Top Rated Stocks of the Week - July 22, 2024

Markets are currently navigating the political shift following President Biden's decision to exit the race, with Vice President Kamala Harris emerging as the frontrunner to replace him. This anticipated move brings a new wave of speculation, particularly regarding the potential unwinding of the Trump Trade. 

Additions

There are three new additions to the Top 10 this week: QCOM, META and PDD

1.Qualcomm (QCOM)

Current Price: $191 | Market Cap: $222Bn

Qualcomm (QCOM) continues to be a strong contender in the technology sector. Reiterating a buy recommendation by Wall Street analysts, Qualcomm has shown impressive growth driven by its automotive and AI PC segments. The company's Snapdragon Elite series is poised to capitalize on the growing AI PC market, despite a conservative revenue forecast for 2024. The auto segment, with a robust pipeline of $45Bn, is expected to grow significantly, further solidifying Qualcomm's position in the market. 

Financial forecasts predict a 13% revenue growth in FY25 and 9% in FY26, driven by strong earnings growth and expanding market opportunities. With a fair valuation target of $300 in two years, Qualcomm offers a potential 50% return on investment.

2.Meta Platforms (META)

Current Price: $485 | Fair Value: $549

Meta Platforms (META) is set to report earnings for Q2 on July 31st, with expectations of strong performance due to robust consumer engagement and advertising momentum. Revenues are projected to hit $39-40 billion, exceeding the guidance of $36.5-39 billion. With a projected operating income of $15-16 billion for Q2, Meta's strong monetization should offset concerns about CAPEX and AI spending. 

Given its dominant position in digital advertising, Meta's stock has outperformed the market, rising approximately 35% YTD. A fair value target of $549 suggests significant upside potential, driven by ongoing growth in user engagement and advertising revenue.

3.PDD Holdings (PDD)

Current Price: $134 | P/E Ratio: 8.8x

PDD Holdings (PDD), known for its popular e-commerce platform Temu, continues to exhibit strong growth in the Chinese market. With revenues surging 131% year over year in Q1 2024, PDD is well-positioned to benefit from the expanding e-commerce market in China. 

Despite the economic challenges in China, including slower GDP growth and increasing competition, PDD's focus on discount deals and innovative use of AI has enabled it to build a loyal customer base and achieve impressive profitability. With a long-term EPS growth rate of 36% and a current P/E ratio of 8.8x, PDD is undervalued compared to its growth potential. A fair valuation of 10x FY 2025 earnings implies a price target of $150, offering a 14% upside.

Deletions

There are several deletions this week: INTC and RDDT

Conclusion

In the current market environment, Qualcomm, Meta Platforms, and PDD Holdings stand out for their strong fundamentals and growth potential. Qualcomm's innovation in AI PCs and auto tech, Meta's dominant position in digital advertising, and PDD's rapid growth in the Chinese e-commerce market make these stocks top picks for this week. Investors should consider these stocks for their robust growth trajectories and attractive valuations amidst evolving market dynamics.