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🧱 No Roadblocks for Roblox

🧱 No Roadblocks for Roblox

Plus, will Trump's teetotalism rub off on American consumers?

November 10, 2024

Happy Sunday to everyone on The Street.

After two devastating hurricanes, scientists are looking for creative solutions to curb their effects. One such solution? A wall of oysters — which scientists believe could absorb up to 90% of waves’ energies.

I don’t know if the math checks out, but I do know that would make me feel a lot more comfortable living on the coast. The oyster bars would be out of this world.

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Some Losers From Trump’s Win

Good for Some, Not for All

The stock market is rallying to new highs following President-elect Donald Trump’s victory. But that doesn’t mean every sector stands to benefit from his win.

While analysts expect areas like crypto, financials, and automakers to do well over the next four years, other areas of the economy are in more precarious positions.

Clean Energy

The clean energy sector, a benefactor of Biden’s Inflation Reduction Act, is expected to suffer. Trump has already floated the idea of repealing the bill, which could cause the sector’s growth to halt quickly.

According to Goldman Sachs (GS) analyst Brian Lee, solar infrastructure and manufacturing companies are expected to take the biggest hit. This includes companies like SolarEdge Technologies (SEDG), Enphase Energy (ENPH), and First Solar (FSLR).

(Then again, as we wrote about on Friday, not all analysts are bearish on the latter.)

Alcohol

Trump famously doesn’t drink alcohol — and under his presidency, cost-conscious consumers turn teetotaler, too.

Under Trump’s proposed tariffs, Americans could see a sharp increase in the price of alcohol, particularly imports. TD Cowen (COWN) analyst Robert Moskow believes that Constellation Brands (STZ), which owns brands such as Corona and Svedka, is one stock that could see its share price take a hit.

Moskow also mentioned Johnnie Walker-parent Diageo (DEO) as a possible loser thanks to challenges posed by levies on Mexican tequila and Scotch imports to the US.

There are certainly winners and losers in this new political environment. Investors may be wise to take note.

Which industry do you think will take the hardest hit from a Trump presidency?

Bullish on Roblox

Plenty of Momentum

According to Morgan Stanley’s (MS) Matthew Cost, Roblox (RBLX) has the potential to double its share price in the long term. The analyst upgraded the stock to overweight and raised his price target to $65. This represents a 24% upside from current prices.

Cost also believes that in a bull case, the stock could hit $110 — which would coincidentally imply roughly 110% upside from Friday’s close.

Roblox stock certainly has some momentum: it’s up nearly 22% YTD. The video game developer also recently beat earnings and raised its full-year bookings guidance. But according to Cost, its run may just be getting started.

Expanding Potential

In a note sent to clients last week, Cost touted Roblox’s user-generated content platform as a means to generate stock gains. He believes it will help the company reach a larger and more diverse audience across more platforms.

Cost also believes that consensus expectations underestimate the company’s true potential to exceed its 20% bookings growth target. Additionally, its non-console business grew 28% year-over-year, 10 times faster than the overall game market.

Strategic Moves

Much of Roblox’s recent success can be attributed to the game becoming available on PlayStation in October 2023.

Cost believes Roblox’s efforts to improve search and discovery and in-game economy optimization (including virtual currency) will continue to push its bookings growth higher in the long term.

At present, 20 of 33 analysts covering the stock have rated it a Buy or Strong Buy.

Are you bullish or bearish on Roblox (RBLX) over the next 12 months?

Notable November Stock Picks

Turning the Corner

October was a strange one for stocks. Despite reaching record highs in the middle of the month, the S&P and the Nasdaq saw their worst day in over a month on October’s last trading day. All of the major averages saw losses on the month, and both the S&P and the Dow saw their five-month winning streaks come to an end.

In other words, investors are ready to turn the page on October, and JPMorgan (JPM) is, too. The bank recently updated its list of top stock picks for November, providing investors with several trading ideas for the month ahead.

Carvana

Carvana (CVNA) is one of the investment bank’s top growth picks.

The online car retailer is up a whopping 400% YTD. (On the dot, to boot.) Nevertheless, JPM maintained its Overweight rating on the stock and set a $300 price target, meaning it could still climb another 23% from Friday’s close.

The stock surged 19% after the company announced strong Q3 results and lifted its 2024 full-year forecast. The car company now expects adjusted EBITDA to come in well above its original projection of $1.2 billion.

Caterpillar

On the value side, JPM likes Caterpillar (CAT), despite the company’s recent lowering of its full-year sales forecast. The news caused shares to drop, although the stock is still up more than 34% YTD.

JPM also maintained its Overweight rating on Caterpillar shares, with a $500 price target, representing a 27% upside from Friday’s close. However, among analysts covering the stock, only 9 of 26 give it a Buy or a Strong Buy rating.

The investment bank has its eyes on these stocks for the remainder of November. Investors can decide if they want in on the action too.

Which stock do you think will outperform over the next 12 months?