Top Stocks of the Week - August 19, 2024
AInvestMonday, Aug 19, 2024 11:41 am ET
2min read
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The stock market is off to a promising start this week, buoyed by rising trends and a relatively calm data week. With the Federal Reserve's July meeting minutes and Jerome Powell's anticipated speech at the Jackson Hole conference later this week, investors are keeping a close eye on market movements. Here's a look at some of the top-performing stocks that are catching attention this week.

Additions

There are three new additions to the Top 10 this week: ULTA

1. Super Micro Computer, Inc. (SMCI)

Super Micro Computer, Inc. ($SMCI(SMCI)), commonly known as Supermicro, has had a tumultuous yet intriguing week. The company reported its earnings on August 6, 2024, revealing impressive triple-digit revenue growth, but disappointing profitability. As a result, the stock saw a significant drop of 20% the day after earnings, contributing to an overall 35% decline from its peak earlier this year.

Despite these challenges, Supermicro remains a compelling buy for aggressive growth investors, particularly those focused on the burgeoning Artificial Intelligence (AI) infrastructure market. The company has demonstrated remarkable growth, with its Q4 FY 2024 revenue up 143% year-over-year, fueled by its dominance in AI infrastructure. CEO Charles Liang has outlined bold plans to expand Supermicro's role from merely manufacturing servers to designing and building entire data centers, significantly cutting down the time required for their construction.

The company's fundamentals are strong, with a robust revenue growth forecast for FY 2025. While risks remain, particularly related to margin compression and customer concentration, Supermicro's potential in the AI market cannot be overlooked. For investors with a high risk tolerance, SMCI presents a unique opportunity at its current valuation.

2. Meta Platforms, Inc. (META)

Meta Platforms, Inc. ($META(META)) continues to be a heavyweight in the digital advertising space. Despite ongoing debates about the company's heavy investments in AI and Reality Labs, Meta remains a cornerstone for advertisers seeking high returns on ad spend. The company has made significant strides with its AI-powered tools like Meta Advantage+, which have shown a 22% improvement in return on ad spend for advertisers using the platform.

Meta's ability to maintain strong returns on capital, coupled with its relatively undemanding valuation, makes it an attractive stock this week. The company's focus on expanding its AI capabilities and its strategic bets on the future of computing platforms could drive substantial growth in the years ahead. While there are concerns about the long-term payoffs of these investments, Meta's dominant position in digital advertising and its strong financial performance make it a stock to watch.

3. Ulta Beauty, Inc. (ULTA)

Ulta Beauty, Inc. ($ULTA(ULTA)) has faced its share of challenges over the past year, with the stock down over 30%. However, recent developments suggest a potential turnaround. The iconic retailer Berkshire Hathaway's investment in Ulta has renewed investor confidence, highlighting the company's resilience and growth potential.

Ulta's competitive edge lies in its value-for-money proposition, especially compared to its main competitor, Sephora. With consumers becoming more price-conscious, Ulta's positioning as a more affordable option could play to its advantage. Moreover, the company's expansion into international markets, particularly Mexico, offers a new growth avenue.

Despite the competitive pressures and the broader retail sector's challenges, Ulta's focus on enhancing its in-store experience and expanding its service offerings could help re-accelerate growth. The stock's recent underperformance might offer a buying opportunity for long-term investors looking to capitalize on the company's strategic initiatives.

Deletions

There are several deletions this week: O

Conclusion

This week's top stocks reflect the dynamic nature of the market, with each company presenting a unique mix of challenges and opportunities. Supermicro's potential in AI infrastructure, Meta's stronghold in digital advertising, and Ulta's strategic growth initiatives make them standout stocks this week. Investors should keep a close eye on these companies as the market continues to evolve, particularly with key events like the Fed's announcements later this week.

Disclaimer: the above is a summary showing certain market information. AInvest is not responsible for any data errors, omissions or other information that may be displayed incorrectly as the data is derived from a third party source. Communications displaying market prices, data and other information available in this post are meant for informational purposes only and are not intended as an offer or solicitation for the purchase or sale of any security. Please do your own research when investing. All investments involve risk and the past performance of a security, or financial product does not guarantee future results or returns. Keep in mind that while diversification may help spread risk, it does not assure a profit, or protect against loss in a down market.