Hope you enjoyed the long weekend.
As always, I’m going to start the first day of the trading week with some analysis of what went down last week – then spotlight three stocks I believe have the best chance of surging this week.
Last week, both the consumer and producer price indexes indicated that inflation was falling faster than expected.
Then, after 10 consecutive rate hikes, the Fed paused rate hikes – although it did signal that future rate hikes this year remained on the table (I suspect they did this to not cause a huge market rally).
Despite the Fed’s efforts, both the S&P 500 and the NASDAQ posted their best weekly performance since March. Further, both indexes are now up by 5 and 8 weeks in a row.
At this point, pullbacks are natural and should be expected. So don’t get caught off guard if it happens.
But this doesn’t mean that certain stocks can’t still surge over the next few days.
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Marathon Digital Holdings, Inc. (MARA)
Major Bitcoin miner Marathon Digital’s stock has been on a tear, having almost tripled in 2023. Yet, despite this impressive performance, its stock is still down about 87% from its all-time high in November 2021 – back when Bitcoin was trading at over $65,000, about 60% down from its all-time high.
Should the ratio between Bitcoin’s and Marathon’s stock price roughly hold, that indicates the stock could still have plenty of room to run.
Factor in its awesome momentum, its high short interest of about 27% of free float (making it ripe for a short squeeze) – plus the fact that the company is on the verge of increasing its mining capacity by about 50% – and you have a prime candidate for an upcoming surge.
Celsius Holdings, Inc. (CELH)
Energy-drink company Celsius’ stock has also dashed off this year, having risen 44% this year. But unlike other tech stocks, Celsius hasn’t just been performing this year – it’s actually up over 160% over the past year, and now sits at an all-time high. In short, Celsius absolutely defied the 2022 bear market – and its run could continue for a while.
For one, the trend – both short-term and long-term – is clearly on its side. Second, underlying financial performance is also positive, with its most recent quarterly report crushing Wall Street’s expectations. And third, short interest on Celsius stock is now standing at about 23%, meaning any move higher could be further amplified as short sellers rush to cover their positions.
Vuzix Corporation (VUZI)
Augmented reality (AR) glass manufacturer Vuzix Corp’s stock has been on a roll – rising by 45% this year. Yet, this is still less than one-fifth of what it traded at during its peak in April 2021.
One reason for the stock’s recent rise is underlying expansion, with Vuzix expanding its products (focused on enterprise clients) across multiple sectors including defense and healthcare. The company is still unprofitable, but for a short-term hold – that may not matter.
Throw in a short interest standing at 26% of free float, combine that with Vuzix’s status as a former “meme stock” – and you have a recipe for a continued and profitable surge.
To your wealth,
Felix @ Ace of Investing