to $68, offering only about 7% upside. Given these factors, Dollar Tree could face continued selling pressure as the year winds down. If you’re holding DLTR, now might be the time to consider cutting your losses and moving on to stronger opportunities.

    ZoomInfo Technologies (ZI)

    ZoomInfo Technologies (NASDAQ: ZI) is another stock that has struggled in 2024, with shares down 42% year-to-date. Despite the company’s long-term potential, analysts are cautious about its near-term outlook. More than half of those covering the stock have rated it as a “hold,” reflecting concerns about continued revenue headwinds.

    Mizuho Securities recently flagged issues around downsells and renewals that could keep weighing on the stock in the short term. While there’s hope for a rebound in the longer term, ZoomInfo’s current challenges make it a potential candidate for tax-loss selling. Investors may want to consider exiting the stock before further declines.

    Rivian Automotive (RIVN)

    Rivian Automotive (NASDAQ: RIVN) has been a high-profile player in the electric vehicle space, but it’s also been one of 2024’s biggest underperformers. With shares down significantly this year, Rivian could see additional selling pressure as investors look to lock in tax losses.

    While Rivian’s future in the EV market remains promising, the company is still in the early stages of growth and faces significant competition. The stock’s performance this year makes it a candidate for trimming before the year ends, especially if you’ve held it through its rough 2024 run.

    Billionaires Are Dumping Nvidia Stock and Buying These Supercharged AI Stocks

    By
    Editorial Staff
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    0

    With Nvidia’s meteoric rise amid the artificial intelligence (AI) boom, many investors are wondering if it’s time to take profits. Some of the world’s top hedge fund managers are already making moves, cutting back their Nvidia stakes and shifting capital into other AI-driven opportunities. Surprisingly, they’re betting big on a few resilient stocks that are well-positioned to benefit from the continued AI revolution. Let’s dive into three of these supercharged picks and why they’re catching the attention of some of the most successful investors.

    CrowdStrike (NASDAQ: CRWD) Cybersecurity in the Age of AI

    CrowdStrike might not seem like an obvious AI play at first, but its services are essential in the increasingly digital and AI-driven world. As businesses rely more heavily on cloud infrastructure and artificial intelligence, the need for robust cybersecurity solutions only grows. CrowdStrike, a leader in endpoint security and threat detection, plays a critical role in this ecosystem.

    During the brief COVID-19 recession in 2020, CrowdStrike’s revenue growth accelerated as companies scrambled to protect their networks and data amid the shift to remote work. Fast forward to today, and the demand for its services is stronger than ever. Despite facing challenges like a recent software update glitch that caused IT outages, CrowdStrike quickly implemented strategies to retain customers and minimize the impact, forecasting only a $60 million revenue headwind out of its $3.9 billion in annual recurring revenue.

    CrowdStrike’s ability to weather multiple economic disruptions and maintain robust growth makes it a standout AI play. With AI-driven cybersecurity becoming a necessity, this stock is well-positioned to continue growing even in tough economic environments.

    Microsoft (NASDAQ: MSFT) A Recession-Proof Powerhouse with AI Upside

    Microsoft has long been one of the most reliable tech companies, with a track record that shows resilience even during recessions. During the 2007–2009 financial crisis, Microsoft’s revenue and profitability remained strong. In fact, it actually grew its sales during most quarters of the downturn, highlighting its ability to adapt and innovate even when the broader economy is struggling.

    Fast forward to today, Microsoft has evolved far beyond its origins in PC software. Now a leader in cloud computing with Azure, it’s also integrating AI capabilities across its platforms, including its flagship product Microsoft 365 and even its gaming division with AI-powered tools. This diversification, combined with its strategic AI investments, has allowed Microsoft to capitalize on the AI revolution without being overly dependent on any one segment.

    Given Microsoft’s proven ability to thrive during uncertain times and its leadership in AI, it’s easy to see why fund managers are flocking to this stock. Billionaire investors are betting on Microsoft’s long-term growth potential as AI transforms industries globally.

    Invesco QQQ Trust (NASDAQ: QQQ) Diversifying AI Exposure Through a Tech-Focused Index

    While Nvidia has been a top AI play, billionaire investors like Ken Griffin and Israel Englander are shifting capital into the Invesco QQQ Trust (QQQ), which offers exposure to a broad range of tech stocks that are also benefiting from the AI boom. The QQQ tracks the Nasdaq-100 index, which is heavily weighted toward technology companies that are leveraging AI to drive future growth.

    These billionaires aren’t completely abandoning Nvidia, but they are diversifying by reallocating significant capital into the QQQ. This move provides exposure to not only Nvidia but also other AI-driven companies like Microsoft, Alphabet, and Amazon, all of which are core holdings within the index. For investors looking to gain broad exposure to AI technology without the risks of holding individual stocks, QQQ presents an excellent option.

    In fact, during the second quarter of 2023, billionaire hedge fund managers Cliff Asness, Steven Cohen, and Ken Griffin each made substantial increases to their QQQ positions—some by over 500%. Their decision reflects a strategic approach to capitalize on AI’s long-term potential while spreading out risk across multiple high-growth tech companies.

    As Gold Breaks Records, Here’s a Smart Way to Trade It

    By
    Editorial Staff
    -
    0

    Gold recently reached a new record high of around $2,610 per ounce, more than ten times its low of just over $253 per ounce back in 1999. This surge comes at a time when the U.S. government is projected to spend a record $1.2 trillion on interest payments in 2024, marking the first time interest payments have surpassed military spending. It’s no coincidence that both events are happening simultaneously.

    For those who are long-term investors, gold’s rise isn’t just about short-term fluctuations—there’s a strong fundamental case supporting this trend. But it’s important to understand why gold is performing the way it is, and how to navigate potential opportunities, especially if you’re thinking of using options rather than buying physical gold directly.

    Why Gold Is Rising

    Gold has long been viewed as a safe-haven asset, one that tends to benefit when economic and geopolitical uncertainties are high. It also has a low correlation with other asset classes, making it an effective hedge in times of market volatility. Carter Braxton Worth from Worth Charting recently emphasized on CNBC’s Fast Money that during significant declines in the S&P 500 (specifically, drops of over 20%), gold has almost always risen, except for one instance. This highlights gold’s unique role as an uncorrelated hedge.

    For investors who hold physical gold, this asset is typically held through market fluctuations. Unlike stocks, which are often sold during volatile periods, physical gold holders tend to stick with it, contributing to its stability in times of stress.

    Central Bank Activity and Its Impact

    One particularly interesting development is the recent behavior of central banks, especially Saudi Arabia. Historically, Saudi Arabia has been a key player, buying gold when prices dipped and selling when prices rose. However, the country has continued to buy even as prices have soared, which could indicate a shift in their long-standing strategy. Given Saudi Arabia’s pivotal role in global energy markets and the dollar’s reserve currency status, this is a noteworthy change.

    On a broader scale, central banks worldwide have been amassing gold at impressive rates. In 2023, central banks purchased 1,037 metric tons of gold, with China buying 225 tons, marking its largest purchase since 1977. These strong purchasing trends have continued into 2024, with central bank activity in the first quarter ranking fourth in the past two years. For context, one metric ton is 1,000 kilograms or about 1.1 U.S. tons.

    Is Gold Overbought?

    Despite these positive fundamentals, there are signs that gold may be slightly overbought in the short term. Over the last 20 years, the average 30-day return on gold has been about 79 basis points (0.79%). However, when the 14-day RSI (Relative Strength Index) exceeds 70, that average drops to 37 basis points.

    As of the most recent close, the RSI for gold stood at 69.147, which suggests it’s nearing overbought territory. While this doesn’t mean gold will immediately drop, it’s a signal for investors to proceed with some caution in the near term.

    A Potential Trade Using Options

    If you’re looking for a way to capitalize on gold’s momentum without directly buying the metal, you might consider an options strategy on the SPDR Gold Shares (GLD), which tracks gold prices. One potential approach involves purchasing a longer-dated call option while selling a nearer-dated strangle to offset decay.

    Here’s how that trade could look:

    • Sell an October 18 GLD $228 put
    • Buy a January 17 GLD $240 call
    • Sell an October 18 GLD $255 call

    This strategy allows you to participate in gold’s upside while managing time decay, though it comes with the risk of having to buy GLD at a price about 5% lower than its current value if the price drops. The good news is that declines of more than 5% in gold over a 30-day period are relatively rare, occurring less than 10% of the time.

    Final Thoughts

    Gold’s recent surge has caught the attention of many investors, especially as we move into a period of heightened economic and political uncertainty. While physical gold remains a strong asset for many, options can provide another way to benefit from gold’s movement without requiring the upfront cost of buying the metal itself.

    As always, it’s important to stay informed and weigh the risks, but with central banks continuing to buy and volatility on the rise, gold remains a strong contender in today’s market. Whether you’re holding the metal itself or trading options on GLD, gold’s record highs offer intriguing possibilities for investors looking for a hedge in uncertain times.

    Three Strong Conviction Buys for the Week Ahead

    By
    Editorial Staff
    -
    0

    When it comes to stocks, 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.

    General Electric (GE) – GE Aerospace Could Soar as Boeing Struggles

    General Electric (NYSE: GE) is increasingly becoming a standout in the aerospace industry, thanks to its dominant position with the LEAP engine. This advanced engine is set to power the majority of narrow-body planes in the coming years, potentially accounting for over 80% of engines in the air by the next decade. As Boeing (NYSE: BA) continues to grapple with manufacturing delays, particularly following the 737 Max 9 door-plug blowout earlier this year, airlines are being forced to keep older aircraft in service longer. This situation is driving strong demand for GE’s cutting-edge aerospace products, reinforcing its status as a leader in the sector.

    The aerospace and defense industry has seen significant gains in 2024, with the iShares U.S. Aerospace & Defense ETF (NYSEARCA: ITA) climbing nearly 16%. GE’s stock has outpaced this, surging 70% year-to-date. With global geopolitical tensions on the rise, defense budgets are expanding, and GE stands to benefit from this trend as well.

    Additionally, there’s a broader reinvestment wave in U.S. manufacturing, partly driven by a shift towards de-globalization and a focus on bringing supply chains closer to home. This trend is accelerating manufacturing construction across the country, further bolstering GE’s outlook.

    Given GE’s strong market position, impressive stock performance, and the ongoing demand for its aerospace technology, now could be an opportune time to add this stock to your portfolio. While Boeing faces challenges, GE appears well-positioned to capitalize on the current dynamics in the aerospace sector.

    Clorox (CLX) – Golden Cross Signals a Potential Bullish Run

    Clorox (NYSE: CLX) is catching the attention of investors as it enters September with strong momentum. After a solid August, where the stock climbed more than 20%, Clorox is now flashing a classic bullish chart pattern known as the “golden cross.” This occurs when the 50-day moving average crosses above the 200-day moving average, signaling potential further upside. What makes this even more compelling is that Clorox’s 200-day moving average is starting to slope upward, adding weight to the bullish sentiment.

    This technical signal comes after a challenging period for Clorox, where it had previously experienced a “death cross” back in May. However, the company has since turned the corner, bolstered by stronger-than-expected fiscal fourth-quarter earnings and an optimistic outlook for fiscal 2025. Analysts are now more confident in Clorox’s ability to weather economic uncertainties, especially given its position as a defensive play. The company’s 3%+ dividend yield also adds to its appeal, offering income potential in addition to capital gains.

    As Clorox moves into September with this golden cross in play, it might be an opportune time to consider adding this stock to your portfolio. With the Federal Reserve potentially easing interest rates soon, and Clorox’s strong performance in recent months, the stock could be poised for further gains as we head into the fall.

    BJ’s Wholesale Club (BJ) – Strong Growth and Expanding Footprint Make BJ’s a Buy

    BJ’s Wholesale Club (NYSE: BJ) is showing impressive momentum, making it a compelling pick for your watchlist. The company has been delivering robust results, with a recent earnings report that exceeded expectations on both the top and bottom lines. BJ’s also reaffirmed its forward guidance, signaling confidence in its growth trajectory.

    The warehouse club’s strength lies in several key areas: strong traffic trends, rising unit volumes in grocery categories, and increasing customer engagement. These factors are driving the company’s earnings potential, with plenty of room for further growth as BJ’s continues to expand its footprint by opening new stores in untapped markets.

    BJ’s stock has climbed about 20% this year, and there’s still potential for more upside. The company’s strategy of refreshing its product assortment and enhancing customer experience is likely to keep boosting its top-line performance. Additionally, BJ’s has a long runway for new club growth, which should help it gain further market share in the competitive retail space.Given these strong fundamentals and growth prospects, BJ’s Wholesale Club is well-positioned to continue its upward trend. If you’re looking for a stock with both solid performance and future growth potential, BJ’s deserves a close look.

    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…

    Etsy (NASDAQ: ETSY)

    Etsy (NASDAQ: ETSY) has been struggling with slowing revenue growth, a trend that’s becoming more evident across the e-commerce sector. In its most recent earnings report, Etsy posted another quarter of declining year-over-year gross merchandise sales (GMS), down 2.1% YOY. While revenue managed a modest 3.0% YOY increase, this growth was driven primarily by higher fees and advertising, not from expanding its core business. Net income took a hit, dropping 14% YOY, underscoring the challenges Etsy faces as its pandemic-driven growth continues to fade.

    Despite hopes for a rebound, Etsy’s stock has been in a downward spiral, falling 32% year-to-date and more than 80% from its peak. The reality is that Etsy’s growth story may be over, and the market seems to be reflecting that sentiment. With revenue growth now dependent on price hikes rather than increased sales volume, the long-term outlook appears bleak.

    Given these factors, it may be time to reconsider holding onto Etsy. The stock’s current trajectory suggests that further declines could be on the horizon, especially if revenue begins to decline YOY, as we’ve already seen with GMS. Selling now could be a prudent move to avoid deeper losses as the company continues to navigate a challenging environment.

    Northrop Grumman (NYSE: NOC)

    Defense stocks have been on a remarkable run recently, largely fueled by the volatile geopolitical landscape. Northrop Grumman (NYSE: NOC) has benefited from this surge, with the stock up 16% over the past month alone. The company has delivered strong results, including a 7% year-over-year increase in revenue to $10.2 billion and a 19% jump in earnings per share to $6.36. Their impressive performance is further highlighted by a record order backlog of $83.1 billion, including $38.4 billion in funded contracts.

    However, despite these solid fundamentals, Northrop’s stock now trades at a rich valuation, roughly 20 times earnings. While this premium valuation reflects the company’s strong position in the defense sector, it also suggests that much of the news may already be priced in. Given the rapid ascent in its stock price and the current valuation, the downside risk is growing, especially if the geopolitical environment stabilizes or if defense budgets don’t expand as expected.

    For investors, this could mean that the risk of holding Northrop Grumman is starting to outweigh the potential rewards. With the stock now vulnerable to a re-evaluation, particularly if there’s any shift in market sentiment or defense spending forecasts, it may be prudent to consider selling before any potential downside materializes.

    In short, while Northrop Grumman remains a strong company fundamentally, the current market conditions and its elevated stock price suggest that taking profits now could be a wise move. 

    iRobot (NASDAQ: IRBT)

    As robotics continues to capture investor attention, driven by advances in artificial intelligence and automation, it’s crucial to remain discerning about where to place your bets. While the sector holds promise, not all players are well-positioned to capitalize on the opportunities ahead.

    iRobot (NASDAQ: IRBT), known for its popular Roomba vacuum, has been struggling to maintain its footing in a rapidly evolving market. The company has seen its stock price plummet by nearly 81% this year, largely due to inflationary pressures and rising interest rates, which have dampened consumer spending on non-essential tech products. The pandemic-driven surge in consumer tech purchases has also left iRobot with a challenging environment to navigate.

    In an attempt to stabilize, iRobot introduced the “iRobot Elevate” restructuring plan earlier this year, aimed at cutting operational costs and reducing inventory levels. While these efforts have led to some improvement in margins, they may not be enough to spark a meaningful recovery.

    Adding to iRobot’s woes is the growing competition from emerging Chinese companies like Narwal, which are backed by tech giants such as Tencent and ByteDance. Narwal’s innovative products, like self-cleaning mops, are gaining traction and pose a direct challenge to iRobot in the premium market segment.

    Given the intense competition, ongoing operational challenges, and a shifting market landscape, it may be time to consider selling iRobot before its situation potentially worsens. The company’s path to recovery appears steep, and the risks seem to outweigh the potential rewards at this point.

    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.

    Meta Platforms Inc. (META) – “Leveraging AI for a New Wave of Growth”

    Meta Platforms Inc. (NASDAQ: META) has long been seen as a digital advertising powerhouse, but the company’s latest investments in artificial intelligence (AI) could set the stage for a new phase of growth. Earlier this year, Meta’s CFO Susan Li announced plans to spend $37 billion on digital infrastructure in 2024. While this move might seem surprising for a company that doesn’t sell cloud services like some of its tech peers, the reasoning becomes clearer when looking at Meta’s expanding product lineup.

    One of Meta’s most intriguing ventures is its partnership with Ray-Ban to develop AI-enabled smart glasses. These glasses, which weigh only five grams more than standard sunglasses, have become an unexpected hit, especially among visually impaired users. The glasses can snap pictures and provide real-time descriptions of what the user is seeing—an innovation driven by Meta’s AI efforts.

    Additionally, Meta’s development of Llama 3, its latest large language model, has accelerated its capabilities in image recognition and language translation, further enhancing its smart wearables. The most recent version, Llama 8b, is now considered the fastest and most affordable among current-generation language models, providing Meta with a strong foothold in the AI space.

    While Meta’s core business still revolves around digital advertising, which is expected to see a 17.5% revenue jump in the third quarter—thanks in part to increased spending during the upcoming election year—its foray into AI and wearables adds significant upside potential. Investors buying Meta today are getting exposure to both a well-established digital advertising business and the exciting possibilities in AI-driven products like smart glasses and augmented reality devices.

    With Meta’s focus on AI, smart wearables, and its continued dominance in digital advertising, it remains a strong contender for long-term growth, providing a blend of stability and innovation.

    Informatica Inc. (INFA) – “Undervalued AI Data Management with Big Potential”

    Informatica Inc. (NYSE: INFA) has been making steady progress since going public in 2021, focusing on AI-powered cloud data management through its Intelligent Data Management Cloud (IDMC) platform. Over the past three years, Informatica has achieved an average revenue growth of 6.4%, with analysts projecting that growth to accelerate to 9% by 2027.

    Despite these promising fundamentals, Informatica’s stock has experienced a volatile year. After hitting a high of $40 in April, the stock dropped to $23 before settling just above $24. For value investors, this might signal an opportunity. With free cash flows expected to reach $431 million this year (equivalent to $1.43 per share), some models justify a share price between $40 and $50—suggesting an upside of over 90% from its current levels.

    But it’s not just about value. Informatica’s strong position in AI-driven cloud data management makes it appealing to growth investors as well. With a net retention rate of 126% in Q2, the company is excelling at retaining and growing its customer base. As enterprises increasingly adopt cloud storage and AI, companies like Informatica are essential in managing this data, providing cost controls and insights that businesses depend on.

    Given the current market, Informatica also looks like an acquisition target. With fast-moving industry consolidation, major players like Salesforce (CRM) could make a move to acquire a company with a solid platform like Informatica. Any potential buyer is likely to offer at least $35 per share, providing additional upside for investors.

    With both value and growth potential, Informatica looks well-positioned for future gains.

    Coca-Cola FEMSA (KOF) – “Defensive Play for Election Volatility”

    Coca-Cola FEMSA (NYSE: KOF) looks like a solid defensive buy for investors looking to hedge against the upcoming election volatility. Shares of the Mexico-based Coke bottler were recently upgraded to a buy rating, with Goldman Sachs setting a new 12-month price target of $113.70, a notable increase from its previous target of $108.30. With shares currently trading around $84.24, this implies a potential upside of 35%.

    The stock has dropped 9% this year, presenting what analysts see as an attractive entry point. Coca-Cola FEMSA’s demand is expected to remain resilient due to the inelastic nature of soft drink consumption in Mexico, meaning price changes are unlikely to significantly impact demand. The company has seen positive low-single-digit volume growth, with pricing power that has generally outpaced inflation.

    Goldman Sachs also highlights growth opportunities in other regions, particularly Brazil. Coca-Cola FEMSA is investing heavily in expanding its network, with 25 new production lines expected to be added by 2025. Meanwhile, costs in Mexico are expected to moderate in the low single digits, while prices are set to rise in the mid-single digits in the second half of 2024.

    Given the stock’s defensive nature, exposure to less discretionary industries, and strong pricing power, Coca-Cola FEMSA is well-positioned to navigate potential market volatility stemming from the Mexican presidential transition and the upcoming U.S. election. For investors looking for a steady, resilient performer in uncertain times, Coca-Cola FEMSA is a stock worth considering.

    September Watchlist: 3 High-Potential Stocks to Buy this Month

    By
    Editorial Staff
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    As we head into September, certain stocks are showing strong potential despite the recent market turbulence. While stocks rebounded in late August, the start of this month has been choppy for the major indexes. Investors are on edge, bracing for more volatility, but that also creates opportunities. Here are some key names to watch that could see significant upside in the near term.

    Fifth Third Bancorp (FITB) – “Benefiting from a Soft Landing”

    Fifth Third Bancorp (NASDAQ: FITB) is one of the standout names this September. The stock is up 22% year-to-date, and Wolfe Research sees more upside, with a price target that implies over 16% potential growth. One of the reasons Fifth Third is in such a strong position is its minimal exposure to commercial real estate and its focus on high-quality consumer lending.

    The firm expects record net interest income next year, assuming the Federal Reserve implements five 25 basis point rate cuts through the end of 2025. With a 3.3% dividend yield and solid financials, Fifth Third could be a safe bet for investors looking to navigate potential market instability.

    Adobe (ADBE) – “Riding the AI Wave”

    Though Adobe (NASDAQ: ADBE) is down 3.6% year-to-date, the stock has seen a massive 28% rise in the past three months after beating expectations in its fiscal second-quarter results. Wolfe sees this momentum continuing, with a price target of $685, representing a 19% upside.

    What makes Adobe stand out is its dominant position in the creative design and enterprise software markets. As AI continues to reshape industries, Adobe is expected to benefit from faster subscription growth and better monetization, especially considering its vast installed base. This gives Adobe a solid competitive moat, making it a compelling choice for those looking to capitalize on the AI-driven future.

    Vertiv (VRT) – “Poised for Strong Earnings Growth”

    Vertiv (NYSE: VRT), a digital infrastructure company, has been performing impressively this year, with shares up 56% year-to-date. Wolfe sees even more upside, projecting a 41% gain from current levels. Vertiv has faced challenges from inflationary pressures in recent years, but the company’s strategic pricing response has turned things around. Now, with strong volume leverage and pricing power, Vertiv is poised to achieve over 20% profit margins.

    With momentum in its end markets and improved earnings outlook, Vertiv looks like a solid growth opportunity in the tech infrastructure space.

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