Welcome back to Cook’s Kitchen!
Last week before the FOMC threw their every-six-weeks quant-fest, I made a video recommending you buy stocks into any further weakness presented by the probable perception of too many hawk feathers from the gang…
Who’s Afraid of the Hawkish Fed? Stocks to Buy On Sale
If you listened and bought The Trade Desk, NVIDIA,
Shopify
SHOP
, or even the Nasdaq 3X Bull ETF TQQQ, you did well.
I still think that The Trade Desk is a buy here near $70 and Shopify is giving you another chance today with the 10% pullback under $900.
Even my reco of
Block
SQ
was solid given today’s dynamics with peer
PayPal
PYPL
headed to oblivion with a -25% crash and burn on massive volume.
As I explain in today’s video, the reason things are looking up for Block is that (1) even though the stock is down 10% in collateral sympathy with PayPal, it is not threatening last week’s lows near $100, and (2) this nose-dive by PayPal is like the final cathartic capitulation in FinTech for which all possible worst-cast scenarios should now be discounted in Block shares at $110.
Smart Models Got Short for the Win
In the video, I also opine on how Wall Street analysts got it so wrong in PayPal that they were climbing over each other this morning to lower their price targets.
It has to do with how they are tracking trends in revenues and profits and, more importantly, the rate-of-change in those trends. Several analysts were already lowering EPS estimates for PayPal in the past two months, which put PYPL in the cellar of the Zacks Rank. But they
underestimated the speed of the deceleration.
And thus they got wildly surprised by the company’s cut in forward guidance and had to scramble to put lower numbers in their spreadsheets and revamp their forecasting models.
The good news for Zacks Ultimate members is that our Short Sell List portfolio has captured chunky gains of 31% in PYPL and over 50% in SQ in the past few weeks. It’s not doing too bad in Twitter either with over 30% gains for being short since the beginning of November.
That’s because our quant model, the Zacks Rank, is a super simple algorithm that consistently nails the big shifts in growth and specifically EPS trends.
If you want access to the Short Sell List, just email
[email protected]
and tell ’em Cooker sent you.
Chips and Skips
The last two important companies I mention in today’s video are
Advanced Micro Devices
AMD
and
Alphabet
GOOGL
. AMD delivered strong results last night and the stock gapped up over 10%. AMD was a gift near $105 just like NVIDIA was under $220.
In the video I also use NVIDIA as an example of how to think about buying your favorite stocks when they go on sale during market corrections. It’s not as easy as most people think and you have to prepare your mind with a plan, in a certain way, or you won’t take the right actions at the right time.
Finally, let’s sing the praises of YouTube advertising after Alphabet reported record growth in that segment. GOOGL also gapped up over 10% — from $2750 to $3030 and new all-time highs! — and is currently hanging on to about +8% on big volume of 5 million shares.
What I explain in the video is the secret to YouTube attracting so many new business ad buyers. It has to do with something more than video being the best new medium for attracting and connecting with customers. I’ll give you a clue: skippable ads.
Watch the vid to get the full recipe and I’ll talk to you next week in Cook’s Kitchen!
Disclosure: I own shares of AMD, NVDA, and TTD.
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