Daily Stock Pick for August 30, 2023

The stock market staged a stunning reversal yesterday – logging its best day since June.

The S&P 500, Nasdaq, and the Dow have now recovered to above their 50-day moving averages –  a traditional support level.

It remains to be seen if this momentum can continue.

But if it does, tech stocks are the ones that seem most likely to once again head the new rally.

That’s why today’s stock pick is a small AI name that jumped over 17% yesterday.

This was a combination of the swing in market sentiment – plus an analyst initiating coverage with a Buy rating and a price target that implies a 150% gain.

Of course, like most small AI names, this is a speculative pick – so adjust your position sizing accordingly.

BigBear.ai Holdings, Inc. (BBAI)

BBAI provides AI-powered decision intelligence solutions, with the U.S. Army being one of its biggest customers – having extended its contract with the company by six months back in May.

As with most tiny AI stocks (BBAI currently only has a $250 million market cap), BBAI is still far from profitability – although its losses have been narrowing.

Again, this is a speculative play, with the main catalyst for its upward move being the shift in market sentiment plus analyst Wainright & Co initiating coverage with a Buy rating and a price target of $4 (BBAI closed at $1.61 yesterday).

Wainwright & Co’s reasoning is that BBAI has a clear path to profitability, a growing customer base of prominent governmental and commercial entities, plus a favorable macro environment in the form of a rapidly growing AI analytics market – projected to reach almost $250 billion by 2025. It also noted BBAI’s current backlog of $205m – which is about 165% of its trailing 12-month revenue.

Is Wainwright right? It might be worth finding out.

To your wealth,
Felix @ Ace of Investing