Top Rated Stocks to Watch This Week - Jan. 02, 2024
In the stock market where opportunities and risks coexist, stock selection is of paramount importance for every smart investor. Here, we have some very good investment opportunities that can assist investors. Combines fundamental analysis and quantitative screens to uncover promising companies that have the potential to become market leaders.
Additions
There are several new additions to the Top Rated Stocks this week.
1.NIO Inc. (NIO)
NIO Inc. is a leading electric vehicle manufacturer in China, focusing on the premium segment. The company designs, develops, and sells smart electric vehicles, including five and six-seater electric SUVs and smart electric sedans. It also offers power solutions, repair and maintenance services, and financing and leasing services.
NIO is currently being covered by 12 Wall Street analysts, who, on average, rate the stock as a Moderate Buy. This rating suggests that analysts are optimistic about the company's future prospects but also acknowledge potential challenges.
Bulls argue that NIO has successfully built its premium brand image, which will differentiate the company from mass-market competitors and generate extra pricing power for its electric cars. Advancing battery technology and charging solutions will ease range anxiety on electric cars, benefiting NIO. Chinese consumers' growing demand for EV cars will also boost NIO's sales. Younger-generation car buyers value vehicle tech experience, giving NIO a competitive edge over legacy carmakers.
NIO Inc. has demonstrated strong growth potential in the premium electric vehicle market in China, with sales of over 12,0000 EVs in 2022, accounting for about 2% of the China passenger new energy vehicle market. Click here to review the article.
2.Qualcomm (QCOM)
Qualcomm's market capitalization of $159.70B and an enterprise value of $163.78B demonstrate its substantial presence in the technology sector. Currently, 23 Wall Street analysts cover QCOM, with a consensus rating of a Moderate Buy. The stock trades with a forward P/E ratio of 15.6, notably below the S&P 500s 18.7, suggesting a potentially undervalued status compared to the broader market. Furthermore, compared to the Technology sector's TTM P/E of 36.54, Qualcomm's TTM P/E of 22.01 positions it as a more attractively priced option within its sector.
The companys lucrative royalty income stream, derived from its extensive patent holdings in 4G and 5G technology, is expected to continue generating substantial revenue. This positions Qualcomm favorably as the adoption of 5G technology accelerates globally. Additionally, Qualcomm's dominant market share in 5G chipsets and strong relationships with leading smartphone manufacturers underscore its leadership position. The company's expansion into automotive and Internet of Things markets reflects a strategic diversification leveraging its core competencies. Click here to review the article.
3.Occidental Petroleum (OXY)
Recent SEC filings indicate that legendary investor, Warren Buffett, has been adding to his OXY position, which is one of his top holdings. He purchased 10.5 million shares of the oil company last week for about $589 million. That brings Berkshire's total stake in Occidental to 27.2%, and it still holds an additional $8.5 billion in preferred shares and warrants.
The company's position in the Energy sector is primarily responsible for its current TTM P/E of 13.1, which is higher than the sector's average of 7.84.
Despite this, analysts rate the stock as a moderate buy, and the company has a dominant position in the Permian Basin, which is expected to be a major growth engine in the coming years.
The bulls are optimistic about OXY's position in the Permian Basin, which offers the cheapest production in the US. This is complemented by its conventional assets in the Gulf of Mexico and the Middle East, generating stable cash flows from assets with a much lower base decline rate. OXY's low carbon ventures segment is also seen as a synergistic addition to its chemical business, while its EOR portfolio holdings and expertise give it a natural advantage in carbon capture.Click here to review the article.
4.Salesforce (CRM)
Salesforce, Inc. (CRM) is a leading provider of customer relationship management (CRM) technology and has become one of the most widely recognized names in the technology industry. With its diverse product offerings and a range of tools, Salesforce has established a strong presence in the market and has expanded its reach to various industries. The company has a solid market position and a robust customer base, which has helped it to maintain its growth trajectory.
In terms of valuation, Salesforce trades at a forward P/E ratio of 27.47, which is above the current forward P/E for the S&P 500 of 18.7, and its TTM P/E of 98.95 is higher than the industry average. While this indicates that the stock may be overvalued, the company's strong growth potential and market position warrant further analysis.
Bulls argue that Salesforce is well-positioned to capitalize on the growth in the SFA space, as it dominates the market but still only controls 30% of it. With the market expected to grow at a double-digit rate, there is still room for the company to grow. Click here to review the article.
5.Alibaba (BABA)
The company's success is primarily due to its e-commerce business, which accounts for over 67% of its revenue. With a gross merchandise volume of CNY 8.3 trillion for the fiscal year ended March 2022, Alibaba is the largest online and mobile commerce company in the world.
The company's dominant position in the Chinese market is supported by its strong retention rate of over 90% for its core annual active users on its China retail marketplaces, which highlights its ability to maintain customer loyalty and drive revenue growth.
Bulls argue that Alibaba's gross merchandise volume per annual active user was CNY 8,83 for the year ended March 2022, which is significantly higher than its peers Pinduo and JD.com, who had CNY 3,285 and CNY 5,905 in 2021, respectively. Furthermore, the company's adjusted EBITA margin of 32.5% is higher than its competitors JD Retail's 3.1% non-GAAP EBIT margin and PDD's 12.4% non-GAAP EBIT margin for the 12 months ended December 2021. These numbers demonstrate Alibaba's profitability and its ability to generate revenue from its e-commerce business, making it an attractive investment opportunity. Click here to review the article.
Delletions
There are several deletions this week: SNOW, CHWY, PFE, ADBE, ENPH.
Last Week's Best Performing Stocks
1.Arm Holdings ( ARM )
ARM has risen by 17.6% since being selected.
While Arm experiences increasing adoption, its stock price may not be justified by its current valuation. The stock currently trades at over 55 times next year's earnings estimates, which is significantly higher than Nvidia's forward multiple. Although Nvidia is adopting Arm for its Grace CPU chips, the majority of Nvidia's revenue is attributed to its core GPU products. Comparatively, other semiconductor players, such as Nvidia, exhibit lower valuation multiples.
Arm Holdings shows promising growth potential, backed by its dominant position in the chip architecture market and partnerships with industry-leading technology companies. The adoption of Arm's architecture by Nvidia for data center CPUs and the development of Arm-based chips for PCs indicate a growth trajectory. However, Arm's stock valuation appears relatively expensive compared to other semiconductor players. This information should be considered when making investment decisions related to Arm Holdings. Click here to review the article.
2.Moderna (MRNA)
MRNA has risen by 15.63% since being selected.
Moderna is a biotechnology company specializing in the development of mRNA-based therapeutics and vaccines. They have gained recognition for their COVID-19 vaccine, which received Emergency Use Authorization (EUA) by various regulatory agencies worldwide.
Moderna (MRNA) and Merck (MRK) jointly announced positive results for their combination treatment, mRNA-4157 (V940), in combination with Keytruda (Pembrolizumab) for stage III/IV melanoma patients with a high risk of recurrence following complete resection.
Following the news of positive clinical results, Moderna's stock exhibited a notable 11.7% uptick. This surge suggests that market participants view the news favorably and anticipate the potential for future growth.
MRNA sets up as an interesting opportunity for investors. The stock was a covid darling as it gained recognition for its covid vaccine in 2021. This drove its stock price to $497 in August of 2021. The stock has pulled back aggressively as worries around covid receded. The stock held its ground at the $71 level the past couple of months, suggesting sellers had left. This news has renewed interest in the name. MRNA could see some interest from traders given its breakout on the weekly chart and the positive new from today. Click here to review the article.
3.Advanced Micro Devices (AMD)
AMD has risen by 14.34% since being selected.
AMD shares have been triangling sideways since fall 2021, ranging roughly between $50 and $150 in a wide-swinging consolidation over two years in the making. Zooming in a bit, the stock is currently trading above rising major MA's. It is flirting up against key resistance in the $125 area. Support sits below in the area around $105-110 where we see the 50- and 200-day MA's.
In conclusion, AMD is a promising long-term investment for those who are willing to accept the risks involved. The company's growth in revenue, strategic positioning in AI, and focus on innovation make it an attractive option for investors who believe in its ability to secure its future in a rapidly evolving tech landscape. However, it is essential to monitor the company's performance closely and make informed decisions based on the latest financial data and market trends.
In short, there are enormous risks in play here, but enormous upside potential is also within reach. It's a very interesting basket, but it's not a place to hold all your eggs. Click here to review the article.
Summary
Top Rated Stocks is savvy investor's proprietary quantitative system designed to uncover small, fast-growing companies that have the potential to become market leaders.
If you're new to this page, each Monday we publish an updated list of the growth stocks in the market. In-house focus list of the most compelling investment and trading opportunities in the eyes of savvy analytical team. Also incorporates periodic Special Situations reports on theme-based market opportunities.