The best trade ideas for August 24

Livent Corp. (LTHM), a fully integrated lithium products company, was reiterated with a BUY rating and $40 price target by Argus Research analyst Bill Selesky. Selesky is bullish on LTHM due to expectations for accelerating lithium demand growth driven by electric vehicle adoption globally. LTHM recently reported strong Q2 results beating EPS estimates on higher lithium pricing and positive product mix. The company reaffirmed 2023 guidance calling for revenue of $1.025-$1.125 billion and adjusted EBITDA of $530-$600 million. LTHM continues to expand lithium production capacity including a new 5,000 metric ton hydroxide plant starting up late 2023. Additionally, LTHM entered into a merger agreement with Allkem to create the world's third largest lithium producer with operations spanning the Americas, Australia and Europe. The merger is expected to generate significant synergies and better position LTHM to capitalize on lithium demand growth. Despite risks including competition and dependence on sustained EV growth, Selesky believes LTHM shares have upside given attractive valuation multiples compared to historical averages and maintains a BUY rating with a $40 price target.

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Brookfield Corp (BN) is a global alternative asset manager. The author believes BN is substantially undervalued based on a sum-of-the-parts analysis, implying 122% upside to $72 per share. 43% of the value is derived from publicly listed entities which provides support. The remaining value relies on management assumptions for target carry interest and property portfolio value, which the author acknowledges could be aggressive. However, scenario analysis shows even with zero value for both, BN would still be undervalued trading at a 27% discount. Given the likely non-zero value of these assets, the author sees substantial additional upside, making BN shares compelling despite uncertainties around key assumptions.

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MercadoLibre (MELI), an e-commerce and financial services company in Latin America, reported Q2 revenue of $3.415B, up 32% YoY, beating expectations by 5%. Net income was $262M, up 113% YoY, and EPS was $5.15, beating consensus estimates by 25%. Key metrics like GMV, shipped items, unique buyers, fintech TPV and users all showed strong double digit growth. Operating margin expanded 670bps to 16.4% due to lower COGS, operating expense dilution and improved credit quality. Cash flow from operations was $2.27B YTD, up 237% YoY. Free cash flow was $2.07B YTD, up 373% with FCF margin of 32% YTD. The results demonstrate MELI's ability to drive high revenue growth and significant margin expansion leading to substantial cash generation as the business scales across its large addressable market opportunity in Latin America. The author rates this opportunity as 4/5.

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Deutsche Telekom, a leading global telecommunications company, is rated a Strong Buy with an implied 36% upside to a fair value estimate of ~$28 per share. The company has consistently outperformed competitors over the past 5 years. Q2 results showed EBITDA AL growth of 1.2% to €20B and free cash flow generation, although revenue dipped 2.4% to €55B. Looking ahead, the author forecasts 2-2.5% CAGR revenue growth over the next decade, driven by T-Mobile US expansion and increased European market share. The company aims to substantially grow its dividend by at least 7% annually. The Q2 results highlight Deutsche Telekom's ability to deliver growth and strengthen its balance sheet despite economic challenges. The company's growth strategy and currently discounted valuation make it an attractive investment.

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Alphabet has the largest index of websites accessible by automated search. It generates revenue through advertising, cloud services, and hardware. It owns YouTube.com, a video site. It also has moved into mobile phones with its Android smartphone. GOOGL has been a huge winner since its 2004 IPO. After a big run until 2007, the stock was hit during the 2008 bear market. It then rode its 50- and 200-week exponential averages higher until 2022. The shares peaked at an all-time high of $150 in November 2021 and then fell to $83 in November 2022. That area was tested over the next few months. GOOGL took off in March, traced out a bull flag in April, and took off again in May, peaking on June 6. Over the next four weeks, the stock traced out a flag back to its 10-week exponential, bounced to recovery highs, traced out another flag, and now appears to be breaking out again. We would put a stop-loss just below chart and moving-average support at $123. We would take profits at $150, with the potential for greater gains over the long term.

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Kohl's (KSS), a department store retailer, has a $50 fair value estimate from Morningstar analyst David Swartz who views the shares as undervalued. Despite difficult economic conditions, Swartz believes Kohl's is making progress under new permanent CEO Tom Kingsbury on initiatives including expanding Sephora shop-in-shops, better inventory control and promotions, and reducing debt. Bullish factors for Kohl's include its large e-commerce business comprising one third of sales, its off-mall real estate footprint, dividend yield above 7%, and the value provided by its free cash flow and real estate assets. However, Swartz notes competitive pressures on department stores limit Kohl's moat, its sales per square foot have stagnated, and margin improvement potential is uncertain. Kohl's holds strengths including reasonable prices, a loyalty program with 30 million members, and emphasis on activewear. But Swartz contends Kohl's will struggle to achieve its 7-8% margin target, instead fore

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