🤖📈 Top Trade Ideas from July 5

Including 85% upside in Victoria's Secret, Under Armour has 132% upside, and more...

Author

Connor Van Ooyen
July 05, 2023

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Our AI read and summarized 193 articles today from all over the internet to find the best trade ideas to help you make more money in the stock market.

What you’ll find in this email:

  • 👙 Victoria’s Secret is deeply undervalued (85% upside)

  • 🐻 The bearish v bullish case for Diageo

  • 📱 [Premium] Morningstar analyst gives Under Armour 132% upside potential

  • 🤖📈🚗📱 Much more…

*If you missed yesterday’s email, you can read it here

💰 Today’s Featured Trade Ideas

The three best trade ideas our AI tool found today. Make sure to vote on your favorite!

🥇 Victoria's Secret: Deep-Value, But Not Without Risk (link)

Ticker: $VSCO | Current Price: $17.91 | Price Target: $33.20 (+85%)

👙 Apparel | 🏷️ Undervalued | 📈 Long Idea

Victoria's Secret & Co is the market leader in intimate apparel and lingerie. The company has an extensive product portfolio and operates multiple brands, creating cross-selling opportunities and operational synergies. However, since its spinoff and IPO, the company has had mixed financial performance, leading to negative market sentiment. The stock is currently undervalued by almost 70%, but there is uncertainty regarding the company's ability to meet growth and profitability targets. Victoria's Secret has a narrow economic moat based on its brand image and economies of scale. The company's extensive portfolio of brands, including \"Victoria's Secret\" and \"PINK,\" creates differentiation and reduces competition. The company operates over 1200 stores worldwide and is expanding its digital sales. Victoria's Secret has faced challenges in recent years, including a decrease in net sales and operating income. The company has significant long-term debt, which could pose cash flow issues in the future. Despite these challenges, Victoria's Secret has a three-pillar strategy focused on strengthening core products, international growth, and transformation. The stock is currently trading at a low valuation, presenting a potential value play. However, the company faces risks related to macroeconomic conditions, brand image, execution of acquisitions, and debt burden. From an ESG perspective, Victoria's Secret has a positive outlook.

Click here to read the full article

🥈 Portfolio Review - Added to Sea Limited (link)

Ticker: $SE | Current Price: $56.46 | Price Target: N/A

📦 E-commerce | 🕹️ Gaming | 🇸🇬 Singapore | 📈 Long Idea

SE's stock has seen a nearly 35% decrease since announcing earnings on May 18th. Despite this, the company reported satisfactory earnings, marking its second consecutive profitable quarter. Shopee, SE's e-commerce platform, was recognized as the top player in Southeast Asia for 2022, holding approximately 48% market share and $47.9 billion of the region's $99.5 billion e-commerce Gross Merchandise Volume (GMV). The company is ahead of Alibaba's Lazada in all Southeast Asian countries. There is the potential for significant upside and a possible re-rating of SE's stock once their Garena game stabilizes.

Click here to read the full article

🥉 Diageo: P/E at 20x Again Ahead of FY23 Results (link)

Ticker: $DEO | Current Price: $172 | Price Target: $269 (+56%)

🥤 Beverage | ✏️ Blog Post | 📈 Long Idea

Diageo, the global leader in spirits, has a bullish outlook with forecasts indicating a total return of 56% (16.3% annualized) by June 2026. Despite a potential over-earning in CY22 due to COVID-19's demand boost and a possible future impact of a U.S. recession, the company's long-term growth drivers are deemed strong. The company's focus on premium brands and resilience in the U.S. market are key factors in this positive outlook. The growth in spirits consumption during the pandemic is believed to be permanent, supporting Diageo's growth strategy. Despite the share price remaining relatively flat since January 2020, the valuation of Diageo shares is considered cheap with a P/E ratio of 20.4x CY22 EPS and a 2.5% Free Cash Flow (FCF) Yield. The company is targeting consistent organic net sales growth and sustainable organic EBIT growth. Although a U.S. recession is inevitable, it's currently not a factor affecting the company's strong position. The company's resilience in a future recession is backed by the structural drivers behind Diageo's earnings growth and the company's diversification and better inventory control.

Click here to read the full article

Which featured trade idea was the most compelling to you?

You can see how others voted after you make your choice

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Yesterday’s Poll Results (link):

🟩🟩🟩⬜️⬜️ JinkoSolar ($JKS) [46%]

🟨🟨⬜️⬜️⬜️ Pfizer ($PFE) [33%]

🟥⬜️⬜️⬜️⬜️ Nvidia ($NVDA) [20%]

🤔 Stock Market Quiz

How many Google employees become millionaires when the company IPO’d in 2004?

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Yesterday’s Question: How many stocks are in the S&P 500?

Answer: 503. It was a trick question and only 4% got it right! There are 500 companies in the S&P 500, but 503 stocks because 3 companies have two classes of stock (which reader sub**** correctly commented)

🐻 Bearish v 🐂 Bullish

Company: Diageo ($DEO)

Bullish Reasons:

  1. Positive Outlook: The company's management expressed confidence in their ability to deliver mid-single-digit growth in organic net sales for the full year. This suggests a positive outlook for the company's future performance.

  2. Profitability Improvement: The company's operating profit margin improved by 2.1 percentage points, reflecting the benefits of cost savings and price increases. This shows the company's ability to manage costs effectively.

  3. Broad Presence Across Categories: Diageo's broad presence across categories with both global strategic and local niche brands mitigates some of the risk to volume from shifting consumer tastes and preferences.

Bearish Reasons:

  1. Rising Input Costs: Diageo is grappling with rising input costs, particularly for raw materials and packaging. This could put pressure on the company's margins if it is unable to pass on these costs to consumers.

  2. Currency Headwinds: Diageo is facing significant currency headwinds, which are negatively impacting its reported results. This could continue to be a challenge if currency volatility persists

  3. Cyclical Industry: The spirits industry is slightly more cyclical than beer, particularly in the premium segment and above. Diageo's price positioning at the high end can hurt revenue when the global economy slows

Are you bearish or bullish on $DEO

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Yesterday’s Results for $PFE (link):

🟩🟩🟩⬜️⬜️ 🐂 Bullish (61%)

🟨🟨⬜️⬜️⬜️ 🐻 Bearish (39%)

💰📈 Winning Trade from a Previous Email

Rivian: Where Will The Stock Be In 5 Years? R2 Platform Is Key To Volume Ramp-Up (link)

Ticker: $RIVN

Date Published: 2023-04-24

Return: +61% ($12.36 → $19.90)

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