Cautious Optimism: Market Trends, Portfolio Moves, and 2025 Prospects
January 6, 2025 Update
This week feels like the real start of the year, with everyone back at their desks, ready for action.
Last week, both the Nasdaq and the S&P 500 finished slightly in the red at -0.51%.
On the weekly chart, they look healthy.
On the daily chart, the 10-day and 20-day SMAs are trending down, signaling caution.
On the macro side, the inflation nowcast for December is 2.86%, and for January 2025 it’s 2.89%, suggesting a slowdown.
Oil is relatively low at $77 for Brent, though it has been rising in recent weeks.
The New York Fed’s GDP nowcast for Q4 2024 is 1.9%, and for Q1 2025 it’s 2.1%, with no signs of recession yet.
All in all, it’s a mixed picture.
I’m watching for inflation to stay below 3% and for liquidity not to become restrictive. Credit tightening, after all, is what causes economic slowdowns—or worse, recessions.
We’re walking a fine line right now, so the best we can do is monitor the situation and prepare for different scenarios.
Overall, I remain bullish on stocks for 2025, based on current information.
Of course, if the situation changes, so will my views.
PORTFOLIOS
10X 2025 PICKS
After a +54% return in 2023 and a +138% return in 2024, on January 1 I published my 2025 portfolio of 10 stocks, aiming to beat the S&P 500 yet again. Maybe I’ve been lucky twice—let’s see what happens in 2025.
The portfolio is already off to a good start, up +4.8% versus +1% for the SPY. Hopefully, that’s a positive sign for the rest of the year!
10X UNDERPRICED GROWTH PORTFOLIO
This is where I invest in high-growth, low-priced businesses. I loosen my risk management rules here to allow for some volatility.
Last week, 1/3 of a position in AEHR was triggered.
Current Portfolio: Details below.
What I’m doing this week:
AEHR: Adding another 1/3 of a position by buying 200 shares if the stock hits $17.30 (buy stop order).
HITI: Adding 1/3 of a position by buying 1,000 shares if the stock hits $3.42 (buy stop order). First stop loss at $2.60.
About HITI (High Tide)
High Tide operates in the cannabis industry. I like that it’s profitable and expanding its distribution footprint. Below is its weekly chart, plus a summary from my CustomGPT analysis:
High Tide Inc. (HITI): A Compelling Cannabis Retailer Investment Case
High Tide Inc. (NASDAQ: HITI) is a leading Canadian cannabis retailer with a robust business model and an innovative Canna Cabana discount club approach. This model has led to 1.55 million members (+41% YoY) and a 12% market share in its regions. The company’s Q3 2024 revenue was $131.7 million (+10% YoY), and it has been free cash flow positive for five consecutive quarters—unusual in the cannabis space.
Key strengths include:
Revenue and Earnings Growth: Strong financial results, with sequential same-store sales growth of +5% QoQ, outpacing industry averages.
Innovation and Branding: A disruptive retail model and loyal customer base, bolstered by rapid growth in premium memberships (+203% YoY for ELITE).
Operational Efficiency: The company has achieved profitability while expanding its footprint, adding 21 new stores YTD. With disciplined management under CEO Raj Grover, High Tide is balancing growth and profitability, positioning itself as a leader in the maturing cannabis sector. Challenges remain in product innovation and insider confidence, but the company's trajectory makes it a standout in the space.
10X MOMENTUM PORTFOLIO
Last week, my QNST buy stop order was not triggered.
Current Portfolio: Details below.
What I’m doing this week:
MGNI: Stop buy order for 330 shares of Magnite (MGNI) if it hits $17.15. First stop loss at $14.90.
I also updated my stop loss levels.
About MGNI (Magnite)
Magnite, Inc. (NASDAQ: MGNI) is an independent supply-side platform (SSP), well-positioned for growth in programmatic advertising and Connected TV (CTV). In Q3 2024, revenue rose 12% YoY and CTV jumped 23% YoY, reflecting strong momentum in this space.
Key highlights from the investment case include:
Robust CTV Growth: Magnite’s partnerships with industry giants like Disney, Netflix, and Roku reinforce its dominance in programmatic CTV. Expanded deals with Disney include live sports (college football) and international markets, while Netflix is expected to become a major revenue driver by 2025.
Innovation & Operational Efficiency: Magnite has integrated AI and machine learning, reducing ad-processing costs by 30% YoY and improving targeting and monetization for publishers through tools like ClearLine and Demand Manager.
Improving Profitability: Adjusted EBITDA grew 26% YoY in Q3, with margins expanding to 34%. Free cash flow is projected to grow 20% in 2024, and further improvements are expected in 2025.
Strong Industry Position: Recognized by Forrester’s Q4 2024 report as the leading SSP for curation and yield optimization, Magnite remains a preferred partner for top-tier publishers.
That’s all for the week!
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Important: This is not investment advice. Please consult a licensed financial advisor before making any investment decisions.
Disclosure: The content has been reviewed using artificial intelligence to enhance readability and ensure grammatical accuracy.