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Top stock ideas (Wed, Jan 3)
Connor Van Ooyen
January 03, 2024
YBR Portfolio // About // Sponsorships // Upgrade
👋 Good Morning!
Welcome to the 116 new readers who joined yesterday!
Our AI read and summarized 104 stock ideas, 1231 news articles, and 95 insider trades and found:
An analyst gives $GOOGL a price target of $160 for 2024 (featured stock idea)
Apple shares slip more than 2% after Barclays downgrade (news)
An insider bought $6.5M of their own stock (insider trade)
3 more stock ideas and much more…
Thanks for reading! Have a great day.
Connor
* If you missed yesterday’s email, don’t forget to read it here
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FEATURED STOCK IDEA
ANALYST REPORT
$GOOGL Price target Raised to $160 at JPMorgan, Added as New Top Pick
Alphabet Inc. is the parent company of Google and several other companies previously owned by or tied to Google. It operates through various segments including Google Services, Google Cloud, and Other Bets, focusing on areas such as search, advertising, operating systems, platforms, computing, and more.
Ticker: GOOGL | Price: $138.17 | Price Target: $160 (+16%) | Timeframe: 2024
🔎 Search | ☁️ Cloud | 🤖 AI | 📈 Bullish Idea
JPMorgan has raised its price target for Alphabet Inc. (GOOGL) to $160, adding it as a new top pick due to its "undemanding valuation." The decision is based on expected improvements in advertising growth, significant margin gains, and advancements in general AI through its project "Gemini Ultra." The forecast includes an 11% growth in Alphabet's 2024 gross revenue, with increments in various segments like Search, YouTube Ads, and Cloud. The positive outlook is attributed to enhanced growth in Search and YouTube, driven by AI advertising tools, a secular shift, monetization of YouTube Shorts, and favorable comparisons. Additionally, there's anticipation of greater margin expansion in the second year of Alphabet's cost base re-engineering efforts, projecting a 175 basis point increase in the 2024 GAAP Operating Income margin to 29.2%. Although it's still early stages, Gemini Ultra is expected to significantly innovate and help close the gap in generational AI technology. While there are concerns regarding Google's DOJ trials and the Play Store case, the impact is expected to be less severe than feared. Google's current market sentiment is perceived as weaker and less owned compared to other mega-cap companies, with its valuation below 17 times its projected 2025 GAAP EPS of $8.03. Consequently, the December 2024 price target has been raised, based on 20 times the estimated 2025 GAAP EPS. Google follows Amazon, which is ranked as the top large-cap pick.
Read the full article here. Read time: 1 min
POLL - FEATURED STOCK IDEA
+3 POINTS - WEEKLY TOURNAMENT
How do you rate the featured stock idea? |
Yesterday’s Rating (link):
LITHIUM AMERS (ARGENTINA) CP - $LAAC
🟩🟩🟩⬜️⬜️ - Buy (42%)
🟥⬜️⬜️⬜️⬜️ - Pass (26%)
🟨🟨⬜️⬜️⬜️ - Watchlist (32%)
stanley**** (buy) - (Technicals) The TSI, PMO, and KST are trending positive along with the 7 x 26 ema.
samb**** (watchlist) - Lithium stocks have not really moved much in the past year. I have several lithium and uranium stocks that haven't performed as expected with the need for both to produce cars and electricity. I'll wait to see.
emoj*** (buy) - With the Chinese EV market taking off, there will likely be greater demand for lithium.
* There are more stock ideas later in the email!
MARKET OVERVIEW
Today’s market overview is brought to you by TiiCKER. You can earn rewards from companies just for owning their stock. See what awards you can get with the stocks you own
Are you short-term bullish or bearish on the market? |
Yesterday’s Poll Results: 61% bullish
Yellowbrick Road readers were surprisingly bullish (61% bullish is the most bullish you’ve been in the last couple of weeks) as the indexes started the year down (mostly) and the news sentiment fell to below half of what it peaked at last week. The Fear v Greed index also remained in the Extreme Greed segment.
Even though the poll for Yellowbrick Road readers was bullish, the comments did start to look more bearish with a few readers mentioning that today may be a turning point for the market and others believing the market is completely overheated right now.
STOCK MARKET NEWS
Today’s news is brought to you by Behind the Markets. A small, publicly traded biotech is working on the discovery of a lifetime: Using a "drug smuggler" to fight Alzheimer's, Parkinson's and Dementia. Get the report
Apple shares slip more than 2% after Barclays downgrade - CNBC
EV maker Rivian misses quarterly deliveries expectations, shares tank - Reuters
Maersk halts Red Sea shipping until further notice after Houthi militant attack - CNBC
Moderna surges after CEO says sales growth expected in 2025 - Reuters
Oil prices up after US strikes back at Houthis in Red Sea - Fox Business
Alibaba's Stock Buybacks Rise in 4th Quarter to $2.9 Billion; Investors Want to See More - Barrons
QUIZ
+3 POINTS - WEEKLY TOURNAMENT
Who is the co-founder of the Oracle Corporation, along with Larry Ellison and Ed Oates? |
Yesterday’s Question (link): Who founded the Coca-Cola Company in the late 19th century?
Answer: John Pemberton. As emoj*** and micked*** pointed out, he created the formula and then sold it to Asa Candler who created the Coca-Cola Company
FEATURED INSIDER TRADE
The insider trade is brought to you by CEO Watcher (another free, weekly email I write). It’s the only newsletter that tracks insider returns to find the best ones. Subscribe here
10% Owner at KalVista Pharmaceuticals, Inc. ($KALV)
The 10% Owner purchased 519,017 shares at $12.46/share ($6.47M total) which increased their holdings by 14.5%. The current price is $12.25 (-1.7%). (trade link)
Historic Returns
1m returns: 86% weighted | 17% median | 100% win rate (4/4)
3m returns: 46% weighted | 30% median | 50% win rate (2/4)
6m returns: 19% weighted | 3% median | 50% win rate (2/4)
1y returns: 37% weighted | 20% median | 50% win rate (2/4)
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LINKS YOU’LL LOVE
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Surprisingly, the market was less volatile than normal last year
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SECRET QUESTION
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Secret Question: What was your New Year’s resolution? Fun fact: I’ve never made a resolution before.
BONUS STOCK IDEAS
ANALYST REPORT
Intel: Raising target to $60 on new fab, new products
Intel supplies the computing industry with the chips, boards, systems and software that are the primary components of computer architecture. Intel has also expanded through acquisitions, although these businesses are now being reviewed and in some cases sold to other semiconductor firms. Intel formerly had the largest revenue base and market cap in the semiconductor industry, though it now lags Nvidia.
Ticker: INTC | Price: $47.80 | Price Target: $60 (+26%) | Timeframe: N/A
⚡️ Semiconductor | 📈 Bullish Idea
Intel Corporation (NASDAQ: INTC), a major player in the computing industry known for its chips, boards, systems, and software, is receiving a BUY rating from Argus with a 12-month price target raised to $60 from $42, backed by strategic investments and product innovations. Intel is constructing a $25 billion semiconductor foundry in Israel, with a $3.2 billion government grant, showcasing its commitment to global expansion despite regional conflict with Hamas. Recently, Intel showcased next-generation AI-focused products including the Core Ultra Mobile processor on Intel 4 process technology and the Gaudi 3 AI Accelerator set for 2024 production. Following strong 3Q23 revenue growth and optimistic projections, Intel expects a positive annual financial turnaround by Q4 2023. Under CEO Pat Gelsinger, the company is transforming, evidenced by its expansion in Germany and Ohio, CHIPS funding applications for Arizona fab development, and a bold product roadmap to reclaim data center market share and push forward AI integration. Despite a dividend cut in February 2023, Intel's financials remain robust with $25.0 billion in cash & equivalents, and investments as of 3Q23. The stock has shown resilience, outperforming peers significantly in 2023. Risks include intense competition, economic downturns, and challenges in integrating past acquisitions. Currently trading well above its historical P/E average, Intel's valuation reflects its growth recovery and established market position. INTC closed at $50.76 on December 27, with analysts bullish over its growth trajectory and ability to exceed broad market returns, supported by a modest dividend yield.
Read the full article here. Read time: 10 min
VALUE INVESTORS CLUB
KBR INC - KBR
KBR, Inc. specializes in providing a range of technology, engineering, procurement, and construction solutions. The company operates Government Solutions business serving government clients with operational support and other services, and Sustainable Technology Solutions focusing on addressing the energy trilemma through various technology and consulting services.
Ticker: KBR | Price: $55.90 | Price Target: $80 (+43%) | Timeframe: 12-18 months
🏛️ Government Services | 🏗️ Engineering/Construction | 📈 Bullish Idea
KBR (KBR US) presents a strong investment opportunity with nearly 60% potential upside in 12-18 months if it reclaims a 1-year forward P/E of 18x, reflecting its superior growth—organic top-line growth in double digits and ~20% EPS growth—compared to peers. The company's recent stock dip signals a buying chance and potential for significant value generation through warrant settlement and share repurchase. KBR's Government Solutions (GS) business is currently stable and its Sustainable Technology Solutions (STS) segment, driving energy transition solutions, is projected to have 15-35% top-line growth with superb margins and minimal capital requirements, representing ~25% of revenue and nearly 40% EBITDA by 2023. The company boasts high ROCE and promising segments like Digital Solutions and Mura Technology, the latter poised for a potentially highly valued IPO by 2025. Despite a setback due to HomeSafe project delays, KBR's share price reaction has been disproportionate, neglecting the unchanged long-term value of the contract. The management, led by CEO Stuart Bradie, is proactive, with signs of strategic maneuvers such as increased STS disclosures, potential business separation, and beneficial share repurchases and buybacks. Investor catalysts include the upcoming analyst day, M&A activity, clarity on HomeSafe, forthcoming earnings growth, and the potential spinoff of STS if the market underestimates its worth, making KBR's current valuation under 12x 2025 P/E highly attractive.
Read the full article here. Read time: 7 min
[SHORT] MSTR is trading 100% too high
MicroStrategy is a provider of enterprise analytics and mobility software. A significant aspect of its business strategy is holding a large amount of Bitcoin as part of its treasury reserve policy.
Ticker: MSTR | Price: $685 | Price Target: $342.50 (-50%) | Timeframe: Early 2024
🪙 Bitcoin | 📉 Bearish Idea
Proponents of the efficient markets hypothesis need look no further. The company owns 165,000 $BTC. At a bitcoin price of $45,000 thats $7.2bn. There's $2.2bn of debt in the company. So net thats $5.2bn. Yet $MSTR market cap is $10bn+....Madness. The stock has been ramping in the latest bout of tulipmania these past few months. Yet any arrival of a $BTC ETF presumably offers an efficient vehicle for owning $BTC. So why pay 100% more for $MSTR? Why not arb it out? After all most investment trusts trade at a discount... A $BTC ETF presumably offers any hedge fund a very simple arbitrage opportunity. So retail apes punting on $MSTR as a bullish play on $BTC may find a nasty sting in the tail.
Read the full article here. Read time: 1 min
+3 POINTS - WEEKLY TOURNAMENT
Which bonus stock idea was the most compelling to you? |
Yesterday’s Poll Results (link):
🟩🟩🟩⬜️⬜️ Amazon ($AMZN) [41%]
🟨🟨⬜️⬜️⬜️ Sylogist ($SYZ.TO) [30%]
🟥⬜️⬜️⬜️⬜️ Danaher Corp ($DHR) [29%]
Your Thoughts:
🧪 prppep*** ($DHR): The chart over the last quarter looks beautiful
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🏆 This Week’s Leaderboard
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Some other newsletters to check out if you want more things to read:
Bullseye Trades (link) - option trading strategies
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Caveminds (link) - weekly AI deep dives
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