Welcome back to a whipsawing market.
The week before last, all indexes ended the week higher, with “bad” news being positive for stocks.
Last week, the market shifted again, and indexes ended the weak lower to kick off September – another historically weak month in the markets.
The major spotlight for this week will be the consumer inflation report due Wednesday morning at 830 a.m. ET – as that will majorly influence the outcome of the Fed’s meeting next week.
Where indexes will go this week, will depend a lot on that inflation report.
But this doesn’t mean we can’t pick a few high-potential stocks that could surge before then – and after…
Because momentum is one of the strongest factors influencing short-term stock prices…
Meaning if we can identify a few maket-defying stocks with strong momentum from last week…
There’s a good chance that momentum could continue into this week as well.
Today’s list features stocks from three completely different industries…
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UiPath Inc. (PATH)
PATH has an enterprise software platform that companies can use for robotic process automation (RPA). RPA is the simpler precursor to AI, as it is ideal only for automating repetitive rule-based tasks. But while it is not “new” per se, it is still extremely useful and very much in use. And the good news is that the whole AI boom has also created a tailwind for RPA stocks like PATH.
PATH’s stock surged nearly 16% last week after releasing its latest quarterly results in which operating profit handily beat analyst expectations (despite revenue being roughly in-line) – indicating the company has been successful at controlling its expenses.
PATH has been repositioning its go-to market strategy, which has made an already volatile stock even more volatile. While momentum is on its side for now, be aware of this and adjust your position sizing accordingly.
AeroVironment, Inc. (AVAV)
There’s a common saying that war is good for business. And while that may be a little cynical, aerospace and defense stock AVAV – which is also supplying its Switchblade drones to Ukraine – is proving that saying at least partially right.
AVAV stock defied the market and flew by 16% last week after receiving an analyst upgrade on the back of a record-level backlog that can cover the company’s entire annual revenue outlook. And even though AVAV has already been significantly outperforming other aerospace stocks for the year, the analyst – investment bank Baird – increased its price target for AVAV to $135, implying a further upside of almost 20%.
Liberty Energy Inc. (LBRT)
LBRT is a leading oilfield services firm – meaning it provides a variety of services to companies that own and operate these oilfields. So, while not directly affected by oil prices, the indirect effect is very strong.
And with Saudi Arabia and Russia extending their production cuts till the end of 2023, oil prices have been rising – and so has LBRT’s stock. It blasted higher by over 8% last week, and is up nearly 22% this year (far higher than most energy companies).
A quick note about this one – while most of the stocks highlighted in the “3 stocks to watch” section on the first trading day of the week are all short-term plays, LBRT is a rare gem that could be worth holding on to for longer.
To your wealth,
Felix @ Ace of Investing