Category: Under the Radar

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Stock Whispers Under the Radar

Is Ford a Buy? Analyst Points to Key Breakout Levels

Navigating 2023 was no small feat for Ford Motor’s CEO. The company faced significant pressure from the United Auto Workers union for better wages, and its ambitious electric vehicle (EV) initiatives drew skepticism.

However, the tide has turned. Ford successfully negotiated a deal last fall, averting potential strikes, and the latest EV sales data from Kelley Blue Book show promising trends. Although Ford still trails Tesla, its vehicle volumes are moving in the right direction.

Investors have taken note, and the improved outlook has caught the attention of Wall Street analysts, including seasoned market veteran Bruce Kamich.

Kamich, with over 50 years of experience in evaluating stock, bond, and futures markets, recently updated his stock-price forecast for Ford. His insights could be eye-opening for many investors.

Ford Capitalizes on Sales Momentum

Shifting consumer preferences from sedans to trucks and SUVs have played to Ford’s strengths. The Ford F-150, the top-selling full-size pickup truck in the U.S., sold nearly 750,000 units in 2023, outpacing GM’s Chevy Silverado and Stellantis’ Ram pickups. This marked the 45th consecutive year of dominance for Ford’s F-Series pickups.

In the SUV market, while not as dominant, Ford’s Explorer, Escape, and Bronco ranked among the top 20 most popular SUVs in America last year, according to Kelley Blue Book.

Ford’s EV strategy is also gaining traction. The introduction of the Lightning F-150 in 2022 was met with enthusiasm, and despite initial challenges, second-quarter sales were robust. Ford sold 23,957 EVs in Q2 2024, a 61% increase from the previous year and higher than the 20,223 units sold in Q1. Notably, sales of the F-150 Lightning surged 77% to 7,902 units, Mustang Mach-E sales climbed 47% to 12,645, and electric Transit units jumped 96% to 3,410.

For context, Tesla delivered 444,000 vehicles in the same quarter.

Ford’s overall financial performance in Q1 2024 was solid, with total revenue rising 4% year-over-year to $44.4 billion, and earnings remaining stable at 44 cents per share.

Analyst Sets New Price Target for Ford Stock

The strong sales performance has positively impacted Ford’s share price. After dipping below $10 last October due to union concerns, Ford’s stock rebounded, trading above $14 on July 16, marking the highest level since summer 2023.

While the recent rally has excited bullish investors, there are questions about whether Ford’s shares are now fully valued. However, Kamich’s latest analysis suggests there is still potential for further gains.

“Prices have been hammering out a base pattern over the past two years and are now trading above the bottoming 40-week moving average line,” Kamich noted. “The weekly on-balance volume (OBV) line is decent, though I’d like to see more strength. The moving average convergence divergence (MACD) oscillator is slightly above the zero line.”

OBV measures buying and selling pressure, while MACD tracks momentum. Ideally, both indicators should be positive, according to Kamich. “The critical breakout point for Ford is to close above its 2023 highs around the $15.50 area. If Ford can reach and maintain that level, it could pave the way for another upward move.”

Using daily and weekly point-and-figure charts, Kamich set a new price target for Ford. “The daily point-and-figure chart suggests an upside target in the $19 area,” Kamich concluded. “If Ford continues its climb, investors should be prepared for a potential breakout above the 2023 highs.”

Key Takeaways

  • Ford’s successful negotiation with the UAW and improving EV sales have positively influenced investor sentiment.
  • Strong performance in the truck and SUV markets bolsters Ford’s overall sales.
  • Bruce Kamich’s technical analysis indicates further upside potential for Ford’s stock, with a critical breakout point at $15.50 and an upside target of $19.

Conclusion

Ford’s strategic moves and market positioning, especially in the EV sector, have revitalized investor confidence. While challenges remain, the technical indicators suggest that Ford’s stock could have room to grow, potentially offering significant gains for investors who are prepared to ride the wave.

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Under the Radar

Cooling Inflation Raises Hopes for Fed Rate Cuts This Fall

The latest signs of cooling inflation suggest that the Federal Reserve may gain enough confidence to cut interest rates this fall.

After the release of favorable Consumer Price Index (CPI) numbers on Thursday, the odds of a rate cut in September jumped, with traders now pricing in an 83% probability of an easing at the Fed’s meeting on Sept. 17-18.

“I think it puts September firmly on pace for a cut,” said a macro strategy expert

Some analysts believe that a rate cut at the Fed’s July 30-31 meeting is now a possibility, contingent on additional economic data. “The Fed could very well lower rates sooner than September if the labor market softens at a faster clip,” said a chief global strategist for a financial services firm.

The CPI on a “core” basis, which excludes volatile food and energy prices, rose 3.3% year-over-year in June, slightly below expectations and the level seen in May. Month-over-month core CPI also showed promise, rising 0.1% after a 0.2% increase in May.

The modest month-over-month increase “strengthens the case for a September rate cut,” according to a chief economist. However, much depends on upcoming readings of the Fed’s preferred inflation gauge, the “core” Personal Consumption Expenditures index (PCE), and further cooling of the jobs market.

San Francisco Fed President, speaking with reporters after the CPI release, said the timing for rate cuts is “closer than six months ago,” but more data is needed before making a decision. “With the information we have received today, including data on employment, inflation, GDP growth, and the outlook for the economy, I see it as likely that some policy adjustments will be warranted,” she said.

Another Fed President also expressed cautious optimism, stating that the new CPI numbers “point to encouraging further progress towards lower inflation” but emphasized the need for more evidence that inflation will converge to 2%.

A macro analyst said June marks the third consecutive month of moderate inflation growth, confirming a downward trajectory. However, achieving the Fed’s 2% inflation goal might not be smooth due to tougher annual rate comparisons in the latter half of the year.

“For the Fed to justify rate cuts, it will need to focus on a decelerating labor market rather than relying solely on inflation softening,” the analyst said. “Today’s report and the Fed’s subtle shift to a balanced focus on employment growth help set the stage for a September rate cut.”

Fed Chair Jay Powell highlighted the importance of a cooling labor market, noting recent data indicating significantly less overheated conditions compared to two years ago. “This is no longer an overheated economy,” Powell told lawmakers.

The Fed has maintained high rates to curb inflation, but with the job market normalizing, it is now considering both price stability and maximum employment in its policy decisions.

The San Francisco Fed President echoed this sentiment, saying more attention is now on the labor market. “I’m looking at the labor market, which is coming into better balance, and additional slowing is likely to result in a rise in unemployment,” she said.

The focus on the job market follows last week’s unemployment report showing a gently cooling labor market, with the rate ticking up to 4.1% for the second consecutive month. While still historically low, this is an increase from 3.4% early last year.

Powell expressed optimism about potential rate cuts, citing evidence of cooling inflation and encouraging data. “The inflation numbers have shown modest progress, and more good data would strengthen our confidence that inflation is moving sustainably toward 2%,” he said. However, Powell did not commit to a September cut, cautioning that more evidence is needed to ensure inflation is on track to meet the 2% target.

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Pharma Stocks Stock Whispers Under the Radar

Can This Stock Live Up to the Hype? Wall Street Weighs In on AI-Powered Healthcare

Tempus AI Inc. (TEM), a recent entrant into the public market, has caught the eye of Wall Street analysts who are impressed by the company’s application of artificial intelligence (AI) in the field of cancer diagnostics. Despite a volatile stock price since its June IPO, several leading analysts have issued bullish calls on Tempus, citing its unique platform, sizable market opportunity, and potential for future growth.

Tempus’s Intelligent Diagnostics platform leverages AI, including generative AI, to analyze and personalize laboratory test results for cancer patients. This is achieved by connecting a patient’s clinical data with their test results, offering a more comprehensive picture for physicians. The company debuted on the Nasdaq in June, raising $413.7 million at an IPO price of $37 per share.

AI Differentiation in a Competitive Landscape

While other companies offer similar molecular diagnostics services, Tempus stands out by layering on additional patient information and utilizing advanced AI techniques like neural networks, deep learning, and large language models. This allows for a more nuanced analysis and potentially more effective treatment plans. Analysts at BofA Securities highlighted this differentiation, stating that Tempus offers a “play on molecular diagnostics, with an AI twist.”

Analyst Optimism on Market Opportunity and Growth Potential

The total addressable market for Tempus’s platform is estimated at a staggering $190 billion, with genomics comprising $70 billion and data services reaching nearly $120 billion. This vast market size provides ample room for Tempus to expand its reach and solidify its position within the oncology space.

Several analysts are bullish on Tempus’s future prospects. Morgan Stanley initiated coverage with an “overweight” rating and a $44 price target, implying a potential upside of 34% from current levels. Analyst Tejas Savant lauded Tempus as a “unique platform company” at the intersection of healthcare and data/AI. He also sees the company playing a crucial role in drug discovery and development by facilitating “smarter and more efficient” R&D for pharmaceutical companies.

Stifel’s Daniel Arias echoed this sentiment, recommending buying Tempus shares and setting a $45 price target. He believes Tempus’s business model fosters a unique synergy, benefiting both physicians treating cancer patients and biopharmaceutical companies developing new drugs. As Tempus expands its portfolio and the market evolves, Arias anticipates the company becoming a “top-tier player in the oncology space,” with the potential to branch into other therapeutic areas.

J.P. Morgan’s Rachel Vatnsdal initiated coverage with an “overweight” rating and a $42 target. She emphasized Tempus’s success in monetizing its extensive patient database of combined clinical and genomic data through licensing agreements with pharmaceutical and biotechnology companies. This “flywheel effect,” as Vatnsdal described it, renders Tempus’s data business even more valuable over time as the company acquires more data.

Financial Considerations and Analyst Underwriting Roles

Despite the bullish outlook, it’s important to acknowledge that Tempus is still in the red. The company reported widening net losses in the quarter ending March 31, 2024, compared to the same period last year. Additionally, it’s worth noting that Morgan Stanley and J.P. Morgan were among the lead underwriters of Tempus’s IPO, while BofA Securities and Stifel were also involved in the underwriting process. This potential conflict of interest should be considered when evaluating analyst recommendations.

Conclusion: A Promising Future for AI-Powered Diagnostics

Tempus AI’s unique approach to cancer diagnostics using AI has garnered significant attention from Wall Street analysts. The vast market opportunity, combined with the company’s platform capabilities and potential for future growth, paint a promising picture. However, investors should factor in the company’s current financial losses and the potential bias of some analysts involved in the IPO process before making investment decisions. As Tempus continues to develop its platform and navigate the competitive healthcare landscape, its future success will hinge on its ability to translate its technological edge into tangible clinical benefits for patients and financial returns for investors.

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Technology Under the Radar

From Under the Radar to Over the Moon: April’s Tech Stock Winners

As technological advancements continue to shape the future, the allure of tech stocks remains undeniable. The spotlight on artificial intelligence and similar innovations has propelled numerous tech enterprises to significant valuations. Amidst this fervent activity, discerning investors might wonder if there are any undervalued tech stocks worth considering for April 2024. Despite the challenges in identifying such opportunities within an extensively watched sector, the expansive nature of the market assures that overlooked yet promising investments still exist. For those willing to embrace a more adventurous investment stance, several tech companies stand out for their potential upside.

Among these, Photronics, operating with the NASDAQ ticker PLAB, emerges as a key player in the semiconductor domain. Specializing in the production and distribution of photomask products essential for integrated circuits (ICs) and flat-panel displays (FPDs), Photronics has carved a niche in both the U.S. and international markets. This firm’s expertise in translating intricate circuit designs onto semiconductor wafers positions it as a critical facilitator in the tech manufacturing process.

Venturing further into the semiconductor arena, Himax Technologies, trading as HIMX on NASDAQ, represents a notable fabless semiconductor entity. With a diverse geographical presence spanning China, Taiwan, and other countries, Himax excels in delivering advanced display-imaging processing technologies. The company’s operations are bifurcated into Driver IC and Non-Driver Products segments, focusing primarily on the production of display driver ICs and timing controllers. These components find applications across various platforms, including televisions, laptops, and automotive systems, highlighting the company’s integral role in the tech ecosystem.

Lastly, ViaSat, known by its ticker VSAT on NASDAQ, operates within the communication equipment sector, offering an array of broadband and communications solutions globally. The company’s Satellite Services segment stands out for providing satellite-based fixed broadband services, facilitating broadband internet access, and VoIP services to an extensive clientele. Additionally, ViaSat’s contributions to in-flight entertainment and aviation software services for commercial airlines and private jets underscore its expansive reach in communications technology.

Key Takeaways:

  • Despite the prevailing view that tech stocks are overvalued, careful research can uncover undervalued companies with significant growth potential.
  • Photronics (PLAB) and Himax Technologies (HIMX) underscore the enduring importance and innovation within the semiconductor industry, offering promising prospects for investors.
  • ViaSat (VSAT) exemplifies the vast opportunities in the communications sector, providing essential services that cater to an ever-growing demand for connectivity and entertainment.

Conclusion:

As we navigate through April 2024, the quest for undervalued tech stocks requires a keen eye and a readiness to explore less-charted territories within the bustling tech landscape. Photronics, Himax Technologies, and ViaSat represent just a snapshot of the potential waiting to be uncovered by astute investors. With their specialized niches, these companies not only contribute significantly to technological progress but also offer intriguing possibilities for those seeking to diversify their portfolios with tech stocks that might currently be flying under the radar. Embracing these opportunities could well be the key to unlocking substantial returns in a sector that continues to drive forward the frontier of innovation.

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Under the Radar

7 Under-the-Radar Stocks Set for Explosive Growth

The investment landscape brims with opportunities, especially within the realm of growth stocks that possess the potential to deliver multibagger returns. Highlighted below are several companies, each with unique propositions and market positions, signaling strong upside potential for savvy investors.

Magnite (MGNI) shines in the expanding universe of digital advertising. As a provider of sell-side advertising platforms, MGNI’s financial outlook is bullish, especially given the current trends in digital ad spending. The company’s valuation suggests an attractive entry point for investors seeking to tap into the advertising sector’s growth.

Xos (XOS) emerges as a formidable player in the electric vehicle (EV) industry, focusing on commercial fleets. With high-profile partnerships already in its portfolio, XOS is strategically positioned to benefit from the accelerating shift towards vehicle electrification. This focus positions the company as a promising investment in the green transition of transport.

Ring Energy (REI), an oil explorer in the Permian Basin, stands on the verge of a significant turnaround. Amid tight global energy markets, REI’s potential to retest its previous highs is noteworthy. This scenario paints a bullish picture for investors looking at energy sector growth plays.

V2X (VVX) offers a glimpse into the future of vehicular communication with its vehicle-to-everything technology. Despite a modest growth outlook, VVX’s valuation is compelling, trading at just 10 times forward earnings. With projections of increased EPS growth and the advent of smart infrastructure, VVX represents a strategic bet on the future of automotive technology.

Grid Dynamics Holdings (GDYN) leverages its expertise in digital transformation services, including cloud engineering, data analytics, and AI, to cater to Fortune 500 companies. Despite its seemingly high valuation at 35 times forward earnings, GDYN’s growth prospects and competitive positioning suggest it is undervalued, especially compared to its peers.

Vital Energy (VTLE) focuses on oil and gas exploration, particularly in the lucrative Permian Basin. Despite concerns over its debt, VTLE’s growth prospects are enhanced by high energy prices and a lean operational model, making it an attractive investment at just 5 times forward earnings.

Clear Secure (YOU) operates a leading identity verification platform, primarily serving the U.S. airport and venue markets. Despite the stock’s recent performance, YOU’s financial health and growth outlook, with EPS expected to rise significantly, underscore its potential as a long-term investment in a security-conscious world.

Key Takeaways:

  • Diversity in Growth: The highlighted stocks span across digital advertising, electric vehicles, energy exploration, vehicular communication, digital transformation services, and identity verification, reflecting a wide array of growth opportunities.
  • Strategic Market Positioning: Companies like MGNI, XOS, REI, VVX, GDYN, VTLE, and YOU are uniquely positioned in their respective sectors to capitalize on emerging trends and technological advancements.
  • Attractive Valuations: Many of these stocks present compelling valuations, offering potentially lucrative investment opportunities for those looking to diversify into growth-oriented stocks.

Conclusion: Investors seeking growth stocks with multibagger potential would do well to consider these companies. Each presents a unique proposition based on technological innovation, strategic market positioning, and financial metrics. As industries evolve and new trends emerge, MGNI, XOS, REI, VVX, GDYN, VTLE, and YOU stand out as compelling picks for those looking to capitalize on growth opportunities across various sectors.