APP, SOFI, ZETA, FOUR, HIMS: 5 Strong Picks Ahead of Rate Cut Cycle Plus 2 Momentum Plays

Semptember 15 2024, Update

This week the CPI came at 2.5% slightly better than expectations.

Looking at the Nowcast predictions the next reading should touch 2.3%.

Next week, the FED is expected to announce a rate cut, with a 0.25% reduction being the most anticipated outcome.

Currently, no clear indicators are suggesting an imminent recession. As long as severe negative economic data doesn't emerge, the outlook for stocks remains positive. However, it's important to remember that September and October are typically volatile months due to seasonal trends.

The INDEX

The Nasdaq closed the week with a strong gain of +5.95% on increasing volume. All key moving averages are now pointing upward, so I am ready to re-engage with my portfolios.

SECTORS

I see strength in Real Estate, Financials, and Utilities. However, Technology took a significant hit over the last three months, which suggests it has substantial potential for a rebound.

PORTFOLIOS

Some action this week for me. Let’s start with my 10X MOMENTUM plays.

10X SMALL CAP MOMENTUM POT

CMPO 0.00%↑ continues to perform well, currently up by +71%, and it's the only remaining holding in this portfolio. I have raised my stop loss. I'll close this portfolio as soon as I exit CMPO. No other changes this week.

10X MOMENTUM POT

$ZETA also had a strong week, now up +55% in less than 3 months. My account currently stands at $21,000, with most of it in cash. I am ready to start 2 new positions by dividing my available cash ($15,478) into four parts, targeting a maximum of 5 positions (approximately $3,869 per new position).

• 100 shares of HRMY if it reaches $38.90, with an initial stop loss at $33.90.

• 500 shares of RKLB if it reaches $7.47, with an initial stop loss at $5.70.

Harmony is a $2.1 billion biotech company that is showing strong momentum, breaking out on volume and outperforming the S&P 500 in recent weeks. It has been growing revenue above 30% year-over-year and is expected to maintain a growth rate above 24% for the next 2 years. The company exceeded revenue and EPS expectations in the last quarter.

RKLB 0.00%↑ is a company that provides launch services and space system solutions for the space and defense industries. It is growing at over 40% year-over-year and is expected to maintain this pace for the next 2 years.

RKLB had a very strong week with high trading volume and is close to breaking its 2-year all-time high (ATH). It is outperforming the S&P 500 and shows positive momentum.

UNDERPRICED GROWTH PORTFOLIO

Now to my new venture as discussed here last week. I'm ready to get started, and below are my first picks. Each pick represents a starting position. Based on my rules, I may allocate 1/3 or 1/2 of a full position initially. Each full position will represent 1/10 of the portfolio's total value.

I’m starting my UNDERPRICED GROWTH Portfolio with 5 starting positions. More specifically:

• 300 shares of HIMS if it touches 16.58 USD, first Stop Loss at 12.97

• 180 shares of ZETA if it touches 27.53 USD, first Stop Loss at 20.97

• 60 shares of FOUR if it touches 82.93 USD, first Stop Loss at 65.97

• 645 shares of SOFI if it touches 7.75 USD, first Stop Loss at 6.47

• 45 shares of APP if it touches 112.6 USD, first Stop Loss at 83.97

Below is a snapshot of the five companies. On average, they are growing revenues at 34% year-over-year (YoY) and are expected to maintain a growth rate of 30% over the next 2 years. Their average Return on Assets (ROA) is projected to be 56% in 2024 and 70% in 2025, indicating strong and growing profitability. Additionally, these companies are investing in expansion, with an average asset growth of 45% in 2023 and 20% in 2024.

In my assessment, all these companies are underpriced and offer more upside potential than downside risk.

Below are the weekly charts of the five stocks. Starting next week, I'll share a Google Sheet with all the details of this new portfolio

ZETA is simply in a strong uptrend. It could rest for some time before resuming. Very strong close on Friday.

HIMS is about to go above all key moving averages:

FOUR might be on the verge of starting a new uptrend. Same for SOFI below, about to go above all its key moving averages.

Lastly, APP broke out last week on strong volume. It might consolidate for a while or retest the 10-week moving average before continuing its upward trend.

That’s all for the week!

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Important: This is not investment advice. Consult a licensed financial advisor before making any investment decision.