3 Stocks to Watch for the Week of July 31, 2023

The Fed raised interest rates by 0.25% last week, as widely predicted, with Powell doing his best to leave the door open for future rate hikes in his post-meeting statements.

While markets didn’t move much immediately following the announcement on Wednesday, they pulled back sharply on Thursday.

Many expected this pullback to continue for at least a few days, considering how far the market has run.

Instead, the market surprised us – rising sharply on Friday to end the week strong.

What does this mean?

Well, in my view, it means the underlying positive trend is so strong that it basically shook off the pullback, instead of doing what it was “expected” to do.

This means we’re likely to see many stocks ripping higher this week.

So, as always, let’s look at three stocks with huge momentum that I think could continue to race higher over the next few days.

And as always, remember that these are short-term plays, so manage your risk accordingly.

Roku, Inc. (ROKU)

Streaming company Roku saw its shares pop over 20% last week after reporting second-quarter earnings, which revealed stronger-than-expected account growth, top-line revenue, and highly positive forward guidance.

Roku looks to be in a good position to keep capitalizing on the secular “cord cutting” trend, and has also implemented features that will improve advertiser monetization.

Despite this share surge, Roku is still heavily below its 2021 peak – which was more than 5 times its current share price. As Roku continues to gain momentum on the back of positive results from the big advertising giants, this is one stock that could continue to surge this week.

Lam Research Corporation (LRCX)

Semiconductor stocks performed very strongly last week – and Lam Research was leading the pack. The stock popped over 16% last week after it released its latest revenue forecast, which was $100 million higher than Wall Street estimates.

The reason behind this stronger-than-expected forecast? AI demand from computer chip companies – a theme that continues to uplift the market.

Previously, shares of Lam Research were cheap compared to its peers. Today, it’s about on par with the sector average and is just shy of hitting a new all-time high. This is not a bad thing – and with such strong momentum on its side, Lam Research could continue to race higher this week.

Celestica Inc. (CLS)

Canadian electronic components manufacturer Celestica just ripped to a new all-time high last week with a nearly 30% rise. This strong price action came on the back of better-than-consensus Q2 earnings, including revised upward guidance for the third quarter, combined with several analyst upgrades.

But even though it’s reached new all-time highs, Celestica’s P/E ratio is still a modest 17x – far below the average of 27x for the U.S. electronic equipment and components industry. This means this stock still has quite a ways to go, and with the wind in its back, there’s a good chance it will continue to run further this week.

To your wealth,
Felix @ Ace of Investing