Welcome back – hope you had a great long weekend.
All indexes ended last week higher, and while August was still a down month for stocks, things are really looking up.
One good sign is the fact that “bad” news for the economy – for instance, unemployment ticking up – is once again good news for stocks.
This is a recurring pattern we’ve seen when the market was rallying this year, so this is positive.
Since market momentum is now positive, this makes it even more likely that you can pick up some quick gains from fast-moving stocks this week (even if it is a shortened trading week).
This week’s list features stocks from marketing tech, semiconductors, and even an industry that’s still illegal in many parts of the world.
Before we go into these stocks, a quick reminder to manage your position sizing accordingly…
Cardlytics, Inc. (CDLX)
Cardlytics – short for card analytics – is an advertising platform that specifically helps banks target and upsell their customers better using card purchase data.
Cardlytics has been a top-performer this year, rocketing 220% higher – including a 26% gain in just the past week alone.
While it delivered positive earnings surprises about a month ago, that can’t explain the stock’s outperformance. More likely, investors are still seeing Cardlytics’ stock as cheap, as despite more than tripling this year, it’s still almost 90% lower compared to its 2021 high.
Plus, with advertising revenue looking to recover in the second half of the year with the Fed’s soft landing scenario playing out, things are looking good. The positive momentum it has built up throughout the year seems likely to continue, and that is something you can exploit.
Aehr Test Systems (AEHR)
AEHR is in the semiconductor industry – but it’s not a semiconductor company per se. Rather, as the name implies, it makes test systems for integrated circuits, meaning the semiconductor companies are its major customers.
This makes AEHR a very cyclical stock with the company also having a high reliance on a few large customers. That’s a very real risk. But the good news is that the cycle it’s in right now is highly positive – with AEHR having soared 181% this year, and 17% in the past week alone.
This is one stock you’ll want to exit as soon as the cycle enters the downturn. But for now, short-term-focused investors can just sit back and enjoy the ride.
Tilray Brands, Inc. (TLRY)
Cannabis companies soared last week after a top official at the Department of Health and Human Services wrote Drug Enforcement Administration head Anne Milgram calling for marijuana to be reclassified as a Schedule III drug under the Controlled Substances Act.
Cannabis stocks jumped in response. But why TLRY instead of say Curaleaf or Canopy Growth – both of which actually jumped a bit more compared to TLRY in the past week?
The reason I chose TLRY is because of how resilient its stock price has been this year. After the price surge, TLRY is up nearly 10% on the year, while its counterparts are still largely negative. Even though we’re targeting fast short-term gains here, we want stocks that can resist any shift in momentum.
To your wealth,
Felix @ Ace of Investing
