🤖📈 Top Trade Ideas for June 28

Including why Enphase Energy is posed to benefit from solar power's rising popularity, a short report on $VICR, and more...

Author

Connor Van Ooyen
June 28, 2023

👋 Hello!

Our AI read and summarized 168 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:

  • ☀️ Why Enphase Energy will benefit from solar power’s popularity

  • 🐻 The bearish v bullish case for $MELI

  • 🔋 [Premium] Why $VICR is going to fall 50%

  • 🤖📈🚗📱 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!

🥇 MercadoLibre: The More It Falls, The More I Buy (link)

Ticker: $MELI | Current Price: $1,162 | Price Target: $1,453 (+25%)

🇦🇷 South America | 📦 E-commerce | 🏦 Payments | 📈 Long Idea

MercadoLibre is a fast-growing eCommerce and Fintech giant in Latin America. The company offers exposure to fast-growing international markets and is undervalued by at least 25%. It has a highly diversified business with different segments, including logistics, payments, and advertising. The company saw significant growth in all key geographies except Argentina, which is struggling with inflation. MercadoLibre's logistics segment dominates the market, and its fintech services are also growing steadily. The company achieved strong EPS in the first quarter of 2023 and has shown encouraging trends in profitability. It has the potential for further growth and profitability in the future, particularly in the fintech and logistics spaces. However, it faces competition and geopolitical risks in the region. Analysts expect MercadoLibre's growth and profitability to continue trending upwards, and valuation metrics suggest that it is undervalued. Technical analysis suggests a potential buying opportunity in the coming weeks. Overall, MercadoLibre is considered a high conviction pick for investors looking to gain exposure to the growing economies of Latin America.

Click here to read the full article

🥈 Dave & Buster's: Time To Play The Growth (link)

Ticker: $PLAY | Current Price: $43.82 | Price Target: $60 (+37%)

🥤 Food and Beverage | 🕹️ Entertainment | 🏷️ Undervalued | 📈 Long Idea

Dave & Buster's Entertainment (PLAY) is seen as attractively priced with several growth opportunities. The company operates entertainment and dining establishments and has two concepts: Dave & Buster's stores and Main Event. Amusement revenue accounts for the majority of PLAY's revenue, followed by food and beverage. PLAY has opportunities for growth through store expansion, both domestically and internationally, as well as driving more traffic to existing locations and remodeling stores. The recent merger with Main Event provides cost-saving opportunities. However, risks include the economy, competition, and consumer trends. Despite the risks, PLAY stock is trading at a lower valuation compared to peers, and the author sees upside potential with a price target of $60+ based on FY25 estimates.

Click here to read the full article

🥉 Buy Enphase Energy (link)

Ticker: $ENPH | Current Price: $160 | Price Target: N/A

☀️ Solar | 🔋 Batteries | 📈 Long Idea

Enphase Energy is a company specializing in microinverters and battery hardware for solar energy. They are expected to benefit from the expansion of solar power, with a projected annual growth rate of nearly 20% through 2028. The company has several growth catalysts, including international expansion and the potential to enter utility-scale installations. Near-term headwinds in Enphase's largest market have led to a sell-off in their shares, creating a buying opportunity. Enphase has a lead in their niche and has expanded their hardware offerings. They have seen favorable trends in microinverters shipped and megawatt hours deployed. The majority of sales come from North America, indicating untapped potential in other regions. The battery business has also seen growth. Enphase's free cash flow has grown significantly, allowing them to pursue growth opportunities without taking on more debt. They have established a moat through high switching costs and brand value. However, the biggest threat to Enphase is commoditization, which could impact their gross margins. They also have a significant customer concentration, which could be concerning if that customer decides to switch to a competitor. The adoption of solar power is influenced by incentives and subsidies, which could impact Enphase's revenue. Overall, Enphase may be a suitable investment for those interested in the renewable energy industry and strong cash flow, but may not be suitable for those concerned about the long-term adoption of residential solar power or the commoditization of inverter products.

Click here to read the full article

Which featured trade idea was the most compelling?

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Yesterday’s Poll Results (link):

🟨🟨⬜️⬜️⬜️ - Shell ($SHEL) [42%]

🟨🟨⬜️⬜️⬜️ - Amazon ($AMZN) [40%]

🟥⬜️⬜️⬜️⬜️ - M&T Bank ($MTB) [19%]

Your Thoughts:

  • 🚗 bri*** ($SHEL): Diversified energy conglomerate with a nice dividend; also a sneaky play on the EV revolution with their EV charging tech and gas stations that can be converted to host the chargers

  • 🛢️ em*** ($SHEL): Shell has funding for embracing new energy resources as well as more oil options in the Gulf since the lifting of Mexico’s restrictions in June 2022.

  • ☁️ qu*** & jo*** ($AMZN): AWS is a big play for AI and their cloud services are still huge and growing

🤔 Stock Market Quiz

In the dot-com crash of 2000, Microsoft stock fell over 50%. In what year did the stock fully recover (i.e. the market cap was higher than before the dot-com crash)?

Choose your answer to see how other's voted!

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🐻 Bearish v 🐂 Bullish

Company: MercadoLibre ($MELI)

Bullish Reasons:

  1. Diversified Ecosystem: MercadoLibre offers an ecosystem of six integrated e-commerce services and digital financial services, including the Mercado Libre Marketplace, the Mercado Pago Fintech platform, the Mercado Envios logistics service, the Mercado Ads solution, the Mercado Libre Classifieds service, and the Mercado Shops online storefronts solution. This diversified ecosystem can provide multiple revenue streams and growth opportunities.

  2. Expansion of Mercado Pago: Mercado Pago, the fintech solution, enables individuals and businesses to send and receive digital payments. It has expanded beyond facilitating Marketplace transactions and now offers a full ecosystem of financial technology solutions both in the digital and physical world. This expansion could drive further growth.

  3. Strong Moat: The company has a wide economic moat, benefiting from a quickly growing network of buyers and sellers on its platform, privileged access to consumer transaction data, and switching costs as sellers and buyers increasingly depend on the firm's broadening suite of services.

Bearish Reasons:

  1. Intense Competition: MercadoLibre faces intense competition in the e-commerce and digital payments sectors. Competitors include traditional retail businesses, numerous online e-commerce and classifieds businesses, and several digital payments companies. This competition could impact the company's market share and profitability.

  2. Increased Operating Expenses: MercadoLibre's operating expenses, including product and technology development, sales and marketing, provision for doubtful accounts, and general and administrative expenses, have increased. This could impact the company's profitability.

  3. Currency Risk: The functional currency for each country’s operations is the country’s local currency, except for Argentina, where the functional currency is the U.S. dollar due to Argentina’s status as a highly inflationary economy. This exposes the company to currency risk.

Are you bullish or bearish on $MELI

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Yesterday’s Results for $SHEL (link):

🟩🟩🟩⬜️⬜️ 🐂 Bullish (50%)

🟩🟩🟩⬜️⬜️ 🐻 Bearish (50%)

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