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🌮 Chips and Dip
Plus, DraftKings' plan to boost profits will anger users.
Hi All - Happy Friday,
We are going to continue offering polls this week to gather your thoughts on “The Midday Trade” and help us make a decision on how to move forward with it.
This is the final day to give us your feedback, and any input is greatly appreciated!
What did you think of "The Midday Trade"? |
With that out of the way, here's a snapshot of where markets ended the trading session, plus tomorrow's trade idea delivered to you today.
🟥 | US Stocks Fell on Friday. The Dow closed more than 600 points lower, and the Nasdaq Composite fell over 2%, entering correction territory following a weak jobs report.
📈 | One Notable Gainer: Twilio’s stock surged 12% after the cloud communications company reported Q2 results that surpassed analysts’ estimates on top and bottom lines.
📉 | One Notable Decliner: Software company Atlassian saw its stock tumble 17% as its current-quarter revenue outlook came up short of expectations, and its full-year growth guidance came in below last year’s growth.
🌮 | Tomorrow's Trade: Chips and Dip. Scroll down for more.
Plus, today’s partner has a free report outlining five cheap stocks poised for a big move.
YESTERDAY’S POLL RESULTS
🟩🟩🟩🟩🟩🟩 Bullish 🐂
🟨⬜️⬜️⬜️⬜️⬜️ Bearish 🐻
S&P 500 Heatmap. Credit: Finviz
All Stock Heatmap. Credit: Finviz
Global ADR snapshot. Credit: Finviz
MARKET MOVERS
CRWD (-3%) CrowdStrike’s stock continued to fall as reports showed Alphabet cut its stake in the cybersecurity firm before the global IT outage (Reuters)
BAC (-5%) Berkshire Hathaway extended its selling of BofA, shedding more than $3.8 billion of the second-largest U.S. bank's stock since mid-July (YF)
GDDY (+7%) Domain registrar and web services company GoDaddy beat Q2 estimates with revenue up 7.7% YoY to $1.2 billion (Barchart)
MCHP (-11%) Microchip Technology’s stock fell after the company’s revenue dropped nearly 50% in its fiscal first quarter on weak markets and demand (MW)
CLX (+7%) Clorox saw shares jump after reporting better-than-expected quarterly profits due to successful cost-reduction efforts (Investopedia)
TOGETHER WITH UPTREND
Some of the greatest opportunities can be found in undervalued stocks.
Often, a stock will become undervalued because of negative events, like the pandemic. Perhaps the company missed earnings, became overlooked, or was hit with downgrades. Or, maybe the stock fell along with its competition.
Here are five of the most exciting, cheap stocks you may want to take a look at today.
OVERHEARD ON THE STREET
CNBC: DraftKings is planning to tax winning bets in states with the highest sports betting tax rates to boost profit.
Axios: Amazon CEO Andy Jassy said that anti-theft measures in brick-and-mortar chains are driving customers to Amazon's pharmacy business.
Bloomberg: Chevron is relocating headquarters to Houston from California, citing the Golden State’s regulatory regime.
Fortune: James Anderson, an early investor in both Amazon and Nvidia, says Nvidia’s valuation could hit $50 trillion in a decade.
YS: A federal judge overturned a jury verdict in the NFL’s Sunday Ticket lawsuit in a win for the league that was facing more than $14 billion in damages.
TOMORROW’S TRADE IDEA, TODAY
Post-Earnings Drop
Chipotle (CMG) has been on a tear, continuing to outperform its peers despite consumer spending pullbacks from inflation. However, the stock has lately dropped significantly.
Despite beating consensus estimates when it reported Q2 earnings, shares are down around 13% in the past month. According to analysts, this gives investors a great entry point to buy into the fast-casual restaurant chain.
Strong Fundamentals
According to AdvisorShares’ Dan Ahrens, the company's fundamentals don’t support a stock selloff. Instead, he believes the price drop is mostly due to concerns surrounding the restaurant industry and the overall economy.
Chipotle’s sales and margins both exceeded projections in Q2, and foot traffic increased 17% year over year. The popular chain plans to open up to 10 new restaurants each year. Its long-term goal is to reach 7,000 locations, around double its current footprint.
Combating the Margin Squeeze
Unlike some competitors, Chipotle’s transactions among all income levels are increasing, along with its market share. EPS is projected to come in around 19% in 2025, and this year’s should be about four times higher than 2019’s EPS.
Inflation is squeezing margins, but Chipotle has a few tricks up its sleeve, such as automation, digital ordering, and operational efficiencies.
The stock has a strong history, and its current downturn seems more connected to investors' overall economic outlook than Chipotle itself. It might be a great time to grab a bag of chips with the dip.
Are you bullish or bearish on Chipotle (CMG) over the next 12 months? |
TOGETHER WITH UPTREND
Some of the greatest opportunities can be found in undervalued stocks.
Often, a stock will become undervalued because of negative events, like the pandemic. Perhaps the company missed earnings, became overlooked, or was hit with downgrades. Or, maybe the stock fell along with its competition.
Here are five of the most exciting, cheap stocks you may want to take a look at today.
ON OUR RADAR
CNBC: Britain’s major lenders have begun slashing their mortgage rates in a sign that financial pressure on households may be easing after the BOE cut rates.
Reuters: A U.S. appeals court blocked the FTC's reinstatement of net neutrality rules, saying broadband providers are likely to succeed in a legal challenge.
CNN: Don Lemon filed a lawsuit against Elon Musk and X after the cancelation of a partnership in which Lemon would create a talk show on the platform.
WSJ: Trump posted on Truth Social that he wants to end taxes on Social Security benefits, which would reduce federal revenue by between $1.6 and $1.8 trillion.
AP: Police fire gunshots and tear gas to quell mass protests over Nigeria’s economy. At least 2 killed.
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