💻 Buying the Dell Dip

Plus, SpaceX is rolling out a new product

June 21, 2024

Happy Friday afternoon to everyone on The Street. Here's a snapshot of where markets ended the trading session, plus tomorrow's trade idea delivered to you today.

  • 🟨 | US Stocks Were Mixed on Friday. The Dow rose slightly, helping the index post its best week since May. On the other hand, the S&P 500 and the Nasdaq Composite ticked lower as Nvidia slipped 3% today.

  • 📈 | One Notable Gainer: Shares of Spirit AeroSystems surged 6% after news broke that Boeing is nearing a deal to buy back the company after its former subsidiary made progress in separate acquisition talks with Airbus.

  • 📉 | One Notable Decliner: Lending Tree’s stock fell over 2% after Bloomberg reported that hackers are auctioning off stolen customer data from the company’s cloud database.

  • 💻 | Tomorrow's Trade: Buying the Dell Dip. Scroll down for more.

Plus, our partner is unveiling where billionaires are moving their cash for the biggest profits in 2024.

🛎️ You currently have 0 referrals, only 1 away from receiving JPMorgan's Top Picks For June.

YESTERDAY’S POLL RESULTS

🟩🟩🟩🟩🟩🟩 Bullish

🟨🟨⬜️⬜️⬜️⬜️ Bearish

S&P 500 Heatmap. Credit: Finviz

All Stock Heatmap. Credit: Finviz

Global ADR snapshot. Credit: Finviz

MARKET MOVERS

ZLDPF (+11%) Danish biotech company Zealand Pharma saw its shares soar after reporting positive trial results of its weight-loss injection (MW)

HTZ (+16%) American car rental company Hertz Global saw its stock pop after it upsized its bond offering to $1 billion to refresh its vehicle fleet (PRN)

BYD (+2%) Shares of casino operator Boyd Gaming rose on news that it is showing interest in acquiring Penn Entertainment (YF)

PANW (+3%) D.A. Davidson named Palo Alto Networks a top stock pick, citing the company’s edge in being in multiple areas of cybersecurity (CNBC)

FDS (+4%) FactSet Research Systems reported mixed third-quarter results in which earnings beat analyst estimates while revenue missed the mark (YF)

TOGETHER WITH INVESTOR PLACE

Is it any surprise 31 billionaires (including: Warren Buffett, Elon Musk, Jeff Bezos, and more) are quietly unloading their OWN stocks at record pace? 

They’re getting OUT of AI (and Tech Stocks) before it’s too late.

But why? And WHERE are they moving their cash for the biggest profits, in 2024?  

OVERHEARD ON THE STREET

CNBC: SpaceX is rolling out a $599 compact version of its satellite internet antennas called “Starlink Mini” for portable internet service.

ABC: Biden issued a total ban on the use of Russian-backed cybersecurity software in the US due to alleged influence operations over the software.

Fox Business: American Airlines flight attendants are “one step closer to a strike” after ongoing contract talks ended without an agreement.

YF: Nvidia shares slipped yesterday, causing the chipmaker to lose its crown as the most valuable US company after briefly surpassing Microsoft.

CNBC: Fashion retailer Forever 21 is asking some landlords for rent concessions as high as 50% as it faces financial difficulties.

TOMORROW’S TRADE IDEA, TODAY

The Good News and the Bad

As Nvidia (NVDA) has skyrocketed over the past 12 months, so has demand for the specialized servers that utilize its chips. Dell (DELL) has been a major beneficiary of that trend. Its server and networking revenue is up 42% year-over-year, hitting $5.5 billion in its fiscal Q1 that closed out in April. 

However, it wasn’t all sunshine and rainbows. Dell’s Infrastructure Solutions Group (ISG) saw its revenue come in 18% below expectations. On top of that, operating margins were four points below the previous four quarters’ average.

Margin Bounce Back

As a result, Dell’s stock price was down nearly 25% in the first few weeks following its report. The company blamed its underwhelming results on factors like lackluster data storage revenue and deferred revenue in its service and support arm. 

Wall Street is confident margins will bounce back, with the consensus being that ISG margins will reach 11.5% this fiscal year. 

Morgan Stanley (MS) analyst Erik Woodring believes Dell can deliver intricately customized servers and a plethora of connected products in a way its competition can’t.

Trading at a Low Multiple

The stock has already started bouncing back, up around 12% over the past five days. However, according to analysts, its valuation is still relatively cheap at 18 times forward earnings. Super Micro Computer (SMCI), one of its biggest competitors, is currently trading at a multiple of 29. 

If analysts are correct and Q2 does bring stronger margins and increased revenue, the stock could see a nice boost following its next earnings call.

Are you bullish or bearish on Dell (DELL) over the next 12 months?

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TOGETHER WITH INVESTOR PLACE

Is it any surprise 31 billionaires (including: Warren Buffett, Elon Musk, Jeff Bezos, and more) are quietly unloading their OWN stocks at record pace? 

They’re getting OUT of AI (and Tech Stocks) before it’s too late.

But why? And WHERE are they moving their cash for the biggest profits, in 2024?  

ON OUR RADAR

Reuters: British public debt rose last month to its highest as a share of the economy since 1961 ahead of the nation’s general election in two weeks.

CNBC: A cyber outage at retail software provider CDK entered its second consecutive day on Thursday, impacting car dealers across the US.

StarTribune: In other cyberattack news… The cyberattack on UnitedHealth compromised credit cards, health history, and social security numbers.

Reuters: Multiple AI companies are circumventing a web standard used by publishers to block the scraping of their content for use in generative AI systems.

Axios: AAA expects record-breaking July 4th traffic this year, with 71 million people expected to travel during the holiday weekend.

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