The S&P 500 has officially broken above its 200-day moving average and into the 4500-handle for the first time since February 11
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, which many deemed the technical green-light of bullish confirmation, but fundamental geopolitical risks remain.
The mega-cap growth-fueled Nasdaq 100 exhibited a ripping rally off its mid-March lows, breaking out above its 50-day moving average on Tuesday (3/22), flipping this resistance level into a support in the blink of an eye.
The S&P 500 has rallied over 8% in the past week’s reversal, soaring out of correction territory and now trading only -6% off the highs it reached to start the year. The Nasdaq 100 had seen a more significant decline into a bear market (over -20% off recent highs) but has managed to rally 12% out of the FOMC’s liftoff trading week, driving it out of a bear market. Still, the Nasdaq 100 remains more than -12% below its mid-November highs.
Do these technical breakouts signal an all-clear for stocks, or is more turbulence ahead?
Is it time to go all-in on public equities?
It’s tough to be too optimistic about public equities with the VIX (the market fear gauge) holding buoyantly in the mid-20s, yields surging to their highest levels in nearly 3 years, while geopolitical risk reaches a fresh 2-decade high.
Nevertheless, I have 6 high conviction buys for your portfolio that I would consider adding today (and averaging lower if it falls).
Lam Research
LRCX
This Eastern European conflict has accelerated the need to build out chip production capacity and Lam Research (LRCX), a leading capital equipment provider to semiconductor manufacturers, is well-positioned to be a primary beneficiary of this global move towards technology dependence.
Lam Research (LRCX) is on the ground floor of hardware innovation and is a critical component of the 4th industrial revolution, which is only beginning to heat up. Lam is a leading supplier of etching, deposition, and cleaning equipment for the semiconductor industry.
This enterprise is focused on driving innovation to produce the most cutting-edge integrated circuits and is dedicated to doing it sustainably. Lam is the market share leader of the niche etching and deposition markets for digital chip production and innovation.
Lam drives its topline in 3 semiconductor markets: memory, foundry, and logic/integrated device manufacturing.
The company’s customers included the largest and most trusted semiconductor businesses like Taiwan Semiconductor Manufacturer (TSM), the world’s largest 3
rd
party chip producer, which is building out its leading-edge operations in the US, Japan, Singapore, Germany, as well as an island off Southern Taiwan.
Each of which is driving a fresh market of demand for this global market leader in its essential capital equipment. With 10 years of digitalization being seen in the last 10 months, these businesses’ swelling demand is just beginning to proliferate.
The most recent price targets for LRCX are in the mid-$700 range.
Jabil
JBL
Jabil, a leading manufacturer of highly diversified new economy partners, is perfectly positioned for this onshoring push. After a short correction followed by a bid driving earning’s report last week, JBL is trading at an investment ripe forward P/E of 8.7x (lowest multiple since the pandemic sell-off two years ago), with a PEG (growth adjusted P/E) of 0.7x, representing a heavy discount from both its 5-year median and industry average.
Jabil has been exhibiting margin expanding growth throughout the pandemic, which is set to accelerate in the post-pandemic world as demand for its broad-based portfolio of future-focused international manufacturing operations allows it to take a controlling position amid the impending digital renaissance of the commencing 4
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Industrial Revolution.
The US stock market is the safest place to hold your capital in this highly inflationary (rapidly devaluing cash) rising rate environment (weakening bond values), while earnings growth continues with strong economic demand remaining buoyant. Valuation multiples for many new normal stocks have finally fallen to equitable levels.
With intrinsic valuation modeled denominators (aka enterprise discount rates) now aligning with interest rate expectations (if not exceeding), while earnings estimates point to outsized growth in the quarters ahead, many recently discounted US stocks are looking ripe for the picking.
The acceleration of nationalization in the face of the Russia-Ukraine war, years of pandemic-fueled digital adaptation, JBL’s breakout above its 50-day and 200-day moving average, and increasingly bullish analysts’ estimates following a blowout earnings report in the back half of last week makes JBL a perfectly positioned play for our headline-fueled portfolio.
JBL is a Zacks Rank #2 (Buy) with 6 out of 6 analysts calling it a strong buy today, with price targets around $80 a share.
CrowdStrike
CRWD
Cybersecurity is not just a clear-cut winner of this unfortunate invasion but a long-term winner where valuations are less of a concern than market share functionality as investors realize how essential this technology is for the future of our rapidly digitalizing economic structure.
I have been trading CrowdStrike, the best-in-class AI-power cloud-incepted cybersecurity platform on the market, call options over the past few weeks to take advantage of the momentum here. This space has a lot of room to rally in the coming months.
Sunnova
NOVA
US investors are looking to take advantage of this energy independence goal, driving sustainable clean energy play to the top of many investors’ buy lists. Sunnova (NOVA), a leading residential provider of residential solar energy services, is racing off its lows following a blowout Q4 report at the end of February. Analysts are getting exceedingly bullish on this perfectly positioned (recently) discounted energy independence play.
Sunnova’s solar panel and energy storage operations have been driving record revenues on a seemingly quarterly basis, on accelerating topline growth which breached 50% in 2021 and is expected to continue. NOVA is yet to turn a profit, but its path towards this goal is clear, with management projecting (adjusted) EBITDA growth of 60% in 2022.
NOVA is also curiously enough a play on rising rates, as much of its business is done through flexible financing options (loan programs), which makes up about 50% of the company’s EBITDA, and provides this stock with a rare margin expanding tailwind in this rising rate environment, despite its bottom-line deficit (most of its operations are fund by its exploding operating cash-flows).
The existential threat of mortality that the pandemic incited had the world looking towards sustainable investment opportunities in the past 2 years of trading, but the excessively hawkish price action in recent months sent this entire future-focused sector tumbling.
NOVA is now trading at less than half the value it attained in late October and nearly 1/3
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of the market cap it had reached in January 2021. Now, following a slew of analyst upgrades, NOVA is exhibiting a robust fundamentally fueled bid in its post-earnings reversal, with a ton of room left to rally.
Analysts are giving this $20 stock massive upside price targets between $45 and $65 a share following its Q4 results. WTI’s jump to over $120/barrel (13-year high) has accelerated this sustainable energy revolution, further propelling this business’s outlook.
Cameco
CCJ
In the wake of the 3
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consecutive 4-decade high monthly CPI reading (7.9% YoY in February), an energy crisis in Europe, while Putin relishes in the nostalgia of the former Soviet Union at the expense of millions of Ukrainians and even his own Russian subjects, investors are looking towards the reminiscent cold-war era commodity, Uranium.
Cameco (CCJ), the world’s lastest publicly traded uranium company, has stood out on the options board with an unusually large level of short-term call options changing hands over the past few days. CCJ has soared roughly 40% since its exceptional year-end earnings report last month, with a tidal wave of additional buy catalysts providing an additional tailwind for Cameco’s underappreciated stock.
Record rates of commodity inflation, surging interest in clean nuclear energy options, and a marginally elevated possibility of nuclear war (even a 0.001% increase in probability is material) have traders flooding into this accelerating sector of interest with leveraged option plays.
Let’s jump on this uranium-fueled rocket of returns with CCJ, a best-in-class portfolio of globally diverse producers of this atomic element that are poised to go nuclear (pun intended).
Bitcoin & Riot Blockchain
RIOT
The fallibility of humanity has been brought to the forefront of the financial markets as of late, with economists convinced that the Federal Reserve let inflation run too hot for too long, geopolitical uncertainty reaching a peak as Putin invades a former ally on its western border. At the same time, Europe is struggling through an energy crisis that many fear could lead to another recession or, worse yet, years of stagflation (low/no growth, high inflation) if this situation isn’t alleviated soon.
Bitcoin and its decentralized blockchain-backed nature make it a perfect alternative to fallible fiat currencies, as it significantly reduces the vulnerability to human error and allows for the smooth free-market environment that economists have been theorizing for centuries.
Fiat currencies are the 180 distinct global systems of money controlled/regulated by their respective central banks, which immediately leave this government-backed money vulnerable to human error (occurs much more frequently than many think).
The value of fiat currencies is derived from nothing other than our government trust and global market professionals’ acceptance of its worth because there haven’t been any real alternative options until now.
Cryptocurrencies are upending the world’s financial system, and Biden’s imminent executive order to “regulate” them only further legitimizes these digital assets’ utilization by deep-pocket money managers and global institutions.
Bitcoin broke out above its 50-day moving average in the wake of the Russia-Ukraine conflict as investors wrestle with the hard truth that fiat currencies are far less safe than our economic structure leads us to believe. The cash under your mattress is doing nothing but losing value over time, and with inflation sitting at a 4-decade high, that rate of depreciation is accelerating, while cryptocurrencies have been rapidly appreciating with limited supply being far outpaced by endless demand.
Cryptocurrencies will be a part of our new economy whether you like it or not, and it would be prudent to invest today before their mass adaptation. Riot Blockchain (RIOT), the world’s largest bitcoin miner is the perfect way to take advantage of rocketing bitcoin price, in a nice short-term momentum trade.
Riot Blockchain (RIOT) finally breakout above its critical 50-day MA for the first time since the beginning of December in a bullish post-earnings rally, after reporting a solid Q4 report with exciting forward guidance last night. Despite a bottom-line miss related to some one-time noncash expenses (achieving profitability on an adjusted basis), the stock went soaring on the tailwind of management’s ambitious guidance, indicating a 4x increase in mining capacity by the end of 2022. RIOT surged over 12% in its post-earnings price action.
Riot reiterated its 2022 year-end expectation of achieving a hash rate (speed of mining operations) of 12.8 (EH/s) and reaching 23.3 (EH/s) by early 2023. Riot’s hash rate outlook is likely conservative (the 12.8 (EH/s) projection has been advanced at least twice in the past quarter), setting Riot up to continue taking market share in this rapidly consolidating space.
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 77 billion devices by 2025, creating a $1.3 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 4 tickers for taking advantage of it. If you don’t buy now, you may kick yourself in 2022.
Click here for the 4 trades >>
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