Hi All 👋
Continuing my new series which gets released every Sunday/Monday before market open where I look at some potential adds/trims/buys/sells for the week.
The first 3 will be open to all and the last 2 will be for paid subscribers.
Last week we looked at 👇
Harrow | HROW: HROW was pretty flat last week. It’s still a stock I really want to own if I get presented with the opportunity which for me is ~$32.
Viking Therapeutics | VKTX: VKTX last week showed why I don’t invest in biopharma plays. Phase 2 trial results were not as strong as the market expected and VKTX dropped 35%. They’re now sitting at a very nice support level.
Lululemon | LULU: LULU rose 4.5% last week. They’re still a good value play but one that I don’t own. If they can hit the $175 level I would most definitely buy in.
AbCellera Biologics | ABCL: ABCL is my moonshot stock. Nothing much happened to the stock price last week but they remain above a key support level and above 100 and 200 SMA’s.
NuBank | NU: NU rose another 6% last week. I don’t really care about NU on a week-to-week basis as this is a very long-term hold for me. NU did give a nice entry last week though off the $13 support level that it bounced off.
1. Opendoor Technologies | OPEN
OPEN has now become the number 1 most popular retail stock pretty much over the last 3 days. It’s now surged 60% in 5 days and 74% in 1 month. To me, there seems to be a bit too much hype around it, though I do see the bull case ahead for OPEN.
However, guidance is still a little uncertain, the housing market is cyclical, and there’s a big risk that they don’t execute as expected. However, you’re still ultimately paying ~$3.6B for a company that is operating in a market with a TAM of trillions, with structural leverage through AI, and expected EBITDA growth ~50%, trading for ~1.1x sales. That seems promising until you look into the business model more I’m just not fully convinced. It’s essentially a leveraged bet on housing prices, whilst also operating on razor thin margins (EBITDA margin estimates not expected to flip positively for the full year until 2027), with huge debt requirements.
I do see OPEN moving higher in the short term purely on retail hype. We’ve learnt that retail love truly moves stocks now so if you want to put a bet on that with some money you can afford to lose then go for it, but from more of a fundamental business point of view, there’s far better out there.
2. Intel | INTC
INTC is now owned 10% by the US Government as they continue to transition from a chip designer to a fabricator competing with the likes of TSM. With negative earnings this is a true turnaround, value play. I don’t love the company mainly because the complexities of becoming a good fab company are extremely challenging and INTC does not have the expertise currently to do so.
However, it’s a bet on a cheap company (1.1x P/B) backed by the US government who certainly won’t let them fail. I think the transition will be extremely slow, and I don’t think the stock price will 2x anytime soon, but if you’re a bit more bearish on the market, then INTC is a stock that I believe offers limited downside from here.
I’m just less certain on the upside.
3. SES AI | SES
Paid subs will know that I own SES AI.
SES AI is a next-gen battery company developing lithium metal batteries. Current revenue guide for FY25 is $15-25 million and EPS estimates are -$0.15 with Q2 earnings being reported on 4th August.
With $5.8M of revenue booked in Q1, drone manufacturing sales exceeding expectations, and lots of customer negotiations, there’s every chance SES beat the FY25 estimates of $20M in revenue (midpoint). SES generally jump a lot on any good news in earnings, so I suspect this is maybe a good buy before earnings over the next couple months.
From a technical perspective, they’re sitting (consistently) above this nice support zone at $1 and above the 100 and 200 SMA’s. I suspect we see a very quick move to the $1.40 range if earnings are good.
Keep reading with a 7-day free trial
Subscribe to Make Money, Make Time to keep reading this post and get 7 days of free access to the full post archives.