Happy Monday 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 fell Monday as investors grew skittish in anticipation of tomorrow’s election.

• 📈 | One Notable Gainer: Solar power provider First Solar’s stock rallied 3.6%, a potential sign of election momentum by Vice President Kamala Harris.

• 📉 | One Notable Decliner: Shares of emerging nuclear darling Constellation Energy slumped 12.5% despite beating earnings after federal regulators rejected competitor Talen’s bid to boost its nuclear power output for Amazon.

• 🧞 | Tomorrow's Trade: ‘Open Sesame’ for Alibaba? Scroll down for more.

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MARKET MOVERS

Berkshire Hathaway, Sherwin-Williams, NVIDIA

BRK-A (-2%) Berkshire Hathaway’s cash fortress tops $300 billion as Buffett sells more stock, freezes buybacks (CNBC)

SHW (+4.6%)/ NVDA (+0.5%) Nvidia to Replace Intel in Dow Jones Industrial Average. Sherwin-Williams Also Joins. (WSJ)

CHWY (+6.4%) Chewy stock surges on S&P MidCap 400 inclusion (Investing.com)

NYT (-7.7%) NYT tech workers strike ahead of Election Day (Axios)

OVERHEARD ON THE STREET

CNBC: In Q3, mortgage holders withdrew $48 billion in home equity, the largest amount since the Fed began raising rates two years ago.

CNN: TGI Fridays filed for Chapter 11 bankruptcy protection, citing pandemic-era headwinds.

Reuters: Machinists are voting on whether to accept Boeing's latest contract offer, which could end a seven-week strike. Voting ends today at 7 PM ET.

ABC: Spirit Airlines is cutting jobs and selling jets worth millions to reduce costs amid financial struggles and an uncertain future.

Forbes: Administrative services provider Landmark Admin revealed that a cyberattack in May 2024 exposed the personal information of over 800,000 individuals.

TOMORROW’S TRADE IDEA, TODAY

‘Open Sesame’ for Alibaba?

Late To the Party

Alibaba’s (BABA) stock has bounced back as a result of China’s aggressive stimulus measures. But despite these substantial gains, it may not be too late to buy in. 

China’s economy is far from fully recovered. But its government’s stimulus efforts underscore its commitment to getting there, which should help bolster consumer confidence.

On top of this, it appears increasingly likely that Beijing will roll back regulation in the tech industry, which could serve as a tailwind for Alibaba.

Improving Fundamentals

According to NFJ’s Burns McKinney, the Chinese e-commerce giant’s stock is currently undervalued compared to its history — and its peers. The company has strong cash flow, and market conditions are starting to improve. 

Burns believes that Alibaba has the capability to reach a multiple of 15x. While well below Amazon (AMZN), that could still be plenty enough to deliver value for its investors.

Its EPS is expected to grow 12.5% next year thanks to an 8% increase in sales, thanks to its popularity with quality merchants, Burns says.

AI Assistance

Beyond e-commerce, Alibaba is the largest public cloud service provider in China and the entire Asia-Pacific region. Its cloud business is currently getting a boost from the AI frenzy, but Burns also expects it to be a key revenue driver for the company long term. 

The company has also had a shift in mindset, moving from a “growth at any cost” strategy to focusing on shareholder value. It repurchased $10 billion worth of shares in the first two quarters of 2024, with another $26 billion of authorized buybacks in the works. 

If (and/or when) the Chinese economy recovers, Alibaba might just be well-positioned to flourish.

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ON OUR RADAR

WSJ: Russia may be planning to send incendiary devices on U.S.-bound planes, with two devices that ignited in Europe linked to the suspected operation.

CNN: Former President Donald Trump's net worth has dropped by $2.4 billion in the days before the election due to a sharp decline in Trump Media stock.

Barron’s: Stocks and bonds may decline if the winner of the US presidential election is not declared tomorrow.

Newsweek: The average age of first-time US homebuyers reached an all-time high of 38 this year, up from 35 in 2023.

CNBC: The ruling coalition of the German government is at risk of breaking up this week, which could have dramatic consequences for Germany’s economy.

FRIDAY’S POLL RESULTS

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

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