Three Strong Conviction Buys for the Week Ahead

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May 19, 2024

Navigating the stock market can be a high-stakes game. Choose incorrectly, and your portfolio might suffer. But the right choices? They could be your ticket to financial triumph. With thousands of stocks to choose from, pinpointing those poised for success is no small feat. It’s a daunting task, requiring hours of market analysis and company research – time that many people simply don’t have.

That’s where we come in. Each week, we delve deep into the market’s vast array of options, sifting through countless possibilities to bring you a select few. These are not just any stocks; they are carefully chosen based on solid research, current market trends, and potential for noteworthy growth.

This week, we’ve honed in on three stocks that stand out from the crowd. Our picks go beyond the mainstream; they’re strategic selections, crafted for significant impact in both the immediate future and over the long haul.

Click here to discover the full watchlist and unveil these exceptional stock picks.

Monster Beverage (MNST) – A Refreshing Opportunity in a Downturn

Monster Beverage, the renowned energy drink manufacturer, has experienced a 6% drop in share price this year, presenting a prime opportunity to buy the dip. Despite a slight miss in first-quarter earnings earlier in May, the underlying dynamics of the company paint a promising picture for potential investors.

Monster has embarked on a strategic move to repurchase up to $3 billion of its common stock, a clear indication of management’s confidence in the stock’s undervalued state. This bold step not only reflects the strength of Monster’s financial position but also signals a commitment to enhancing shareholder value. Analyst insights echo this sentiment, highlighting the company’s ability to outpace its competitors with superior growth rates in both revenue and margins.

Looking ahead, Monster is not just resting on its laurels. The company plans to leverage its pricing power to drive further revenue growth in the coming months. With a robust free cash flow and a pristine balance sheet, Monster is well-equipped to sustain its share repurchase strategy, reinforcing its financial stability and commitment to growth.

In conclusion, Monster Beverage stands out as a compelling buy, with its strategic initiatives and strong market positioning poised to accelerate growth. As noted by Band of America analyst Peter Galbo, the company’s proactive measures and solid financial health make it a standout choice for those looking to invest in a resilient and growing brand in the beverage sector.

Costco Wholesale (NASDAQ: COST) – A Resilient Retail Gem

Costco Wholesale stands out as a solid pick in the retail sector, showcasing both financial strength and strategic foresight in its business model. At the heart of its success are its membership fees, which ensure a steady, predictable revenue stream. This model not only differentiates Costco from peers like Walmart and Target, which are grappling with retail theft issues, but also provides a robust shield against social disruptions.

Costco’s business model is further bolstered by its ability to negotiate large volumes of goods, securing excellent deals for its members. This advantage is critical during fluctuating economic times, making Costco a go-to retailer during periods of both inflation and recession.

The company’s first-quarter report for 2024, released in March, highlighted a 5.6% increase in revenue, reaching $116.2 billion for the 24-week period ended, with net income rising to $1.7 billion from $1.46 billion in the year-ago quarter. Notably, Costco’s debt-to-equity ratio is at a ten-year low of 0.335, mirroring the stability observed in February 2020.

With a strong buy consensus among analysts and a near target price of $792.36 versus its current share price of $797.38, Costco’s stock has appreciated by 19% year-to-date and a striking 212% over the past five years. These numbers affirm Costco as one of the safest and most promising blue-chip stocks in today’s market.

Topgolf Callaway Brands (MODG) – Swinging Towards Growth

Topgolf Callaway Brands has shown resilience and strategic savvy in navigating its business landscape, making it a compelling pick for our weekly watchlist. Despite a mixed earnings report earlier this month, the company’s proactive approach to growth and customer engagement positions it well for future success.

With a series of new initiatives aimed at boosting same-venue sales, Topgolf Callaway is poised to capitalize on increasing foot traffic. The company’s enhanced focus on marketing, especially during the summer, along with the deployment of a new data platform, allows for targeted promotions and deals that are expected to attract more visitors. These efforts are tailored to resonate well with consumers, driving both revenue and brand engagement.

Furthermore, Topgolf Callaway is in the early stages of exploring synergies across its various business units, which promises additional efficiency and growth. With the uptick in golf participation and Topgolf’s increasing market share in golf balls, the company’s strategic position appears increasingly robust.

Shares of Topgolf Callaway have already seen a 5% increase this year, reflecting investor confidence. Analyst Alexander Perry encapsulates the sentiment, stating, “We rate MODG shares Buy as we believe shares are undervalued given an uptick in golf participation, increasing market share in golf balls, and strong unit growth at Topgolf.” This outlook underscores a clear trajectory for growth and value, making Topgolf Callaway a standout addition to any investment portfolio.

Bear Watch Weekly: Stocks to Sideline Now

By

Editorial Staff

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May 18, 2024

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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…

Advanced Micro Devices (NASDAQ:AMD)

Despite the initial excitement around AMD’s AI chip sales projections earlier in 2024, the reality has proven less rosy. AMD’s shares skyrocketed on optimistic sales forecasts, only to shed about 30% from their springtime peaks after a disappointing first-quarter update.

While AI remains a significant trend, AMD’s forecast for $3.5 billion in AI sales for 2024 didn’t see an upward revision post-Q1, signaling a potential stagnation in what many hoped would be a more dynamic growth segment. Moreover, the company’s second-quarter revenue guidance indicates only modest year-over-year growth, casting further doubts on its short-term revenue prospects.

Financially, AMD still faces challenges. The first-quarter results revealed a mere 6% operating margin in its client revenue segment, underscoring a crucial need for improvement. Although there was some margin expansion in its data center operations, this hasn’t been enough to offset weaknesses elsewhere.

Given the lackluster guidance and ongoing margin issues, it might be wise to hold off on viewing the recent dip in AMD’s stock price as a buying opportunity. Instead, consider this period a recalibration of expectations. For those holding shares, it’s a time for patience, but for potential buyers, caution is advised until AMD demonstrates a more robust financial turnaround.

Starbucks (NASDAQ:SBUX)

Despite the company’s iconic brand and strong historical performance, recent developments signal potential trouble ahead.

Starbucks recently delivered its weakest performance in decades, a concerning sign given the current leadership instability. The company is now under its third CEO since Howard Schultz, and the recent results do not inspire confidence in a quick turnaround. Laxman Narasimhan, the latest at the helm, faces the tough challenge of steering Starbucks back to its former dominance in an increasingly competitive coffee market.

The shift towards smaller, drive-through oriented shops hasn’t fended off new and agile competitors, especially those capitalizing on trendy offerings like boba, which Starbucks has been slow to adopt.

While the risk of the company failing is minimal in the near term, the ongoing leadership challenges and lackluster adaptation to market trends make SBUX a less attractive investment right now. Investors might want to steer clear or consider reducing holdings until clearer signs of effective leadership and strategic direction emerge.

Snowflake (NYSE: SNOW) – Cooling Off Amidst AI Hype

Snowflake, a leader in cloud-based data warehousing, has seen its shares tumble 21% this year, sharply contrasting with the broader tech surge driven by AI excitement. This decline highlights growing concerns that Snowflake may be lagging in the AI race, a crucial area of growth within the tech sector.

Despite its historic IPO in September 2020, which marked the largest software debut of its time and pushed its market valuation to a peak of $123 billion by the end of 2021, Snowflake’s value has more than halved to just over $50 billion. This downturn is particularly glaring as its peers in the SaaS domain, like Palantir and MongoDB, have successfully capitalized on their AI initiatives, seeing their stocks appreciate as a result.

Adding to its challenges, Snowflake faced a leadership shakeup with the departure of CEO Frank Slootman earlier this year, further shaking investor confidence. Although the new CEO, Sridhar Ramaswamy, brings a strong AI background from his time at Alphabet and his AI startup Neeva, the company’s future in AI remains uncertain. Recently, Snowflake announced the launch of Arctic, its own large language model, signaling a step towards strengthening its AI offerings. However, it’s still an open question whether this move can significantly alter its trajectory in the competitive AI landscape.

Investors might consider staying on the sidelines for now, watching how Snowflake’s strategies under new leadership unfold in the rapidly evolving tech arena.

May’s Must-Watch Dividend Stocks

By

Editorial Staff

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May 16, 2024

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May is a great time to reassess your investment strategies, especially if you’re looking to add a layer of stability to your portfolio with dividend stocks. While investments inherently come with risks, dividend stocks stand out for their dual benefits: potential for appreciation and a cushion against market volatility through regular payouts.

Dividend stocks are more than just a source of steady income; they symbolize a company’s robust financial health and a commitment to rewarding shareholders. In a landscape where returns on safer investments like CDs and savings accounts remain low, dividend-paying stocks offer an appealing mix of income and the potential for capital growth. They’re particularly valuable for managing risk, as they tend to be less volatile and provide returns through dividends, which can be reinvested or used to manage living expenses.

This month, our watchlist highlights several industry leaders known for their consistent and lucrative dividend payments. These picks are tailored for investors seeking to achieve respectable returns while fitting within a spectrum of risk tolerances. Whether you’re looking to bolster your portfolio’s defense against potential downturns or aiming to capitalize on dividends as a passive income stream, these stocks merit consideration for their proven track records and strategic importance in the market.

Coca-Cola (NYSE:KO) – A Refreshing Dividend King

Coca-Cola stands as a pillar of stability in the investment world. Known for its universal brand presence and long-standing position in the S&P 500 and Dow Jones Industrial Average, KO presents a compelling case for dividend investors. With analysts setting an average price target of $62.58, and projections ranging from $56.37 to a high of $69.52, Coca-Cola’s stock demonstrates both resilience and potential for growth.

As a certified Dividend King, Coca-Cola has raised its dividend for over 50 consecutive years, illustrating its commitment to returning value to shareholders. The company’s dividend appeal is further bolstered by Warren Buffett’s substantial holding of 400 million shares, from which he garners over $736 million in annual dividends. This level of endorsement, coupled with Coca-Cola’s iconic global presence—available in every country except Cuba and North Korea—reinforces its status as a top pick.

The company has not only increased its revenue for 13 consecutive quarters but also maintains a reasonable trading value at just 5x sales. Despite a dividend payout ratio of 74%, which may seem high, Coca-Cola’s historical performance in sustaining and increasing dividends should ease concerns regarding its payout sustainability. For those looking to add a reliable dividend-yielding stock to their portfolios, Coca-Cola offers both security and attractive income prospects.

Microsoft (NASDAQ:MSFT) – A Tech Powerhouse with Expansive Growth

Microsoft’s role as a diversified technology leader continues to attract investor attention, underscored by its robust growth across multiple segments. With a foundation in business software and expansion into Xbox gaming, LinkedIn, the Microsoft Azure Cloud, Bing, and AI, Microsoft taps into numerous growth levers. Notably, Azure has become a significant revenue engine, accounting for over half of the company’s total revenue in Q2 FY24.

During this period, Microsoft reported an impressive 24% year-over-year increase in cloud revenue and an 18% overall revenue growth, reaching $62.0 billion with $21.9 billion in net income. This translates to a substantial 35% net profit margin, highlighting the company’s efficiency and profitability.

Analysts are bullish, seeing a potential 17% upside from current levels, with the highest price targets reaching up to $550 per share, suggesting a 35% gain. The stock has already enjoyed a 10% gain year-to-date, adding to a significant 214% surge over the past five years. For investors looking for a blend of steady growth and technological innovation, Microsoft presents a compelling choice, especially considering its expansive role in both current tech trends and future advancements.

American Express (NYSE:AXP) – A Credit Card Leader with Renewed Appeal

American Express stands as a beacon of stability within the financial sector, especially noted for its resilience across various economic cycles. While certain consumer trends may shift, the convenience and rewards offered by credit and debit cards ensure their continued use. Among credit card giants, American Express distinguishes itself with the lowest price-to-earnings (P/E) ratio in its class and a rapidly expanding profit margin.

Currently, the stock boasts a P/E ratio of 20 and has delivered an impressive 104% return over the past five years, along with a notable 27% gain year-to-date (YTD). In Q1 of 2024, American Express reported an 11% year-over-year revenue growth and a 34% increase in net income, signaling strong financial health. The company projects its full-year revenue growth to range between 9% and 11%.

Notably, a significant portion of new cardholders are from the Gen Z and Millennial generations, underscoring American Express’s ability to appeal to and attract younger consumers. This trend is critical as it points to the company’s sustained relevance and potential for growth in a market that values innovation and rewards. For investors looking for a mix of traditional stability and forward-looking growth, American Express offers an attractive proposition.

Three Strong Conviction Buys for the Week Ahead

By

Editorial Staff

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May 12, 2024

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Navigating the stock market can be a high-stakes game. Choose incorrectly, and your portfolio might suffer. But the right choices? They could be your ticket to financial triumph. With thousands of stocks to choose from, pinpointing those poised for success is no small feat. It’s a daunting task, requiring hours of market analysis and company research – time that many people simply don’t have.

That’s where we come in. Each week, we delve deep into the market’s vast array of options, sifting through countless possibilities to bring you a select few. These are not just any stocks; they are carefully chosen based on solid research, current market trends, and potential for noteworthy growth.

This week, we’ve honed in on three stocks that stand out from the crowd. Our picks go beyond the mainstream; they’re strategic selections, crafted for significant impact in both the immediate future and over the long haul.

Click here to discover the full watchlist and unveil these exceptional stock picks.

Expedia Group (EXPE)

Expedia Group has emerged as one of the most undervalued stocks in the tourism sector. Despite rallying 41% in the last six months, it still trades at an attractive forward price-earnings ratio of just 11. Given its solid performance and the likelihood of strong quarterly results continuing, I am bullish on EXPE’s potential to double by the end of 2025.

Operating as a leading online travel company, Expedia Group has a significant global presence. The company experienced its highest ever fourth-quarter revenue in Q4 2023, underscoring a robust post-pandemic recovery. For the full year, revenue climbed by 10% to $12.8 billion, while adjusted EBITDA rose by 14% to $2.7 billion, indicating strong operational leverage and potential for further EBITDA margin expansion this year.

Expedia has also been proactive in expanding its global travel ecosystem, adding new partners and enhancing its service offerings. These strategic moves, combined with favorable industry trends, position Expedia to accelerate its growth in the near future. This backdrop makes EXPE a compelling investment opportunity for those looking to benefit from the ongoing recovery and growth in the travel industry.

Recursion Pharmaceuticals (RXRX)

Recursion Pharmaceuticals distinguishes itself within the biotech landscape not only through its drug development but also through its innovative integration of technology. At the heart of its operations is the Recursion Operating System, a platform that leverages advanced data analytics and artificial intelligence to streamline the drug discovery and development process.

This technology-centric approach allows Recursion to accelerate the production and testing of therapies, reducing costs and enhancing efficiency—key advantages in the competitive biotech field. Additionally, the company capitalizes on its technological prowess by selling its software, providing a diversified revenue stream alongside its pharmaceutical ventures.

Currently, Recursion is making significant strides with REC-4881, a promising candidate in Phase 2 trials for treating Familial Adenomatous Polyposis and cancer, with the trial set to conclude in 2027. While still navigating its path to profitability, Recursion’s innovative model and revenue growth from its software sales position it uniquely for potential explosive growth, especially if its clinical trials yield positive outcomes and its software continues to gain traction in mainstream drug development. For investors open to embracing a tech-forward approach in biotech, Recursion offers an intriguing opportunity.

Sociedad Química y Minera de Chile SA (SQM)

Copper prices have recently soared, reaching $10,000 per ton last week, underscoring a robust demand driven significantly by global shifts toward carbon neutrality and net zero objectives. Given copper’s essential role in technologies such as data centers, wind turbines, and electric vehicles, its importance is set to increase parallel to population and industrial growth. This surge aligns copper as not just a commodity but a crucial component of modern infrastructure, making it an attractive long-term asset for any investment portfolio.

Among the notable companies set to benefit from these trends is Sociedad Química y Minera de Chile SA (SQM). This NYSE-listed firm stands out not only as a major lithium producer but also for its significant copper outputs. The ongoing push towards battery technology and vehicle electrification predicts a sharp rise in demand for these materials, positioning SQM advantageously in the market.

Despite SQM’s stock experiencing a 31.2% decline over the past year, the outlook remains highly favorable. The market’s current valuation of SQM presents a potential buying opportunity, with analysts predicting approximately 34.9% upside, reflected in an average price target of $64.07. With broad analyst support—12 ratings favoring ‘buy’ or ‘overweight’, four at ‘hold’, and only one ‘underweight’—the consensus points towards a strong recovery and growth potential.

Investing in SQM could be a strategic move, not just for those looking to capitalize on the increasing demand for copper and lithium but also for those aiming to diversify their portfolios with a resilient and forward-looking asset.

Three Undervalued Healthcare Stocks to Buy in May

By

Editorial Staff

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May 10, 2024

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In this watchlist, we’ll focus on healthcare stocks that combine solid fundamentals with attractive price points. Given the sector’s potential for innovation and growth, these picks are poised for appreciation. This is an opportune time to consider these stocks, as they offer a balance of stability and potential upside in a volatile market.

CVS Health (NYSE:CVS) – A Steady Performer in Healthcare’s Bargain Bin

CVS Health, a giant in the healthcare plans subsegment, is a household name operating across Health Care Benefits, Health Services, and Pharmacy & Consumer Wellness segments. This diversified business model offers investors a broad exposure to the healthcare sector, making CVS an attractive pick for those hunting for value.

Despite not being the flashiest stock on the market, CVS has demonstrated commendable consistency, outperforming earnings per share (EPS) expectations in each of the last four quarters, with an average positive surprise of just over 5%. This trend of exceeding analyst expectations is noteworthy, especially considering that EPS forecasts for Q2 2024 have been adjusted upwards three times in the past 30 days.

Financial projections for the current fiscal year are optimistic, with EPS expected to hit $8.31 on a robust revenue of $370.82 billion, up from last year’s earnings of $8.74 per share on $357.78 billion in revenue. Despite these strong fundamentals, CVS’s shares are trading at a forward earnings multiple of 9.48X, which is lower than 85.71% of its competitors in the healthcare sector. This valuation discrepancy suggests that CVS’s stock is undervalued, making it a compelling option for investors looking to tap into the healthcare industry without paying a premium.

Voyager Therapeutics (NASDAQ:VYGR) – A High-Risk, High-Reward Biotech Bet

Voyager Therapeutics stands at the forefront of the biotech industry, specializing in groundbreaking gene therapies for neurological disorders. Its leading clinical candidate, VY-TAU01, aims to tackle Alzheimer’s disease through an innovative anti-tau antibody program. Additionally, its pipeline includes promising research into gene therapy for ALS (amyotrophic lateral sclerosis), highlighting the company’s commitment to addressing some of the most challenging medical conditions.

VYGR’s journey is emblematic of the biotech sector’s inherent volatility—a trait that may deter risk-averse investors but offers tantalizing prospects for those with an appetite for speculation. This was evident in the company’s financial performance last year, where a slight miss in Q3 was followed by a surprising Q4, with EPS of $1.25 against an anticipated loss of 29 cents per share.

Looking ahead to fiscal 2024, expectations are tempered, with analysts predicting a significant 84% decline in revenue. Yet, the forecast for fiscal 2025 suggests a potential turnaround, signaling that the current challenges may be a precursor to future gains. Presently, Voyager’s shares are trading at 1.72X tangible book value, a figure that falls short of the sector’s median of 2.88X, suggesting a potential undervaluation.

With unanimous analyst consensus pegging Voyager as a Strong Buy and setting a price target of $16.33, the stock presents a compelling case for those willing to navigate the uncertainties of the biotech landscape. For investors drawn to the high-stakes world of biopharmaceuticals, Voyager Therapeutics offers a unique blend of risk and reward, making it an intriguing addition to any watchlist of undervalued healthcare stocks.

Semler Scientific (NASDAQ:SMLR) – A High-Risk Bet in Medical Devices

Semler Scientific, operating within the medical devices sector, stands out as perhaps the most speculative yet potentially rewarding pick in our list of undervalued healthcare stocks. Semler specializes in innovative technology solutions aimed at improving the clinical effectiveness and efficiency of healthcare providers. Its flagship product, QuantaFlo, is a cutting-edge in-office blood flow test that assists in evaluating patients’ vascular health, showcasing the company’s commitment to advancing medical diagnostics.

Despite the apparent market relevance of Semler’s offerings, investor sentiment took a hit in March, leading to a significant de-risking of SMLR stock. This downturn was partly attributed to a perceived underperformance in Q4 of the previous year, where Semler reported an EPS of 59 cents, slightly above the expected 57 cents but failing to match the impressive 36.55% positive earnings surprise seen in Q2 and Q3.

Looking forward, there’s a cautious optimism for a rebound in fiscal 2024, with analysts projecting an EPS of $3.40 on revenue of $75.5 million, up from last year’s earnings of $2.68 per share on $68.18 million in revenue. Currently, Semler’s shares are trading at a multiple of 10.59X trailing-year revenue, positioning it below 90.36% of its industry peers in terms of valuation.

With Lake Street setting a target price of $65 for SMLR, the stock presents a compelling case for those willing to navigate its volatility. For investors intrigued by the potential of cutting-edge medical technology and willing to bear the associated risks, Semler Scientific could be a valuable addition to your watchlist of undervalued healthcare stocks.

Three Lithium Stocks Set to Lead the Charge

By

Editorial Staff

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May 9, 2024

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Lithium – the unsung hero of the electric vehicle (EV) revolution. With EV sales accelerating faster than a Tesla on Ludicrous Mode, lithium’s role as the go-to material for batteries has investors buzzing. Sure, lithium prices took us on a wild ride, soaring and then dipping, but the long-term outlook? It’s electrifying.

Despite a temporary oversupply hiccup, the demand for lithium is set to surge, thanks to a global push towards clean energy and EVs. And with the U.S. throwing billions into EV infrastructure and incentives, the stage is set for lithium to shine. So, who’s leading the charge in this high-voltage market? Let’s plug into three lithium stocks that are too good to pass up.

1. Sociedad Quimica y Minera (SQM)

Hailing from Chile, the heart of lithium country, SQM is a heavyweight in the lithium arena. This company isn’t just about lithium; it’s a diversified mining operation with enviable profit margins and a sturdy financial backbone. But let’s address the elephant in the room – Chile’s talk of nationalizing lithium. While it adds a layer of uncertainty, SQM isn’t sitting idle. They’re ramping up production, eyeing a bigger slice of the lithium pie, especially for EV batteries. With a strategic focus on expanding its lithium footprint, SQM is a play you’ll want to watch closely.

2. Albemarle (ALB)

Mining and chemical producer Albemarle is leading the charge in global lithium output. Among the company’s biggest customers is Panasonic, which manufactures lithium batteries for everything from small consumer electronics to EVs. Albemarle’s recent bid to acquire Liontown Resources highlights its aggressive expansion strategy. Despite the volatility in lithium prices, Albemarle’s durable operation, minimal long-term debt, and healthy profit margins make it a solid bet for those looking to invest in the lithium market’s long-term growth.

3. Lithium Americas (LAC)

For those who like a bit of spice in their investment portfolio, Lithium Americas is the speculative play that could pay off big time. They’re in the trenches, building lithium extraction sites in Argentina and Nevada, with none other than Ganfeng Lithium by their side. And with GM already signing up for a slice of their lithium pie, the future looks bright. Sure, it’s a gamble, but with the EV market set to explode, Lithium Americas could be the dark horse that crosses the finish line in style.

Charging Forward

Investing in lithium isn’t for the faint-hearted. It’s a market as volatile as the element itself. But for those looking to tap into the EV revolution, these three stocks offer a blend of stability, growth potential, and speculative excitement. Just remember, the key to navigating this electrified landscape is diversification and a long-term outlook.

Three Gold Mining Stocks to Buy Hand Over Fist Amid Market Uncertainty

By

Editorial Staff

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May 8, 2024

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Gold mining stocks, often seen as a safe haven during uncertain times, are standing at a crucial juncture. The Federal Reserve’s unwavering commitment to combat inflation might raise doubts about precious metals. But beneath the surface, several factors suggest that gold’s allure could soon gleam even brighter.

In today’s jittery markets, the ‘fear trade’ is making a comeback. Investors, seeking refuge from market turbulence, are returning to the reliable haven of gold. Its intrinsic value and historical resilience against inflation and economic downturns make it an appealing choice, especially in choppy financial seas.

Adding to this shift is a noticeable pivot away from high-risk assets. As the shine of digital gold dims, the appeal of tangible gold seems to be on the upswing. For those seeking to fine-tune their portfolios in these uncertain times, certain gold mining stocks may offer a compelling mix of stability and growth potential.

1. Newmont (NEM): A Gold Mining Titan

Based in Denver, Colorado, Newmont (NYSE:NEM) stands as a heavyweight in the world of gold mining stocks. It’s not just about gold; this stalwart also mines copper, silver, zinc, and lead. With a market capitalization of $42.41 billion, it offers relative stability.

To be fair, stability alone doesn’t promise growth. Newmont saw an almost 10% decline since the start of the year. However, zoomig out over the past six months, it’s up a bit more than 5%, a potential signal for contrarian investors. Notably, analysts foresee an upside for NEM, rating it a moderate buy. The average price target of $44.80 implies nearly 21% growth potential.

2. Wheaton Precious Metals (WPM): A Unique Approach

Wheaton Precious Metals (NYSE:WPM) is a bit different from your typical gold mining stock. It’s a precious metals streaming company, offering upfront financing to miners in exchange for the right to purchase future metals production at predetermined prices. This setup provides a level of predictability uncommon among pure-play gold mining stocks.

Recent options flow transactions, particularly sizable ones tied to institutional investors, point to positive sentiment. Analysts also view WPM favorably designating it an 82% buy rating with a $54.34 target, implying 7% upside potential.

3. Sibanye Stillwater (SBSW): A Riskier Bet

Sibanye Stillwater (NYSE:SBSW) is a multinational mining and metals processing company, but it’s the riskiest choice among gold mining stocks. Its volatility is a significant concern, with a 40% drop since the year began and over 20% in the past year. Labor disputes and its South African base add to the risk.

Despite this, there’s an undertone of bullishness, as seen in options flow data and the recent purchase of 2025 7.50 calls, reflecting budding optimism.

In navigating the world of gold mining stocks, these companies present opportunities worth considering, each with its unique profile and potential for growth.

Three Strong Conviction Buys for the Week Ahead

By

Editorial Staff

-

May 5, 2024

0

Navigating the stock market can be a high-stakes game. Choose incorrectly, and your portfolio might suffer. But the right choices? They could be your ticket to financial triumph. With thousands of stocks to choose from, pinpointing those poised for success is no small feat. It’s a daunting task, requiring hours of market analysis and company research – time that many people simply don’t have.

That’s where we come in. Each week, we delve deep into the market’s vast array of options, sifting through countless possibilities to bring you a select few. These are not just any stocks; they are carefully chosen based on solid research, current market trends, and potential for noteworthy growth.

This week, we’ve honed in on three stocks that stand out from the crowd. Our picks go beyond the mainstream; they’re strategic selections, crafted for significant impact in both the immediate future and over the long haul.

Dollar General (DG): A Resilient Retailer Ready for a Rebound

Dollar General (NYSE:DG) has been on my radar for a while, and it’s starting to show signs that the wait was worth it. This stock is making a strong comeback, proving that it’s more than capable of weathering the market’s occasional overreactions to economic shifts. DG’s business model has demonstrated remarkable resilience, making it a standout in the retail sector.

The return of Todd Vasos as CEO in October 2023 is a move that’s hard to overlook. Under his previous leadership, DG saw its market capitalization double from June 2015 to November 2022. With Vasos back at the helm, there’s a strong case to be made that Dollar General could see similar growth in the coming years. His track record speaks volumes, and his reappointment signals a bullish outlook for the company’s future.

Last year, sentiment around discount retailers took a hit, with Wall Street turning overly bearish amidst economic uncertainties. However, as inflation begins to stabilize and consumer spending power sees a resurgence, Dollar General is well-positioned to reap the benefits. This isn’t just any retailer; it’s a top-tier operator currently trading below its historical valuation norms. With the potential for margin expansion on the horizon as cost pressures ease, DG’s financial health could see significant improvement.

Looking ahead, I see Dollar General not just recovering but thriving. The combination of a proven leader, a solid business model, and favorable market conditions could very well see DG’s shares doubling in the next two to three years. For investors seeking a retail stock with growth potential and resilience, Dollar General is a compelling pick for your watchlist.

Dynatrace (DT): Leading the Charge in Multicloud IT Security

Dynatrace (NYSE:DT) is a standout in the burgeoning field of IT security. As the digital age propels forward, the demand for sophisticated security solutions is skyrocketing, a trend that Dynatrace is well-positioned to capitalize on. With artificial intelligence (AI) reshaping the landscape, services like those offered by Dynatrace are becoming increasingly indispensable.

Dynatrace isn’t just any security platform; it’s a beacon for companies navigating the complexities of multicloud environments. In today’s digital ecosystem, where businesses often rely on a mix of public and private clouds, Dynatrace’s platform shines by automating cloud services across diverse providers. This capability is not just a convenience; it’s a strategic advantage in optimizing cloud operations.

What’s particularly compelling about Dynatrace is its growth trajectory. The company is on track to expand by approximately 30% this year, a rate nearly triple that of the broader S&P 500. This explosive growth is a testament to Dynatrace’s innovative approach and the increasing reliance on multicloud strategies by businesses worldwide.

Supporting this outlook is a report surveying 1,300 CIOs, which highlights an expected surge in multicloud usage. As the volume of data generated by businesses grows exponentially, the need for automated and intelligent cloud management solutions becomes critical. Dynatrace, with its cutting-edge platform, is poised to be at the forefront of this shift, offering investors a unique opportunity to tap into the future of cloud security.

For those looking to enhance their portfolios with a tech stock that’s not just keeping pace but setting the pace in its industry, Dynatrace presents a compelling case. Its role in the expanding multicloud landscape, coupled with impressive growth prospects, marks DT as a must-watch.

Vital Energy (NYSE:VTLE): A Hidden Gem in the Energy Sector

Vital Energy, a key player in the exploration and production niche of the hydrocarbon industry, is making notable strides in the Permian Basin of West Texas. With a commendable 16% increase in its stock value since the year’s start, VTLE is catching the eyes of savvy investors looking for growth in the energy sector.

The current global landscape, marked by supply chain disruptions and geopolitical tensions, positions Vital Energy favorably. Additionally, the slower-than-expected adoption of electric vehicles suggests combustion engines might stick around longer than anticipated, potentially boosting demand for Vital’s upstream hydrocarbon ventures.

Financial analysts are casting a bullish outlook on Vital for fiscal 2024, projecting revenues to hit $1.87 billion—a significant jump from the previous year’s $1.55 billion. Looking further ahead, fiscal 2025’s sales are expected to edge up to $1.9 billion, underscoring the company’s growth trajectory.

Despite these promising forecasts, VTLE’s stock is currently trading at a surprisingly modest trailing-year sales multiple of 0.66X. This valuation paints Vital Energy as an undervalued stock ripe for the picking, especially for those betting on the enduring relevance of traditional energy sources amidst a shifting automotive landscape. With analysts backing its potential, Vital Energy stands out as a compelling buy in this week’s stock watchlist.

Capitalize on Market Downturns: The Inverse ETF Strategy

By

Editorial Staff

-

April 30, 2024

0

When a sharp market downturn occurs, you can benefit from taking the reverse direction of the markets. Investors use bearish bets to hedge their portfolios and even to turn a quick profit if things get ugly.

The main risk of traditional short-selling is that while profit is capped (a stock can only fall to zero), risk is theoretically unlimited. Of course, other tactics can be used to cover a position at any time, but with a short-selling position, inventors are at risk of receiving margin calls on their trading account if their short position moves against them.

Inverse or “short” ETFs are another option that allow you to profit when a certain investment class declines in value. Some investors use inverse ETFs to profit from market declines while others use them to hedge their portfolios against falling prices.

Over short periods of time you can expect that the inverse ETF will perform “the opposite” of the index, but over longer periods of time a disconnect may develop. Inverse ETFs will decline as an asset appreciates over time. For that reason, inverse ETFs typically are not seen as good long-term investments. Furthermore, frequent trading often leads to an increase in fund expenses and some inverse ETFs have expense ratios of 1% or more.

When approached correctly, inverse ETFs can be excellent day-trading candidates and highly effective short-term hedging tools. There are several inverse ETFs that can be used to profit from declines in broad market indexes, such as the Russell 2000 or the Nasdaq 100. Also, there are inverse ETFs that focus on specific sectors, such as financials, energy, or consumer staples.

Here are just a few examples of what’s available, for those who are interested in taking a bearish position with inverse ETFs:

ProShares Short SmallCap 600 (SBB) – Inverse U.S. small cap
AdvisorShares Ranger Equity Bear ETF (HDGE) – Inverse total U.S. market
ProSharse Decline of the Retail Store (EMTY) – Inverse U.S. broad retail
ProShares UltraShort Technology (REW) – Inverse U.S. Technology
ProShares UltraShort MSCI Brazil Capped (BZQ) – Inverse MSCI Brazil
Direxion Daily MSCI Emerging Markets Bear 3x Shares (EDZ) – Inverse MSCI Emerging Markets Index

Monster Beverage (MNST) – A Refreshing Opportunity in a Downturn

Costco Wholesale (NASDAQ: COST) – A Resilient Retail Gem

Topgolf Callaway Brands (MODG) – Swinging Towards Growth

Advanced Micro Devices (NASDAQ:AMD)

Starbucks (NASDAQ:SBUX)

Snowflake (NYSE: SNOW) – Cooling Off Amidst AI Hype

Coca-Cola (NYSE:KO) – A Refreshing Dividend King

Microsoft (NASDAQ:MSFT) – A Tech Powerhouse with Expansive Growth

American Express (NYSE:AXP) – A Credit Card Leader with Renewed Appeal

Teledyne Technologies (TDY)

Arista Networks (ANET)

Microsoft (MSFT)

Expedia Group (EXPE)

Recursion Pharmaceuticals (RXRX)

Sociedad Química y Minera de Chile SA (SQM)

CVS Health (NYSE:CVS) – A Steady Performer in Healthcare’s Bargain Bin

Voyager Therapeutics (NASDAQ:VYGR) – A High-Risk, High-Reward Biotech Bet

Semler Scientific (NASDAQ:SMLR) – A High-Risk Bet in Medical Devices

1. Sociedad Quimica y Minera (SQM)

2. Albemarle (ALB)

3. Lithium Americas (LAC)

Charging Forward

1. Newmont (NEM): A Gold Mining Titan

2. Wheaton Precious Metals (WPM): A Unique Approach

3. Sibanye Stillwater (SBSW): A Riskier Bet

Dollar General (DG): A Resilient Retailer Ready for a Rebound

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