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These Small-Cap Stocks Are Set to Thrive

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Editorial Staff
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Donald Trump’s return to the White House has set small-cap stocks on fire, spotlighting their potential under his renewed leadership.

Small-cap stocks are primed to shine in this environment as investors look forward to relaxed regulations, which tend to weigh more heavily on smaller businesses. Trump’s domestic-focused agenda, pro-deregulation stance boosting small business confidence, increased M&A activity under a more lenient DOJ/FTC, extended tax cuts, and a potential fiscal boost in 2025 are all major tailwinds that could propel small-cap performance.

We’re already seeing sparks in the market: private prison stocks like Geo Group and CoreCivic leaped around 20%, while crypto-related names such as Riot Platforms and TeraWulf jumped 12%. While small caps have trailed behind their large-cap peers for much of 2024 — with IWM up 11.7% compared to the S&P 500’s 21% — the tide seems to be turning.

With the economy holding strong, higher interest rates being absorbed, and election-related uncertainty fading, small-cap stocks are set for a potential breakout. Historically, small caps have also outperformed in the months following presidential election wins, including Trump’s 2016 victory and Biden’s in 2020.

Now is a great time to dive into the small-cap space. This watchlist will guide you through the top small-cap stocks ready to take advantage of the evolving political and economic landscape.

ACM Research, Inc. (NASDAQ: ACMR) – A High-Growth Semiconductor Play

ACM Research is a U.S.-based company specializing in single-wafer wet cleaning equipment for semiconductor manufacturers. Their products remove particles and contaminants during integrated circuit fabrication, boosting yield and performance. ACMR has shown impressive growth, with a 3-month performance gain of approximately 14%. In Q2 2024, ACM Research reported revenues of $202.48 million, a 40.1% year-over-year increase, and EPS of $0.55, surpassing $0.48 from the previous year. With an average yearly expected EPS growth of 42.7% over the next five years and a forward P/E of 11.5, ACMR is positioned for strong growth.

Titan Machinery Inc. (NASDAQ: TITN) – Solid Performance in Agriculture and Construction

Titan Machinery operates over 100 full-service agricultural and construction equipment dealerships in the U.S., Europe, and Australia. The stock has gained 14% over the past three months. In Q2 FY2025, Titan Machinery reported $642.6 million in revenue, up 29.4% year-over-year, and EPS of $1.32 compared to $1.10 in the prior year. Analysts project an average yearly EPS growth of 25% over the next five years. The forward P/E of 6.3 suggests a buying opportunity as TITN trades below its 52-week high.

Stride, Inc. (NYSE: LRN) – Leading the Way in Online Education

Stride, Inc. provides online K-12 education and career learning programs across the U.S. Over the last three months, the stock has risen 24.1%, outpacing the broader Zacks Schools industry. In Q1 FY2025, Stride reported $480.2 million in revenue, up 10% year-over-year, with EPS at $1.15 versus $0.95 the prior year. The company’s strong growth prospects, with an average yearly EPS growth of 20% over the next five years, and its forward P/E of 13.8 make it an attractive pick.

Investors looking to capitalize on the new political and economic landscape should keep an eye on these small-cap stocks poised for strong performance.

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…

Estée Lauder Companies (NYSE: EL)

Estée Lauder (EL) is facing significant challenges, and its recent performance suggests that further declines could be on the horizon. The stock has plunged 56% this year, hitting a 10-year low, which signals major concerns from investors about the company’s future. When a stock drops to this extent, it typically reflects a combination of weak fundamentals and significant market skepticism.

The company’s top and bottom lines have been going in the wrong direction. Revenue has been declining, and profits have been falling even faster. The most recent earnings report pointed to weak consumer sentiment in key markets like China, with Estée Lauder expressing doubts that stimulus measures would provide much relief in the near future. To make matters worse, the company announced a 47% cut to its quarterly dividend, which only further eroded investor confidence.

Estée Lauder’s high valuation is another red flag. The stock is trading at a price-to-earnings (P/E) ratio of over 100, and even based on analyst projections, it’s still priced at nearly 37 times next year’s expected profits. For a company facing declining profitability, this high multiple makes the stock expensive and suggests that there is little growth on the horizon.

Given the ongoing struggles with profitability and the steep decline in the stock’s price, Estée Lauder is a stock to avoid for the time being. The company’s uncertain outlook, coupled with its elevated valuation, makes it a risky bet even at these depressed levels. It’s likely that more downside is ahead, and investors may be better off looking for opportunities elsewhere.

Coca-Cola (NYSE: KO)

Coca-Cola (KO) has long been a staple in portfolios, thanks to its consistent dividend increases and impressive historical returns. However, as we head into 2025, the growth story for Coca-Cola seems to be losing steam. Despite its dominant position in the beverage industry, the company is facing slow growth, particularly in its core soda business, which is showing signs of weakness.

Revenue growth has been slowing over the last few years, dropping from 17.3% in 2021 to just under 7% in 2023. More concerning, Coca-Cola reported a 1% decline in revenue for its most recent quarter. Operating margins have also taken a hit, falling to 21.2% from 27.4% a year ago, and earnings per share declined 7% to $0.66. While the company has maintained some positive figures over the first nine months of 2024, with revenue up 2%, net income and operating income have both struggled, down 3% and 19%, respectively.

One of the primary challenges Coca-Cola faces is the stagnant growth in soft drink consumption. IBIS World reports that the soft drink industry has seen a decline in annualized growth of 0.5% from 2019 to 2024. Despite Coca-Cola’s broad portfolio, its reliance on soda sales, which are not growing at the same rate as the broader market, limits future growth potential. In fact, global unit case volume fell by 1% in the most recent quarter.

Coca-Cola’s stock has also underperformed the S&P 500 by over 71% in the last five years, signaling a lack of momentum compared to the broader market. With earnings estimates for 2025 coming in at $2.98 per share, giving the stock a forward price-to-earnings ratio of 21.5, it’s clear that the stock is trading at a slight discount to its five-year average of 26.5. However, given the weak macro environment for soda and Coca-Cola’s reliance on price increases to prop up profits, this valuation isn’t compelling enough for long-term growth.

While Coca-Cola’s dividend yield is still 3%, the company’s slowing revenue and stock performance are cause for concern. With more attractive growth opportunities in the market, like Nvidia, Microsoft, or Chipotle, it’s hard to justify holding Coca-Cola stock in your portfolio right now. Unless there’s a major shift in performance, Coca-Cola is best avoided as we move into 2025.

NetEase (NTES)

NetEase (NTES) has been facing challenges, and its recent third-quarter earnings report highlights some concerning issues. The company missed analyst expectations on both revenue and earnings, with a 3.9% year-over-year decline in GAAP revenue, which amounted to RMB26.2 billion (approximately $3.7 billion). Non-GAAP net income per ADS came in at 11.63 Chinese yuan ($0.33), also falling short of expectations. The core gaming segment, which has traditionally been the heart of NetEase’s business, continues to struggle with increased competition, which dragged down overall performance despite growth in some other segments.

While segments like Cloud Music and Youdao reported growth in Q3, the gaming division faced a 4.2% revenue decline. Although certain titles like Naraka: Bladepoint and new releases such as Lost Light and Once Human are showing promising engagement, they couldn’t offset the broader pressures in the gaming market. Additionally, NetEase’s e-commerce division saw a worrying 10.3% decline in revenue, reflecting softer consumer sentiment.

The lack of specific forward-looking guidance and the mixed performance across different business lines makes it difficult to predict a strong recovery in the near term. While NetEase is expanding its international gaming footprint and diversifying its portfolio, the continued weakness in the core gaming division and the challenging market environment suggest that the company may face further difficulties ahead.

Given these factors, NetEase is a stock to avoid for now. While its diversification into segments like Cloud Music and Youdao shows potential, the company’s struggles in the gaming sector, combined with a lack of clear guidance, point to more uncertainty in the near future. Investors may want to look for opportunities elsewhere until there is more clarity on the company’s growth trajectory.

Five AI-Driven Energy Stocks to Hold for the Next Ten Years

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Editorial Staff
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As we advance further into the digital age, the intersection of technology and energy is becoming increasingly pivotal. According to a comprehensive Mizuho Securities report, the rapid expansion of artificial intelligence is set to triple the power demand from data centers by 2030, reaching an astounding 400 terawatt hours annually. This surge will account for approximately 9% of total U.S. electricity demand by the decade’s end.

Currently, the mid-Atlantic region accounts for about 30% of this demand, with Texas following at 13%. This geographical distribution is crucial as it underscores the strategic importance of specific markets within the energy sector.

The growth in energy demand is not just a numbers game but is closely tied to the technology sector’s commitments to climate change, pushing an exponential increase in renewable energy sources. Solar energy, for instance, is expected to see an annual increase of 7 gigawatts, while wind energy could grow by 5 gigawatts each year through 2030. These figures represent potential upsides of 21% and 39%, respectively, over current forecasts.

This backdrop sets the stage for a focused watchlist, spotlighting companies at the nexus of renewable energy and technological innovation, poised to benefit from these transformative trends.

Nextracker (NASDAQ: NXT) Sun-Powered Growth on the Horizon

Nextracker stands out as a key player poised to capitalize on the increasing solar demands driven by AI and data centers. As the sector eyes a substantial surge in solar and wind energy requirements, Nextracker’s ability to scale production rapidly gives it a significant competitive edge. Currently, with a median price target of $55, analysts see the stock climbing more than 40%. The company could see a potential upside due to its robust market share and pivotal role in solar tracking technology.

Array Technologies (NASDAQ: ARRY) Harnessing Solar Potential Efficiently

Array Technologies is another strong candidate set to benefit from the growing renewable sector. Specializing in solar tracking, Array is well-positioned to meet the escalating demand for solar energy solutions. With a median price target set at $10 by the analyst community, Array is anticipated to see gains from its essential technology and production capabilities. This price target represents a 50% upside from the current price.

First Solar (NASDAQ: FSLR) A Bright Outlook Amid Policy Uncertainties

First Solar remains a giant in the solar module manufacturing sector but faces a pivotal moment pending the upcoming presidential election. The continuation of the Inflation Reduction Act is crucial for maintaining its competitive stance. Nevertheless, Analysts suggest a potential 40% increase to its median price target of $280, contingent on favorable policy environments.

EQT Corporation (NYSE: EQT) Fueling the Future with Natural Gas

As renewable sources like solar and wind are set to expand, natural gas is expected to play an essential backup role, especially during dips in renewable production due to weather conditions. EQT Corp., a major gas producer in the U.S., is strategically located to serve the significant data center markets in the mid-Atlantic and Southeast. This positions EQT as a primary beneficiary of the increased gas demand, which could rise significantly if renewable deployment lags. A median price target of $42 represents a 4% downside. However, the stock maintains a solid Buy rating from the analysts covering the stock.

Constellation Energy (NASDAQ: CEG) Nuclear Energy: The Powerful Backdrop for AI

Constellation Energy could emerge as a crucial power provider for data centers, leveraging its nuclear energy capabilities. With the potential to forge power agreements directly with data centers, Constellation is uniquely positioned to offer stable, large-scale energy solutions critical for supporting the intensive operations of AI technologies. A median 12-month price target of $277 represents a 17% increase from the current price.

Three Stocks Set to Benefit From the Global LNG Expansion

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Editorial Staff
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The global liquefied natural gas (LNG) market is entering a period of significant expansion, and this trend looks set to continue through 2030. As new liquefaction plants come online and capacity increases by an average of 31 million metric tons per year, the market is poised for robust growth. This surge in supply is expected to create a buyer’s market, driving prices lower and expanding LNG’s appeal in countries where coal has traditionally been cheaper for power generation. Major economies such as India are particularly likely to benefit from this shift.

For investors, this opens up an attractive opportunity to capitalize on the expansion of the LNG market. As capacity increases, companies in this space are set to reap the rewards, particularly those with a solid infrastructure and strategic positioning in key LNG regions. Below are three stocks that stand out as top picks to ride the LNG boom.

Chart Industries (GTLS) – “Boosting Global LNG Capacity”

Chart Industries (NYSE: GTLS) is a critical player in the global LNG supply chain, with 32 projects worth $9.2 billion already secured to increase LNG capacity. These projects position the company as a leader in the infrastructure expansion that will drive the next phase of LNG market growth. As new liquefaction plants ramp up from 2026 to 2028, Chart Industries stands to benefit from its strong global presence.

Analysts have placed a median price target of $190 on GTLS, representing a 50% upside from current levels. This reflects confidence in the company’s ability to execute on its pipeline of projects and capitalize on the increasing demand for LNG infrastructure. With global LNG capacity expected to exceed 600 million metric tons by 2030, Chart Industries is well-positioned for sustained growth in the sector.

ConocoPhillips (COP) – “Strategically Positioned for LNG Growth”

ConocoPhillips (NYSE: COP) is another strong contender in the LNG market, with significant stakes in major LNG facilities in Australia and Qatar—two of the world’s largest LNG exporters. The company is not only positioned for modest production growth but also benefits from one of the lowest break-even levels in the industry. Recently, ConocoPhillips secured a long-term LNG sales agreement in Asia and a re-gasification contract with a terminal in Belgium, further strengthening its global footprint.

Among 23 analysts covering the stock 73% rate it a ‘Buy.’  A median price target of $135 for ConocoPhillips, implies a 27% upside from current levels. The company’s ability to deliver consistent returns, combined with its strategic investments in LNG infrastructure, makes it a solid pick for investors looking to gain exposure to the growing LNG market.

Shell (SHEL) – “The Leading Global LNG Producer”

Shell (NYSE: SHEL) remains the world’s leading producer of LNG and plans to add 11 million metric tons of annual capacity by the end of the decade. While Shell has faced some challenges, including trading at a discount relative to its U.S. peers due to weaker financial performance and uncertainty around its energy transition strategy, its dominant position in the LNG space remains a key strength.

The median analyst price target of $81 for Shell suggests a 22% upside. Shell’s leadership in the LNG market, combined with a clear pathway for capacity growth, positions it as a compelling long-term play in the LNG sector.

As the global LNG market continues to expand, these companies are well-positioned to benefit from the increasing demand and capacity growth. Whether through infrastructure projects, strategic global partnerships, or leadership in production, each of these stocks offers unique exposure to the booming LNG market.

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. 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.

Adobe Inc. (NASDAQ: ADBE): A Strong Buy Amidst Oversold Conditions

In the wake of Trump’s re-election, the technology sector is gearing up for renewed momentum. A pro-business agenda, regulatory flexibility, and potential tax incentives could create an environment ripe for technology stocks to excel. Among the leaders in this space is Adobe, a company well-positioned to capitalize on the favorable landscape ahead.

Adobe recently reported impressive earnings, showcasing a 10% year-over-year revenue increase to a record $4.89 billion. This growth is driven by strong demand across its core segments: Digital Media, Document Cloud, and Experience Cloud, which grew by 11%, 15%, and 11%, respectively. Additionally, Adobe’s operating margins stand at an impressive 25.6%, significantly outpacing the industry average of 16.8%. Despite these strong fundamentals, Adobe’s stock has reached oversold conditions, providing an attractive entry point for investors.

Currently trading at 23.5 times forward earnings, Adobe is valued below the industry average of 27.8 times, reflecting a 15% discount that presents substantial upside potential. Recent technical indicators show signs of positive divergence, suggesting that selling pressure is waning, and buyers could be stepping in for a rebound. The stock has demonstrated resilience near support levels, indicating a solid base from which it could rally.

Given its robust fundamentals, strong growth rates, and an enticing valuation, Adobe presents an appealing opportunity for investors looking to add exposure to a leading player in the tech space. With the potential for a counter-trend rally, now is an excellent time to consider Adobe as a key stock pick for your portfolio.

Hewlett Packard Enterprise (NYSE: HPE) – A Strong Value Play

Hewlett Packard Enterprise (HPE) stands out as a great pick for value investors, especially given its impressive fundamentals and solid earnings outlook. Currently, HPE boasts a Zacks Rank of #2 (Buy), which reflects recent positive revisions to its earnings estimates—a key indicator that the company’s future earnings potential is on the rise. This improving outlook, combined with HPE’s attractive valuation metrics, makes it a compelling choice for value-focused portfolios.

At the heart of HPE’s value case is its forward P/E ratio of 10.73, well below the sector average, indicating that the stock is trading at a reasonable price relative to its earnings potential. Additionally, HPE has a P/B ratio of 1.23, which suggests the stock is undervalued compared to its book value. For investors looking at growth alongside value, HPE’s PEG ratio of 3.40 adds another layer of attraction, as it factors in expected earnings growth at a reasonable price.

HPE demonstrates the key traits value investors seek: strong fundamentals, a low valuation, and an improving earnings outlook. If you’re looking for a stock that offers both stability and value, HPE should definitely be on your radar.

U.S. Cellular (NYSE: USM): Positioned for Growth Amid Regulatory Changes

U.S. Cellular is emerging as an intriguing investment opportunity following President-elect Donald Trump’s victory. This win could signal a more favorable regulatory environment, which may pave the way for T-Mobile’s $4.4 billion acquisition of most of U.S. Cellular. The deal is expected to close by mid-2025, and this shift in regulatory dynamics could create a more straightforward path for approval.

As analysts have noted, there’s significant upside potential for both U.S. Cellular and T-Mobile shares due to the ongoing strategic review and asset sales at U.S. Cellular. Importantly, the risks associated with the acquisition appear to be diminishing, allowing for more confidence in the stock’s future performance. With a gain of nearly 57% this year and an impressive 78% surge over the past six months, U.S. Cellular is already showing strong momentum.

Earnings Insight: Three Strong Names Heading into Next Week

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Editorial Staff
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0

As we approach another busy earnings week, several companies are poised to report results that could lead to potential gains. Earnings season has already exceeded last year’s performance, with S&P 500 companies showing an 8.2% increase in earnings and a 5.3% rise in revenue compared to the same quarter last year. Impressively, earnings have beaten expectations by 7.5%, while revenue has outperformed by 1.7%.

With several key players on the docket, we’ve identified stocks that have consistently surprised analysts and achieved solid post-earnings gains. These companies have historically beaten earnings expectations 75% of the time and recorded at least a 1% increase on earnings days. Among these, Nvidia stands out with an 86% success rate in surpassing earnings forecasts, alongside notable post-earnings gains. Here’s a closer look at our top picks for the upcoming week.

Nvidia Corporation (NASDAQ: NVDA): A Strong Performer in AI Hardware

Nvidia is set to announce its third-quarter fiscal 2025 earnings on Wednesday, November 20, 2024. The company has a remarkable track record of beating earnings expectations, doing so 86% of the time. Analysts anticipate earnings per share (EPS) of $0.69, reflecting an impressive 81.6% increase from the previous year. Given Nvidia’s pivotal role in the AI hardware sector, investors are highly anticipating its earnings report.

JD.com, Inc. (NASDAQ: JD): E-commerce Growth Ahead

JD.com is scheduled to release its third-quarter earnings on Friday, November 15, 2024. The company has consistently impressed investors with its earnings performance, beating estimates 83% of the time and achieving post-earnings gains of about 1.1%. Analysts are optimistic about JD.com’s growth prospects, especially in light of recent consumption stimulus measures in China. Loop Capital recently upgraded its rating on JD.com to ‘Buy’ from ‘Hold,’ citing the company’s potential to benefit from these economic policies.

Williams-Sonoma, Inc. (NYSE: WSM): Reliable Retailer with Strong Results

Williams-Sonoma will announce its third-quarter earnings on Thursday, November 14, 2024. The retailer boasts an impressive earnings surprise record, having beaten Wall Street expectations 88% of the time, with an average post-earnings gain of 1.4%. However, some analysts have adopted a more cautious stance ahead of the earnings release. Wedbush Securities recently moved to a ‘Neutral’ rating, citing concerns over recent trends despite the company’s previous guidance adjustments.

In summary, as earnings week unfolds, these stocks present intriguing opportunities for investors looking to capitalize on companies that have historically exceeded expectations. From Nvidia’s dominance in AI to JD.com’s e-commerce growth and Williams-Sonoma’s reliable retail performance, these picks are worth keeping an eye on as we approach their earnings announcements.

High-Stakes Stocks to Watch as Election Day Nears

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Editorial Staff
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With the upcoming election, a few stocks are gaining momentum as traders speculate on what a potential Trump victory could mean for their valuations. Each of these companies has connections—direct or indirect—to Donald Trump, making them prime candidates for volatility as the political landscape shifts. These stocks have seen significant inflows from retail investors, spiking interest on forums like WallStreetBets, and they’re poised for more potential movement as election day approaches. Here’s a closer look at three names generating buzz.

Trump Media & Technology Group (DJT) – Riding the Election Wave

Trump Media, the parent company of TruthSocial, has been the biggest name among Trump-linked stocks in recent weeks. The stock’s wild swings reflect investor sentiment tied to the upcoming election, with shares surging over 160% in October, marking the first positive month since March. Year-to-date, DJT has gained over 140%.

As Trump holds a significant stake of 114 million shares in Trump Media, valued at over $5 billion, the company has a uniquely direct link to his fortunes. This stake represents about 75% of Trump’s net worth, and he has no plans to sell. Retail interest has surged recently, with net inflows hitting $14.4 million on a single day last week, and it’s the most-discussed stock on WallStreetBets over the past week, with more than 17,000 mentions this year.

It’s worth noting that DJT’s valuation is driven largely by speculation rather than fundamentals. As UC Irvine professor Christopher Schwarz points out, Trump Media has “no fundamental value” and is trading on pure market speculation around the election outcome. With no profits and limited fundamentals, DJT is likely to stay volatile as the election date draws closer.

Phunware (PHUN) – A Software Play with Trump Ties

Phunware, a mobile software and blockchain company, is another name that has attracted retail traders hoping for an election-linked bump. Known for creating Trump’s campaign app, Phunware also lists prominent clients like Marriott, Atlantis, and the Mayo Clinic. The stock has been highly volatile, with its price swinging between $3 and $24 over the past year.

Investor interest in Phunware spiked in October, with net inflows rising and shares climbing more than 140% this month alone. For 2024, the stock is up over 80%, putting it on track to break a two-year losing streak. All four analysts polled by LSEG rate the stock a “Buy,” with an average price target of $15, suggesting nearly 90% potential upside. Analysts’ estimates vary widely, though, ranging from $8 to $20, reflecting the risk and uncertainty surrounding Phunware. Like Trump Media, this stock is a speculative play with no earnings to show in recent years, so investors should be cautious of its inherent volatility.

Rumble (RUM) – Conservative Video Platform with Election Appeal

Rumble, the video platform popular with conservative audiences, is also seen as a potential beneficiary of a Trump win. The company went public in September 2022 with backing from Peter Thiel and has since carved a niche as a conservative alternative to mainstream platforms. While its connection to Trump isn’t as direct, Rumble remains on watchlists for those speculating on Trump’s influence on its user base and potential growth.

In October, Rumble shares rose 13%, contributing to a 36% year-to-date gain. Over the last year, shares have traded within a narrower range of $3.33 to $9.20. Analyst sentiment on Rumble is more muted, with both analysts surveyed by LSEG giving it a “Hold” rating and an $8 price target, implying a 34% upside from recent levels. Like the other stocks on this list, Rumble is trading with high volatility, driven by sentiment and speculation rather than earnings or revenue growth.

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.

Duolingo (NASDAQ: DUOL) – A Language Leader with Room to Run

Duolingo has made impressive strides this year, with shares up 29% year-to-date, and there’s good reason to believe the stock still has more growth potential. As the go-to platform for online language learning, Duolingo’s combination of category leadership and its unique, gamified approach make it a standout in its space. This strong positioning sets up Duolingo as a promising pick heading into its upcoming earnings report, scheduled for after-hours on Wednesday, November 6.

While investor expectations are high, the company has consistently delivered, driven by a rapidly expanding and highly engaged user base. Duolingo’s ability to turn learning into an interactive, sticky experience is a major factor behind its success. With robust user retention and continual feature enhancements, Duolingo has proven its capability for strong execution and growth within the competitive internet space.

Duolingo is one of the highest-growth companies in its sector, and its growth potential remains compelling. While some volatility is expected with such elevated expectations, Duolingo’s track record and unique position make it a solid addition to a growth-focused portfolio.

Estée Lauder (NYSE: EL) – A Potential Turnaround in the Beauty Sector

Estée Lauder has taken a significant hit this year, with its stock down more than 54% in 2024 and a 31% drop just over the past month. Despite the challenging environment, especially in key markets like China, this drop could present an opportunity for investors who believe in the company’s longer-term potential. Notably, Estée Lauder’s Relative Strength Index (RSI) is currently at low levels, which can signal that the stock may be oversold and poised for a potential rebound.

On November 2, Estée Lauder reported earnings that exceeded analysts’ recently lowered expectations, though revenue came in short, citing softer demand from China. While this news brought further caution, it also underscored the company’s efforts to stabilize its performance amid market headwinds. For investors, Estée Lauder’s strong brand portfolio and resilient demand in markets outside of Asia may offer a path to recovery as the company adjusts its strategy to navigate evolving consumer sentiment.

With more than 15 analysts adjusting their earnings forecasts downward since late October, the market sentiment is notably cautious. However, for those with a value focus and a long-term outlook, Estée Lauder’s current price could be an entry point into a well-established name in the beauty industry, especially if conditions in key markets begin to stabilize.

TKO Group Holdings (TKO): A Knockout Opportunity in Sports Entertainment

TKO Group Holdings, the parent company of UFC and WWE, has been making significant strides in the sports entertainment industry. The stock has surged nearly 43% this year, reflecting strong investor confidence. Analysts project an average 12-month return of 15%, indicating potential for further growth.

In September, Pivotal Research Group initiated coverage with a buy rating, highlighting TKO’s unique position and revenue growth opportunities. Analyst Jeffrey Wlodarczak noted the potential for higher media rights fees, increased event revenue, and new revenue streams.

Currently, 14 out of 19 analysts recommend buying TKO, with none suggesting a sell. This consensus underscores the company’s strong fundamentals and growth prospects.

Investors should keep an eye on TKO’s strategic moves and market performance, as the company continues to capitalize on its leading position in sports entertainment.

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…

AIG (NYSE: AIG) – Sentiment Weakens Amid Analyst Downgrades

AIG is showing signs of losing steam despite a 14% year-to-date increase. Recent analyst actions suggest caution ahead of the company’s third-quarter earnings report on Monday. Over the past three months, analysts have slashed AIG’s earnings estimates by nearly 30%, with a roughly 24% reduction over six months—indicating a shift in confidence.

BMO Capital’s Michael Zaremski downgraded AIG to “Market Perform” from “Outperform” in October, noting that AIG has underperformed its peers and could face additional headwinds. Zaremski cited concerns about the company’s new operating structure and potential for M&A, which could keep investor sentiment muted. With these challenges on the horizon, AIG may struggle to keep up with its sector counterparts in the near term.

Target (NYSE: TGT) Retailer Facing Potential Tariff Headwinds

As the possibility of Donald Trump’s return to the White House gains traction, retailers could face a major challenge with the reintroduction of tariffs. Trump has proposed a 20% tariff on all imported goods and a staggering 60% tariff on imports from China, which would squeeze margins and potentially reduce sales for companies reliant on international supply chains.

Target (NYSE: TGT) stands out as particularly vulnerable. While it’s managed a modest 6% gain this year, it’s still underperforming the broader market, and the company’s reliance on imported goods could become a liability if tariffs rise. Wells Fargo analysts have flagged Target as one of the names to watch, noting that higher import costs could further pressure earnings. While Wall Street holds an overall optimistic view with an expected 18% upside, we’re cautious given the external risks that could derail that growth.

Given the uncertainty surrounding trade policy and the potential for increased costs, TGT might not be worth holding onto right now. Consider reducing exposure to this stock in the near term.

Meta Platforms (NASDAQ: META) – Rising Costs Damp Investor Sentiment

Meta posted solid third-quarter results, with revenue up 19% year-over-year to $40.59 billion and EPS of $6.03, both beating analyst expectations. However, despite the strong numbers, investor enthusiasm took a hit after the company announced that capital expenditures would climb further in 2025, with projected spending now up to $40 billion for the year.

CEO Mark Zuckerberg emphasized that AI advancements are at the center of Meta’s growth strategy, fueling engagement and new advertising capabilities. While this focus on AI holds promise, the steep rise in spending has investors on edge. CFO Susan Li’s comments about “significant capital expenditures growth” added to concerns, leading to a cautious outlook.

For now, Meta’s spending ramp-up appears to be spooking the market more than boosting confidence. If costs continue to escalate, it may weigh on Meta’s performance despite strong user metrics.

Earnings Insight: These Stocks are Gaining Steam Heading into Earnings Next Week

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As we move further into the third-quarter earnings season, several stocks are gaining momentum with notable analyst upgrades and strong growth forecasts. With 64% of S&P 500 companies reporting, earnings growth for the quarter has surpassed 9%, suggesting companies with positive earnings momentum could be poised for even more upside. This watchlist focuses on stocks with increasing analyst earnings forecasts, substantial upside to price targets, and strong buy ratings from at least half of analysts. Here’s what to watch as these companies head into their earnings reports next week:

Constellation Energy (NASDAQ: CEG) – A Strong Performer in Clean Energy

Constellation Energy stands out as a leading carbon-free energy producer in the U.S., with shares soaring 125% in 2024. The stock has received several recent analyst upgrades, including “Overweight” ratings from KeyBanc and Barclays, as well as initiation by JPMorgan with an “Overweight” stance. Analysts expect a year-over-year EPS growth of 20.35% this quarter, reflecting a highly positive outlook for CEG as it focuses on expanding nuclear generation contracts. Though high growth rates can sometimes bring increased volatility, Constellation’s solid balance sheet and diversified capital allocation strategy—including share repurchases, dividend growth, and expansion projects—are key strengths as the company looks to its earnings release on Monday, November 4. With earnings estimates up 215% in the last three months, Constellation is gaining traction as a key player in clean energy heading into earnings.

DuPont (NYSE: DD) – Optimism in Chemicals

Shares of DuPont have advanced over 8% in 2024, with analysts raising earnings forecasts more than 23% in the last six months. Several recent upgrades highlight strong confidence in DuPont’s growth outlook.

Citigroup recently upgraded DuPont to “Buy” with a price target of $95, while Deutsche Bank raised its target to $92, both expressing confidence in the company’s strategic direction and financial health. DuPont’s anticipated earnings per share for the third quarter is $0.92, a slight decrease from last year, but analysts are hopeful about future growth drivers, especially with potential clarity in its electronics and water management segments. While the company faces challenges with fluctuating demand, the focus on innovation and critical markets could lead to positive catalysts in 2025.

DuPont, a global leader in materials and specialty solutions, is set to report its third-quarter 2024 earnings on Tuesday, November 5, before the bell.

Emerson Electric (NYSE: EMR) – Automation Leader with Strong Upside Potential

Global technology firm Emerson Electric, known for its automation and engineering solutions, is set to announce its fourth-quarter earnings on Tuesday, November 5. Analysts project EPS of $1.47, a 13.95% increase year-over-year. Emerson has recently earned a rating upgrade from Oppenheimer, which raised the price target to $125, underscoring the company’s growth potential in the industrial and residential sectors. With a diversified product portfolio and increased demand in automation, Emerson’s current trading price of around $108.44 gives it room for upside, as analysts place its average 12-month price target at $125.81. Investors will be closely watching to see if Emerson’s results align with these optimistic projections.

Howmet Aerospace (NYSE: HWM) – Momentum in Aerospace and Defense

Howmet Aerospace, a key supplier to the aerospace and defense industries, will release its earnings on Wednesday, November 6, with analysts expecting EPS of $0.65—a strong 41.3% year-over-year increase. Last quarter, Howmet beat consensus expectations with revenue growth of 14.1%, and earnings are projected to grow by over 20% in the coming year. With 13 of 16 analysts rating it a “Buy,” Howmet’s momentum is being driven by demand for its high-performance components across commercial and defense markets. The average price target sits at $99.43, slightly below the current trading price, but continued strong performance could signal additional growth for this momentum-driven stock.

Air Products and Chemicals (NYSE: APD) – Industrial Strength

Air Products and Chemicals, a leading provider of industrial gases, has benefited from favorable pricing and a solid business mix, with a 17% increase in GAAP EPS in its previous quarter. Analysts have set a 12-month price target averaging $335.65, offering potential upside from the current price, although the stock has been less volatile than some of its peers. With fourth-quarter earnings expected on Thursday, November 7, investors will be closely watching APD’s report for continued strength in revenue and income. While economic factors like inflation could weigh on future results, APD’s diversified market presence across industries offers a strong foundation.  Investors are likely to focus on whether APD’s pricing strategy and business diversification will continue to deliver results.

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