Three Stocks You Absolutely Don’t Want to Own Right Now

March 23, 2024

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…

Lucid Group (NASDAQ:LCID) – Time to Power Down on This EV Play

Despite its sub-$3 price tag, I’m here to tell you that LCID is likely still too rich for what it’s worth. You might stumble upon some pretty optimistic target prices out there, forecasting double or even triple returns in the near future. My advice? Take those with a grain of salt. Lucid’s journey ahead looks anything but smooth.

Here’s the deal: 2024 is looking eerily similar to 2023 for Lucid. Last year, the company barely managed to roll out 8,500 vehicles. This year? They’re aiming for a modest bump to 9,000, according to their latest production forecasts. So, what we’ve got is Lucid treading water, not making any significant strides forward. And let’s not forget, this is the same company that hemorrhaged over $2.8 billion to produce fewer than 10,000 vehicles last year.

The buzz around Lucid mainly hinges on the anticipated Federal Reserve rate cuts, which could give growth stocks a temporary boost. But let’s be clear: a favorable macroeconomic shift isn’t a solid foundation for investing in a company that’s struggled significantly since its inception.

In short, Lucid’s current valuation and the optimism surrounding it seem disconnected from its operational realities. If you’re holding LCID, it might be time to reconsider your position before the stock potentially dips further. Lucid’s road ahead is fraught with challenges, and there might be smoother rides elsewhere in the market.

Peloton (NASDAQ:PTON) – Time to Unclip and Step Away

Next, let’s dive into Peloton, a stock that’s become a classic example of a potential portfolio pitfall. Despite a recent earnings beat that saw Peloton pulling in $743.6 million in revenue—surpassing Wall Street’s expectations—don’t let this news pedal you into a false sense of security.

Here’s the crux: Peloton’s moment in the sun, fueled by pandemic-induced demand, has passed. The world’s moved on, gyms are back, and the appetite for high-end exercise bikes and subscription-based fitness classes isn’t what it used to be. This leaves Peloton pedaling uphill, facing a future where cash burn is a constant threat.

The company’s options are limited and unappealing. Issuing more shares? That’s a direct route to diluting the value for existing shareholders. Taking on more debt to chase elusive growth? Also dilutive and, frankly, a risky bet on a fading business model.

Peloton’s predicament is a stark reminder that not all pandemic darlings are cut out for the long haul. With the world back on its feet, demand for Peloton’s offerings is dwindling, making it a stock to consider dropping from your ride. Don’t let a temporary earnings beat distract you from the broader, more challenging road ahead for Peloton.

Xerox Holdings Corporation (NASDAQ:XRX) – Time to Let Go

Remember Xerox? The brand that became synonymous with photocopying? Well, times have changed, and so has Xerox. The company has branched out into managed services, IT, software, and automation. But don’t let the diversification fool you; Xerox is facing some tough challenges.

The company’s recent move to slash 15% of its workforce is a glaring red flag. It’s a sign that Xerox is scrambling to reorganize its core business and cut costs, hinting at deeper issues.

The financials paint a grim picture too. Xerox’s revenue dipped 9.1% year-over-year in the latest quarter, with a GAAP net loss of $58 million. Adjusted net income took a $90 million hit compared to last year, and adjusted operating margins shrank by 380 basis points. The company’s hopeful promise to achieve a “double-digit adjusted operating income margin by 2026” feels like a distant dream.

Analysts are giving Xerox a thumbs down, and it’s not hard to see why. With declining revenues, a challenging outlook, and a long wait for a potential turnaround, it might be wise to part ways with XRX sooner rather than later. In a market full of opportunities, holding onto Xerox could mean missing out on better investments.

Chipotle’s Groundbreaking 50-for-1 Stock Split: What It Means for You

Editorial Staff

March 21, 2024

Chipotle Mexican Grill, a name synonymous with fast-casual dining innovation and impressive stock market performance, has just announced a move that’s stirring up the investment community: a 50-for-1 stock split, the first in its 30-year history. This decision, heralded as one of the most significant splits in New York Stock Exchange history, is not just a testament to Chipotle’s growth but also a beacon for potential investors looking for their next big opportunity.

For those tracking Chipotle’s journey, the brand’s ascent from a single Denver location to a global powerhouse is nothing short of remarkable. Recognized in the Time 100 list of Most Influential Companies for its commitment to sustainability and social responsibility, Chipotle has not only redefined fast-casual dining but also set new standards for corporate excellence. Its stock performance is equally impressive, with a staggering 74% gain over the past year and an eye-watering 12,616% increase since its IPO in 2006.

The upcoming stock split, pending shareholder approval at the annual meeting on June 6, promises to make Chipotle’s shares more accessible to a broader range of investors. By dividing each existing share into 50, the company aims to lower the entry price without altering the overall market value of the company. This move could potentially increase liquidity and attract new investors, although the long-term impact will ultimately depend on Chipotle’s continued performance and market conditions.

But what does this mean for current and prospective investors? While the mechanics of a stock split might seem straightforward, the implications are worth a closer look. A stock split doesn’t change the company’s valuation; it simply increases the number of shares available, making them more affordable on a per-share basis. This can sometimes lead to a short-term surge in interest and share price due to perceived accessibility, but the real value lies in the company’s fundamentals and growth prospects.

And on that front, Chipotle continues to excel. With a revenue increase of 14% to $9.9 billion in 2023 and a 38% jump in diluted earnings per share, the company’s financial health is robust. The success of its Chipotlane drive-thru concept and a digital strategy that now accounts for 37% of total revenue are just two examples of how Chipotle is innovating and expanding its reach.

So, is Chipotle a buy? While the stock split itself might not be a direct reason to invest, the underlying strength of the company’s business model, its commitment to growth and innovation, and its proven track record in the market make it a compelling choice for investors. As always, it’s essential to consider your investment strategy and consult with a financial advisor, but Chipotle’s latest move is undoubtedly worth watching.

As we look ahead, Chipotle’s story is far from over. With plans to expand its Chipotlane footprint and continue capitalizing on digital sales, the company is well-positioned for future growth. For investors, the upcoming stock split is a moment to reassess Chipotle’s place in their portfolios, considering not just the immediate effects but the long-term potential of this fast-casual leader.

Buffett’s Big Bets: 3 Payment Giants Powering the Future

Editorial Staff

March 18, 2024

Ever wonder where the Oracle of Omaha, Warren Buffett, places his bets in the vast landscape of the stock market? Well, you’re in luck because today we’re diving into three dominant companies within Berkshire Hathaway’s massive $373 billion portfolio that are reshaping the payments industry. Let’s unpack why American Express (AXP), Visa (V), and Mastercard (MA) are worth a closer look for your investment strategy.

American Express: A Crown Jewel of Berkshire’s Portfolio

Sitting pretty as Berkshire’s third-largest holding, American Express isn’t just another credit card company. With a whopping $32 billion stake, Berkshire owns about 21% of this financial powerhouse. What makes Amex so special? It’s all about the economic moat and the brand’s allure to a wealthier clientele, creating powerful network effects that Buffett loves.

Trading at a P/E ratio of 19, Amex mirrors its decade-long average, presenting what seems like a fair entry point for investors. With a 14% year-over-year increase in revenue, hitting $60.5 billion in 2023, and similar growth in diluted earnings per share, Amex’s momentum is hard to ignore. Plus, with management eyeing double-digit growth again this year, the future looks bright for this payment titan.

Visa and Mastercard: The Dynamos of Digital Payments

Over the last decade, Visa and Mastercard have been nothing short of spectacular, boasting returns of 395% and 502%, respectively. These figures not only dwarf the S&P 500’s performance but also highlight the exceptional quality of these businesses. Yes, their P/E ratios north of 31 might raise eyebrows, but let’s dig deeper.

Unlike Amex, Visa and Mastercard don’t dabble in lending. They’re the maestros behind the payment rails, connecting billions of consumers with millions of merchants globally. This capital-light approach has cemented their status as two of the most formidable businesses worldwide, thanks to their expansive network effects.

With a combined payment volume of $6.3 trillion in just the last quarter of 2023, it’s hard to imagine anyone disrupting their reign. And let’s talk profitability – with operating margins averaging 66% for Visa and 55% for Mastercard, these companies are in a league of their own when it comes to turning sales into income.

Wrapping Up

While Buffett’s Berkshire may not hold massive stakes in Visa and Mastercard, possibly due to their lofty valuations, these companies should definitely be on your radar. Their unparalleled scale, network effects, and profitability make them compelling candidates for long-term investors. Considering dollar-cost averaging into these stocks could be a smart move, allowing you to tap into the ever-growing digital payments sector.

So, there you have it – three payment giants with the Buffett seal of approval. Whether you’re drawn to Amex’s solid dividend and growth potential, or the innovative, capital-light models of Visa and Mastercard, these stocks offer a glimpse into the future of finance

Stock Hotlist: Three Strong Conviction Buys for the Week Ahead

Editorial Staff

March 17, 2024

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.

Sarcos Technology and Robotics (NASDAQ:STRC): A Robotics Pioneer with Upside Potential

Sarcos Technology and Robotics, a trailblazer in the robotics and microelectromechanical systems arena, is gearing up for an exciting 2024. The company’s financial outlook is promising, with an expected year-end balance of around $39 million in cash, cash equivalents, and marketable securities. What’s more, STRC is on track to reduce its net cash usage to approximately $1.6 million per month throughout 2024, thanks to anticipated revenue boosts from customer acquisitions.

The buzz around STRC intensified following its acquisition of a significant $13.8 million, four-year development contract with the U.S. Air Force. This contract, aimed at advancing AI and ML software, underscores the company’s innovative capabilities and its potential for growth in cutting-edge technology sectors.

Despite being in the pre-earnings phase with revenues reported at $11.52 million, the company has caught the eye of analysts. Stephen Volkmann of Jeffries adjusted his price target for STRC to $1.15 from $4.25 which suggests a substantial 109.85% upside from its current position, projected to materialize within the next twelve months.

Investing in early-stage companies like STRC carries its risks, but it’s precisely these ventures that often present the most significant growth opportunities. For those looking to diversify their portfolios with high-potential stocks, even owning a small stake in STRC could pave the way for impressive returns down the line. As we look ahead, Sarcos Technology and Robotics stands out as a potential pick for investors ready to tap into the future of robotics and AI.

Automatic Data Processing (NASDAQ:ADP): A Cornerstone in Human Capital Management

Automatic Data Processing, better known as ADP, has carved out its reputation as a stalwart in the human capital management sector over decades. Starting with payroll automation, ADP has expanded its offerings to a full spectrum of HR, payroll, and administrative services, catering to over 1 million companies worldwide.

ADP’s role extends far beyond payroll processing. The company is instrumental in helping businesses navigate the complexities of workforce management — from hiring and onboarding to benefits administration and ensuring tax compliance. Its cloud-based solutions not only simplify HR operations but also unlock valuable insights into company data, marking ADP as a transformative force in the industry.

The fiscal year 2023 was a banner year for ADP, and the momentum is continuing into 2024. The company’s latest quarterly report showcased a 6% year-over-year revenue jump to $4.6 billion. More impressively, its adjusted EBITDA margin ticked up by 20 basis points to 24.6%, buoyed by strong customer retention and bookings. Under the leadership of CEO Maria Black, ADP is hitting new heights in customer satisfaction.

With a decade-long track record of a 10% compound annual growth rate (CAGR) in its dividend, ADP presents an attractive opportunity for long-term investors. As the company continues to innovate and expand its suite of services, now is an opportune time to consider adding ADP shares to your portfolio.

Kinross Gold (NYSE:KGC): A Golden Opportunity Amid Economic Uncertainty

As we navigate through economic forecasts that lean towards a recession by fall 2024, Citigroup’s skepticism about a soft landing suggests that we might see aggressive rate cuts by policymakers. This scenario sets the stage for a significant rally in gold, making it an opportune time to consider undervalued gold mining stocks.

Enter Kinross Gold, a standout in the sector with its forward price-earnings ratio sitting at an attractive 14.5 and offering a compelling dividend yield of 2.37%. With a market valuation of $6.2 billion, Kinross isn’t just another player in the gold mining industry; it’s a company with substantial financial muscle. As of the fourth quarter of 2023, Kinross boasted a liquidity buffer of $1.9 billion, alongside an impressive operating cash flow (OCF) of $1.7 billion for the year. These figures underscore the stock’s undervaluation, especially when considering its potential cash flow exceeding $2 billion should gold prices trend upwards.

Moreover, Kinross’s solid financial standing could open doors for strategic acquisitions, providing another catalyst for the stock’s growth. For investors looking to hedge against economic downturns or simply diversify their portfolios with a resilient asset, Kinross Gold presents a compelling case. With its strong financials and the looming rally in gold prices, KGC stock is poised for a surge in the latter half of 2024, making it a top pick for those seeking value in uncertain times.

Three Stocks You Absolutely Don’t Want to Own Right Now

Editorial Staff

March 16, 2024

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…

Verizon (VZ)

Verizon has been a staple in many long-term portfolios primarily due to its juicy 6.50% dividend yield. But here’s the thing: a 29% drop over the last five years tells a story that’s hard to ignore. Sure, the stock has risen slightly over the past year, but that’s only after a surprising 27% rally since October.

Digging into the numbers, Verizon’s financial health raises some red flags. With a staggering $128.5 billion in unsecured debt and a slight dip in year-over-year operating revenue, it’s clear the telecom behemoth is under some pressure. The quick ratio sitting at 0.64 doesn’t exactly inspire confidence, signaling more current liabilities than assets.

The reality is, Verizon seems to be on the defensive, struggling to hold onto its market share in a fiercely competitive landscape. The days of robust financial growth appear to be behind it, reflected in its significant five-year decline. And while the dividend might look attractive on the surface, the growth of that dividend is barely inching forward, with a mere 1.25 cents annual increase in its quarterly dividend per share.

After the unexpected rally to end 2023, Verizon’s stock might just be teetering on the edge of a correction. For those looking at the long game, it might be time to reassess Verizon’s place in your portfolio.

Academy Sports and Outdoors (ASO)

Academy Sports and Outdoors has been under the microscope lately, and not for reasons that would excite most investors. Despite the buzz around ASO in 2023, its performance and outlook for 2024 have raised some eyebrows.

Let’s cut to the chase: ASO didn’t hit its mark in the latest quarterly earnings, posting an EPS of $1.38 against the expected $1.58. Revenue also fell short at $1.40 billion, missing the forecasted $1.44 billion and showing a 6.4% dip year-over-year.

But here’s where it gets even stickier – ASO’s financials are looking a bit shaky. With $274.83 million in cash versus a hefty $1.80 billion in debt, we’re looking at a negative cash position of -$20.56 per share. That’s a red flag waving high for financial risk.

The quick ratio isn’t doing them any favors either, sitting at a mere 0.25. This means ASO only has 25 cents in liquid assets for every dollar of current liabilities. Not exactly comforting.

And if you’re hoping for some saving grace in their free cash flow, don’t hold your breath. It’s been on a downward trend, plummeting from $970 million in 2020 to $443 million in 2022.

All things considered, ASO’s current state makes it a prime candidate for our list of stocks to sell or avoid. For those holding ASO, it might be time to reassess and consider whether this small-cap stock aligns with your investment goals.

Baidu (BIDU)

Lastly, we have Baidu, the behemoth behind China’s top search engine. Despite its dominant online presence, Baidu’s stock has taken a hit, sliding down 23% over the year and 10% year to date, now hovering around $104 from its 2021 peak of $339.

The cooling of China’s market has hit Baidu hard, particularly its bread-and-butter online marketing revenue. Despite hefty investments in AI, its cloud business hasn’t made significant strides and remains a minor player in the market.

Here’s the kicker: Baidu is bleeding money and hasn’t turned a profit. The stock’s been stuck fluctuating between $100 and $146 for the last six months, and there’s little to suggest a turnaround is near. Growth is sluggish, and Baidu’s ambitious AI projects might be too little, too late.

The company’s struggle to showcase its AI capabilities to businesses over the past two years is concerning. Moreover, the U.S. ban on chip exports to China throws another wrench in the works. Without these crucial components, Baidu’s ability to run AI models or applications is severely hampered, potentially stalling its growth indefinitely.

Given these challenges, it might be wise to consider selling BIDU before it potentially falls below the $100 mark. Waiting for a turnaround could be a long haul, and there are likely better opportunities elsewhere.

Three Stocks You Absolutely Don’t Want to Own Right Now

Editorial Staff

March 16, 2024

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…

Super Micro Computer (SMCI)

AI’s reach extends far beyond tech, promising to boost the global GDP by a whopping $15.7 trillion by 2030, according to PwC analysts. Yet, not everyone’s buying into the AI frenzy. Some Wall Street skeptics have cast a shadow over the future of a few AI darlings, One stands out as a stock to sell or avoid.

Super Micro Computer. Following a jaw-dropping 751% rise over the past year and a 160% spike since the dawn of 2024, analysts are waving the red flag. Mehdi Hosseini from Susquehanna says SMCI could be looking at a 66% drop from its recent high.

Why the skepticism? Super Micro’s been on fire, thanks to its energy-efficient servers that are a big deal for AI data centers, not to mention its tight partnership with Nvidia. But here’s the kicker: despite forecasting a sunny fiscal 2024, history teaches us to temper our enthusiasm. Remember the cloud computing hype? Super Micro was supposed to be at the forefront, yet it didn’t quite hit the mark expected by many.

With shares sky-high and the company’s past performance in mind, it might be wise to tread carefully. Super Micro’s current valuation could be riding the AI hype wave a bit too hard. For those of you holding SMCI, it might be time to consider locking in those gains before the market does a reality check.

Lucid Group (LCID)

Lucid Group, the EV maker out of California, has been trying to carve out its niche in the electric vehicle revolution since 2007. With an assembly plant in Arizona, it’s had its sights set on becoming a major player. Recently, the stock perked up a bit, gaining 14% over the last month. However, it’s still a shadow of its former self, especially compared to its 2021 peak when shares soared above $55.

But here’s the rub: Lucid’s latest numbers aren’t painting a pretty picture. The company’s vehicle deliveries in the last quarter of the year dipped to 1,734, marking a 10% fall from the year before. Even more concerning, production saw a 32% drop, with only 2,391 vehicles built.

Revenue for Q3 tells a similar story, sliding down to $137.8 million from $195.4 million the previous year. Meanwhile, losses widened significantly, from $530.1 million a year ago to $630.8 million in the third quarter of 2023.

With demand waning, losses mounting, and the specter of shareholder dilution looming, Lucid’s current trajectory leaves much to be desired. For those holding LCID, it might be time to reassess and consider whether this stock fits into your long-term investment strategy.

Academy Sports and Outdoors (ASO)

The quick ratio isn’t doing them any favors either, sitting at a mere 0.25. This means ASO only has 25 cents in liquid assets for every dollar of current liabilities. Not exactly comforting.

And if you’re hoping for some saving grace in their free cash flow, don’t hold your breath. It’s been on a downward trend, plummeting from $970 million in 2020 to $443 million in 2022.All things considered, ASO’s current state makes it a prime candidate for our list of stocks to sell or avoid. For those holding ASO, it might be time to reassess and consider whether this small-cap stock aligns with your investment goals.

Insiders Are Dumping These Tech Names, Should You?

Reports

Editorial Staff

March 14, 2024

The AI stock rally has been nothing short of spectacular, with major players like Nvidia, Meta Platforms, Super Micro Computer, AMD, and Microsoft at the forefront, achieving record highs. Amid this surge, a notable trend has emerged: insiders at these companies have started to sell off their shares, sparking a debate among investors.

Nvidia, the standout with a $2 trillion market cap, has seen its shares climb more than 70% year to date, following a nearly 240% increase last year. Despite this, several directors chose to sell shares in late February. Mark Stevens sold 15,000 shares, Michael McCaffery offloaded 4,000, Mark Perry also sold 15,000, and Harvey Jones parted with 65,000 shares.

Meta Platforms has also been in the spotlight, with CEO Mark Zuckerberg selling a significant number of shares. Zuckerberg sold 154,800 shares on March 1, 232,200 shares on Feb. 28, and another 77,412 shares were sold as indicated by a March 5 regulatory filing. This comes as Meta’s shares rallied nearly 40% this year, and the company reported a tripling in profit and a 25% revenue increase in the fourth quarter.

Super Micro Computer, another AI space winner, with its stock up more than 1,000% in the past year, saw insider selling too. Sherman Tuan sold 5,000 shares on Feb. 29, George Kao sold about 1,900 shares on Feb. 15, and Don Clegg sold 28,000 shares in mid-February.

AMD, not to be left out, has seen insiders taking profits as well. Darla M. Smith sold 1,700 shares on Feb. 29, CEO Lisa Su sold 125,000 shares on Feb. 21, and Mark Papermaster offloaded 16,200 shares on Feb. 15. Despite this, AMD’s shares are up more than 39% this year.

Microsoft CEO Satya Nadella and Vice Chair and President Bradford L. Smith also joined the trend, with Nadella selling 1,300 shares on March 1 and Smith selling 48,300 shares in early February.

This wave of insider selling raises the question, might prompt the average investor to wonder: If those with the most intimate knowledge of these companies are selling, is it time to follow suit? While insider transactions can be influenced by various factors, including personal financial planning, the timing and scale of these sales amidst such significant rallies prompt a closer look. Investors should consider whether these moves signal a market peak.

Stock Hotlist: Three Strong Conviction Buys for the Week Ahead

Editorial Staff

March 10, 2024

Curious to see which stocks made the cut? Click here to access the full watchlist and discover the exceptional opportunities we’ve unearthed this week. Trust us, this is one reveal you don’t want to miss.

Cheniere Energy (NYSE:LNG): A Strong Conviction Buy Amidst Energy Transitions

In a world increasingly vocal about the shift towards green and renewable energy, Cheniere Energy, a leader in liquefied natural gas (LNG), stands out as a compelling pick. Despite the broader market’s pivot away from traditional energy sources, Cheniere’s unique position in the LNG sector makes it a stock worth watching, especially as it navigates the complexities of the current energy landscape.

As of now, Cheniere’s performance reflects the market’s cautious stance towards hydrocarbons, with shares down nearly 9% since the start of the year. Analysts project a near-term challenge, expecting sales to dip to $16.97 billion by the end of this fiscal year, a notable decrease from last year’s $20.39 billion. However, the outlook isn’t all gloomy; projections indicate a rebound to $21 billion in sales by the end of 2025, signaling potential growth on the horizon.

The political and geopolitical climate adds another layer of intrigue to Cheniere’s story. With the 2024 elections looming and the ever-present geopolitical tensions, there’s a possibility that the U.S. may reassess its stance on hydrocarbon infrastructure, potentially benefiting companies like Cheniere.

Trading at less than 4X trailing-year earnings, LNG‘s valuation appears attractive, especially when considering its unanimous strong buy rating from analysts. This valuation, coupled with the potential shifts in political and energy policies, positions Cheniere as a stock with significant upside potential.

For investors looking for a strong conviction buy, Cheniere Energy offers a unique opportunity. It’s a play that leverages the current energy transition while also hedging against potential political and geopolitical shifts. As we look ahead, LNG’s current undervaluation and the broader context suggest it’s a stock poised for a rebound, making it a standout pick for our watchlist this week.

ServiceNow (NASDAQ:NOW): A Tech Powerhouse with AI-Driven Growth

ServiceNow, a leader in the IT automation space, has been making waves with its AI-powered applications, particularly after launching a highly successful AI app in Q3 of 2023. The buzz around this app isn’t just hype; it’s backed by impressive claims from CEO Bill McDermott. In January, McDermott highlighted the company’s ability to command premium pricing for its AI offerings, attributing a 40%-50% boost in productivity levels for businesses utilizing their technology. This kind of performance is exactly why ServiceNow is poised for continued success, riding the wave of demand for top-tier AI applications.

Financially, ServiceNow is on solid ground, with its revenue seeing a 26% year-over-year increase last quarter. Looking ahead, the company is projecting a 29% jump in its income from operations for the current quarter, signaling strong financial health and operational efficiency. Adding to the optimism, Argus, a well-respected investment bank, recently upgraded its price target on NOW stock to $910 from $770, citing the anticipated benefits from ongoing enhancements to its AI app.

Over the past three months, NOW shares have seen a 10% uptick, and an even more impressive 82% surge over the last year. This momentum, coupled with the company’s strategic focus on AI and operational excellence, makes ServiceNow a standout pick for investors looking for growth in the tech sector. As businesses continue to seek out innovative solutions to drive efficiency and productivity, ServiceNow’s offerings are more relevant than ever, making NOW a strong conviction buy for the week ahead.

Vita Coco Company (NASDAQ:COCO): A Refreshing Addition to Your Portfolio

In the bustling world of beverages, where giants like Monster (NASDAQ:MNST) and Celsius (NASDAQ:CELH) dominate headlines, Vita Coco Company emerges as a refreshing under-the-radar pick. As the leading force in the coconut water market, owning over half of its total addressable market, Vita Coco offers a unique investment opportunity that’s hard to overlook.

Expanding beyond its core, Vita Coco has ventured into the burgeoning ready-to-drink alcoholic beverage sector through a strategic partnership with Diageo plc (NYSE:DEO). Their innovative spiked coconut water options are tapping into a rapidly growing market, projected to expand at a 7.5% CAGR through 2029. While the idea of coconut water mixed with Captain Morgan might not be everyone’s go-to drink, the financial potential of this niche is undeniable, and Vita Coco is poised to capture a significant share.

Financially, Vita Coco has been impressive, outperforming analyst expectations with a 4% earnings beat at the year’s end. This achievement is underscored by a staggering nearly 500% increase in yearly net income and a solid 9.4% profit margin. The success story of Monster, one of the century’s top-performing stocks, is well known, but Vita Coco’s trajectory suggests it could be on a similar path to greatness.With its dominant market position, innovative expansion into alcoholic beverages, and impressive financial performance, Vita Coco stands out as a strong conviction buy for the week ahead. This best-kept Wall Street secret is ripe for the picking, offering a tantalizing blend of growth potential and market leadership.

Three Stocks You Absolutely Don’t Want to Own Right Now

Editorial Staff

March 9, 2024

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…

Mullen Automotive (NASDAQ:MULN) – A Dilution Disaster

This EV player has become notorious for its staggering level of stock dilution, making it a risky bet for any investor’s portfolio. While Mullen has caught the eye of those looking for quick gains from potential short squeezes, let’s be real: banking on such an event is more gamble than investment strategy. The harsh truth is, the dilution will likely erode your investment well before any squeeze could offer a payoff.

To give you a sense of the dilution we’re talking about, Mullen executed a cumulative reverse split ratio of 1-for-22,500 in 2023. Yes, you read that right. It’s an almost incomprehensible level of dilution. Even in a fairy-tale scenario where Mullen morphs into the next Tesla, holding onto this stock could leave you with virtually nothing.

The company’s reliance on toxic financing methods is another red flag. In 2023, a whopping $820.4 million of Mullen’s expenses were tied up in non-cash charges, including significant stock-based compensation and goodwill impairment. Notably, CEO David Michery pocketed $48.87 million in stock awards alone last year. This approach to management compensation, at the expense of shareholder value, is a clear sign that Mullen’s leadership isn’t prioritizing the interests of its investors.

In short, Mullen Automotive is a stock to steer clear of. The company’s financial maneuvers suggest a lack of regard for shareholder equity, making it a poor choice for anyone looking for sustainable investment opportunities.

Rocket Companies (NYSE:RKT) – Time to Eject?

Rocket Companies caught many eyes with its sharp uptick during the final months of last year, fueled by bets on a housing sector revival thanks to expected rate cuts in 2024. But as we’ve stepped into the new year, RKT’s momentum has waned, and now we’re staring down a barrel of interest rate uncertainties. The big question on everyone’s mind: Will the Fed cut rates at all this year? And the answer seems to be leaning towards a ‘maybe not.’

But wait, there’s more. It’s not just the interest rate roulette that’s putting RKT under the microscope. Citi analysts threw in a curveball this January, downgrading RKT to a “sell” due to valuation concerns. Despite a slight dip, RKT’s still trading at a hefty 38.4 times forward earnings, a figure that seems to bake in a mortgage demand rebound as if it were a done deal.

Given these factors, it might be wise to heed Citi’s advice. If you’re holding RKT, now could be the time to consider locking in any gains and stepping aside. With the current market dynamics, it’s better to play it safe than sorry.

Levi Strauss (NYSE:LEVI) – Time to Unravel This Position

Alright, let’s talk about Levi Strauss, the iconic denim brand that’s become a bit of a drag on portfolios. Despite a 12% uptick this year, LEVI‘s performance over the past five years tells a different story, with shares down 17%. It seems the brand’s allure is fading as consumers turn elsewhere for their denim and casual wear needs, a trend mirrored in a series of disappointing earnings reports.

The latest news from Levi Strauss isn’t exactly confidence-inspiring either. The company recently announced a significant restructuring plan, including slashing 10% of its global workforce in an effort to streamline operations. This move is expected to affect up to 15% of its corporate staff, out of more than 19,000 employees at the end of last year. Coming off the back of mixed financial results and lukewarm guidance for 2024, where revenue growth is anticipated to be a meager 1% to 3%—well below the 4.7% analysts were hoping for—it’s clear that Levi’s is bracing for a tough year ahead.

Given these developments, it might be wise to consider whether LEVI still deserves a spot in your investment lineup. With the company facing headwinds and the stock’s long-term decline, now could be the right time to fold this position and look for more promising opportunities elsewhere.

Three Stocks That Could Split Following Walmart’s Lead

Editorial Staff

March 5, 2024

When Walmart (NYSE:WMT) announced its 3-for-1 stock split, the market took notice. It was a move that hadn’t been seen from the retail giant in over two decades, instantly tripling shareholders’ stock count while keeping the market cap steady. This strategic decision not only grabbed headlines but also sparked conversations about which companies might be next in line for similar announcements in 2024.

A stock split, for those new to the concept, is when a company divides its existing shares into multiple ones to increase share liquidity. While this multiplies the number of shares available, it doesn’t change the company’s overall valuation; it simply makes each share more affordable and, therefore, more accessible to a wider pool of investors. It’s a tactic often employed to attract more shareholders, including making the stock more attainable for company employees, as was the case with Walmart.

Given Walmart’s bold move, the spotlight now turns to other high-flying stocks that could benefit from making their shares more accessible. The three companies highlighted below are prime candidates for stock splits in the coming year, each with its own compelling reason for potentially following Walmart’s lead.

Broadcom (NASDAQ:AVGO)

Broadcom stands out as a prime candidate for a stock split in 2024, potentially following in the footsteps of tech giants like Amazon and Alphabet, which made similar moves two years ago. With its share price hovering just under $1,350, Broadcom is perfectly positioned for a split. The stock has seen an impressive rally, climbing 135% in the past year and an astonishing 412% over the last five years. This growth trajectory mirrors the original Broadcom, which experienced three stock splits since its inception in 1991 before being acquired by Avago in 2016. Despite the change in ownership, the company retained the Broadcom name and ticker symbol but has not split its shares since the acquisition.

Broadcom’s aggressive expansion strategy, marked by significant acquisitions in the software sector—including notable names like CA, Symantec, and Brocade—underscores its ambition. The recent completion of its VMWare acquisition last November further solidifies its position in the tech landscape. The company’s focus on network and server solutions optimized for artificial intelligence (AI), coupled with its development of AI chips, positions it at the forefront of this rapidly growing sector. With AI-related revenues hitting $1.5 billion last quarter, Broadcom’s influence in the tech world is undeniable.

As Broadcom edges closer to trillion-dollar status, a stock split seems like a logical step to enhance accessibility for investors. Making AVGO stock more attainable could broaden its appeal and potentially fuel further growth, making it a stock to watch closely in 2024.

Microsoft (NASDAQ:MSFT)

Microsoft, a name synonymous with innovation and resilience in the tech world, is currently trading at a relatively approachable $404 per share. Despite being the most affordable of the trio we’re spotlighting, whispers of a potential stock split are growing louder. With a history of nine splits, the last one dating way back to 2003, the idea isn’t far-fetched. Since its last split, MSFT has seen an astronomical growth of 1,560%, and when you factor in reinvested dividends, the total return skyrockets to nearly 2,600%—a stark contrast to the broad market index’s 812% total return.

The recent second-quarter earnings report only adds fuel to the speculative fire. Microsoft announced an 18% increase in sales from the previous year, reaching $62 billion, largely thanks to the integration of AI across its product range and services. CEO Satya Nadella highlighted that half of the Fortune 500 companies are now utilizing Microsoft’s Azure AI models, with the cloud services platform boasting 53,000 AI customers. This isn’t just growth; it’s a testament to Microsoft’s deepening footprint in the AI and cloud computing arenas.

Sitting at the pinnacle of the market with a $3.1 trillion valuation, Microsoft’s financial health is nothing short of robust. With $81 billion in cash reserves and a 33% increase in profits from the previous year, reaching $22 billion, Microsoft is a juggernaut powering through the tech sector. Whether or not a stock split is on the horizon, MSFT’s performance is a beacon for investors seeking a blend of stability and explosive growth potential in their portfolios.

Ulta Beauty (NASDAQ:ULTA)

At a glance, Ulta Beauty’s current share price of $551 might seem steep, but this powerhouse in the personal care and cosmetics industry is showing all the signs of being ripe for a stock split. As the largest specialty beauty retailer in the U.S., with a sprawling network of nearly 1,375 stores across all 50 states, Ulta has carved out a significant niche for itself in the retail sector.

The company’s approach to shareholder value is notably aggressive, focusing on share repurchases over dividends. Following its fiscal third-quarter report, Ulta announced an increase in its share buyback program to $950 million, up from the previously planned $900 million. This move underscores the company’s robust financial health and its commitment to enhancing shareholder value. A stock split could further democratize ULTA stock, making it as accessible as the beauty products lining its shelves.

The beauty industry is known for its resilience, often thriving regardless of the economic climate. This phenomenon, known as the Lipstick Effect, highlights how consumers gravitate towards smaller luxuries, like beauty products, even in tougher times. Ulta Beauty stands at the intersection of this enduring demand, offering an array of affordable luxuries to consumers.

Since going public in 2007, Ulta Beauty has delivered staggering returns of over 1,603%, dwarfing the S&P 500’s 239% return in the same period. Lowering its stock price through a split could open the doors to a broader investor base, eager to partake in the company’s continued growth story. With its solid track record and strategic positioning, Ulta Beauty is not just selling beauty products; it’s offering investors a chance to own a piece of a resilient and flourishing business.

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Verizon (VZ)

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Baidu (BIDU)

Super Micro Computer (SMCI)

Lucid Group (LCID)

Academy Sports and Outdoors (ASO)

Cheniere Energy (NYSE:LNG): A Strong Conviction Buy Amidst Energy Transitions

ServiceNow (NASDAQ:NOW): A Tech Powerhouse with AI-Driven Growth

Vita Coco Company (NASDAQ:COCO): A Refreshing Addition to Your Portfolio

Mullen Automotive (NASDAQ:MULN) – A Dilution Disaster

Rocket Companies (NYSE:RKT) – Time to Eject?

Levi Strauss (NYSE:LEVI) – Time to Unravel This Position

Broadcom (NASDAQ:AVGO)

Microsoft (NASDAQ:MSFT)

Ulta Beauty (NASDAQ:ULTA)

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