03.02.2026: Ideas For The Upcoming Week
CRDO & OUST
I delayed this article until after close today because of the uncertainty around how the markets would react.
Here’s a note I sent to paid subs before the market opened this morning:
“Premarket is looking ugly (as expected). AVAV is up a lot. Pretty much all tech is down a lot 2-4% in pre market. My advice for long term investors:
Do not chase oil… do not chase defense names. These will move quickly but it’s very likely a good portion of the move has already happened.
Defense names like NOC are already +24% YTD. Oil names like OXY are +25% YTD. Can they move more and can you make money from them? Yes…but your margin of safety is likely not on the right side anymore. With regards to tech, we’ve already seen big pullbacks here. This is the sector I am watching the closest. This is the sector people are fearing now and chasing oil, defense etc.
My plan has not changed too much right now but I’ll be monitoring the news. The hard thing will be gauging how much longer this is likely to continue for. There’s every chance the script could be entirely different by next Monday and if that is the case chasing oil and defence likely won’t be your best plays.”
Ultimately, I don’t think many investors out there expected AVAV to finish down 17% whilst tech names like LMND, ZETA, and SOFI finished up 2-3%. But that’s why sitting back and waiting pays off.
The SPY still remains above the 100 daily, though structurally you can’t deny that it looks a bit weaker. Many individual names are now below the 200 daily so caution here is still being exercised though I’m still taking advantage of opportunities.
Before we get into my 3 ideas for the week, take a look at my March database and portfolio. You get:
Portfolio (real monetary amounts with 100% transparency)
Watchlist
Theme tracker
Valuation models
10+ themes with stocks per theme measured by valuation
Daily notes in the paid chat
1 video chart review per week
Here’s a snapshot of one of the tabs on my database. It shows the weekly price action of all the stocks per theme.
The themes running hot at the moment are:
Optics:
AAOI +89%
LITE +16%
COHR +20%
Nuclear Power
UUUU +11%
LAR +12%
NXE +7%
NNE +13%
AI Applications
ZETA +16%
APP +14%
PLTR +11%
SOUN +10%
Here’s my 3 ideas to track for the rest of the week:
Since I waited till after close to release this, I wanted to take this opportunity to follow the 3 stocks in my portfolio that reported earnings after close today. This gives me a chance to dive into the earnings a bit, whilst offering my thoughts on them for this week. FWIW, I wouldn’t be including them in this article if I didn’t think there were opportunities right here.
Defensive Idea
HROW dropped 12.6% in the AH. Paid subs will know that HROW is a 3.4% position in my portfolio with an average cost of $38.70. This AH drop will wipe out a good portion of my current gains in the short term, but I still remain bullish on the name over the long run.
HROW crushed revenue but missed big on EPS and Adj. EBITDA. Most of all though they revised guidance downwards which tends to be the reason for the biggest moves in stocks. Revenue grew 33% YoY to $89.1M in the quarter which ends a very strong 2025 year of growth.
The other very positive factor is full year FCF reversed from negative $22.2M in FY24 to positive $43.9M in FY25.
Guidance came in very soft though. Management’s explanation is as follows:
“Over the past several years, our financial guidance framework has not always aligned as well as it should. As we have rapidly grown over the last 5 years with multiple product launches and re-launches, layered on top of inherent seasonality, forecasting has become more nuanced. Instead of our guidance meeting and beating, we have too often been in the “stress and miss” camp. This has not served our stockholders or us well. Therefore, we are providing guidance differently than in the past, perhaps with a more conservative approach (because several elements of our 2026 strategy are highly discounted in this model), but in any case, certainly with greater transparency and structure.”
I think even with this conservative guidance, HROW is set to grow Adj. EBITDA from $64M in FY25 to ~$100M (top end of guidance which I am taking because my assumption is they are sandbagging) which means I think we grow at ~36% (on the lower end). For 20x EBITDA, I still deem this very attractive.
Taking the long term perspective again, I think remembering management’s Q4 2027 target of $250M in revenue is key. Assuming EBITDA margins hit +40% by FY28, HROW is looking at $400M in EBITDA in FY28 (assuming $1B in revenue in FY28) which means we have ~80% CAGR from today which means an NTM EBITDA multiple of 20x today remains still very attractive.
Neutral Risk
CRDO released earnings AH in which they beat and raised yet the market sold off CRDO ~7%. The only couple of reasons I can understand this is:
CRDO is one of the few interconnect stocks below the 200 daily right now.
The market is massively rewarding “pure” optics plays like AAOI and LITE as opposed to CRDO which has huge demand right now.
CRDO beat on revenue which put them at 201.5% YoY gain. They also beat massively on EPS and raised guidance to $425-$435M in revenue for Q1 2026.
Being bearish on a company that is doing 201.5% YoY revenue growth with 51.3% net margins whilst trading at 20x NTM EBITDA and 27x NTM PE is very difficult. FWIW, I did a screener on Tikr where I screened for this +100% revenue growth and +300% EBITDA growth with EBITDA multiples below 25x and revenue multiples below 13x. Only SNDK returned but SNDK has far lower net income margins than CRDO.
On top of this, I think it’s important to understand CRDO away from the numbers as well.
Competitors are focusing purely on light (photonics) right now and rightly so. I’m assuming some of you have seen the forecasts AAOI put out so the market here is massive…but CRDO is dominating inside the rack with AEC’s as well as offering some nice exposure to optics as well. In short, CRDO essentially wins whether data travels via light or electricity… many people aren’t realizing this yet.
FWIW, I think the AAOI numbers are also mind-boggling, and I think this could quite easily have a MU/SNDK moment. Chasing it is risky, but it’s definitely worth keeping an eye on which I’ll follow closely with my paid subs.
Higher Risk
