Hope you had a good weekend.
Last week, stocks pulled back as strong labor market data stoked fears that the Fed would further hike interest rates this year (even though they had already previously said they most likely would).
What we’re seeing is the return of the “good news for the economy is bad news for the market” narrative that happened in the early part of this year.
For those newer to the topsy-turvy nature of the market, it can seem pretty wild.
Still, despite the pullback, I believe the bull run we’ve been seeing will continue.
The leading stocks – what some traders call “market leaders’ – are still going strong.
Plus, I believe that even if the Fed hikes, it’ll just be one or two more times max – AND those hikes have already mostly been priced in,
Now, as always, for the first trading day of the week, I’ll be sharing the names of three stocks I believe could see a big jump this week.
Whenever there’s a pullback the week before, I like to look at which stocks defied the broader market trend and still rose.
Then, I filter it from there to find the three names I believe have the highest potential.
Today’s three picks come from the electric vehicle and cloud computing industries – but they’re probably not the typical names you’d think of when you hear about these sectors.
They also saw double-digit price increases in a losing week for the market – and their momentum could continue.
Rivian Automotive, Inc. (RIVN)
Rivian – a former meme stock favorite – has a history of making big promises and severely under delivering. Its long-term share price has reflected that fact, with it now trading at just one-fifth of its IPO price (which to be fair, was at the peak of the 2021 market).
But again, Monday’s stocks picks are not about long-term potential – but about short-term gains. And RIVN has surged over 50% in the past week thanks to increased price targets, posting second-quarter production and delivery numbers that were ahead of estimates, more deliveries to Amazon, and the inking of a deal to be able to use Tesla’s fast-charger network starting 2025.
Still, make no mistake – RIVN is still a loss-making company that is still losing money on every vehicle it ships, and is burning through billions of dollars each quarter. This should strictly be a short-term momentum play.
Polestar Automotive Holding UK PLC (PSNY)
You’ve probably heard of Rivian, but not of Polestar – a Swedish-based EV manufacturer (focusing on performance vehicles) that was bought out by Volvo in 2015 and then spun off into its own division.
Its stock has surged over 16% in the past week after it reported record second-quarter delivery numbers that were up nearly 40% year-on-year. Combine that with its smaller market cap and the fact that EV stocks in general performed well last week (Tesla was up 5%) – and you have recipe for a stock that could have room to further race ahead this week.
DigitalOcean Holdings, Inc. (DOCN)
DOCN is an American cloud service provider – but that’s not why its stock surged close to 17% over the past week.
It’s because DOCN acquired Paperspace – a software company that helps deploy and build AI models. The company is now trying to position itself as an AI cloud play, and so far, investors have been enthusiastic.
But again, make no mistake – DOCN is still a loss-making company. And the AI field is getting progressively more crowded, meaning there will eventually be a time where only the true cream will rise to the top, while the rest fade into obscurity.
Fortunately, that time is not now. So, feel free to enjoy the ride on DOCN while you still can. Just remember what you’re getting into it for.
To your wealth,
Felix @ Ace of Investing
