2 Stocks I'm Looking to Buy Even as the Market Surges
The danger of a sell-the-news reaction to the Fed is now higher after the CPI report.
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The market is blasting higher on Wednesday following a softer-than-expected CPI report. The strength is very broad, with 7,400 gainers to 1,500 decliners, and small-caps are leading with a move of more than 3%.
Both the S&P 500 and Nasdaq 100 QQQ are moving deeper into new record-high areas, with the Magnificent Seven names attracting heavy volume.
This sort of strength in front of a Fed meeting is highly unusual. Typically, the market trades randomly on the morning of an FOMC decision, but there is hope that the CPI will result in a more dovish tone from Jerome Powell.
The Fed is not going to change rates Wednesday, but they are likely to indicate that things are on track for cuts later this year. The market is now anticipating three quarter-point cuts before the end of the year.
The market tends to find a positive spin when Powell speaks, but there is always the risk that he may not be as upbeat as hoped. The danger of a sell-the-news reaction to the Fed is now higher.
It is very tough to put new money to work when we have this level of chasing, but here are two names that I’m looking to add as they develop further. I’m not going to add substantially until this euphoria slows, but I will make some incremental additions when I can.
The first name is Uber UBER. Uber had a rough few months due to a number of issues involving lawsuits over the contractor status of drivers and Tesla’s TSLA talk about the robotaxi business. There was a note on Wednesday that robotaxis are probably many years in the future, and good earnings from Lyft LYFT helped to boost the stock.
I’ll look to add more Uber as it pulls back into the gap. UBER has 30 "buy" recommendations with an average target price of around $88.
The second name I’m interested in is Mereo BioPharma MREO. The stock gapped up on Wednesday following very strong data on a drug that it is developing in partnership with Ultragenyx RARE.
Mereo BioPharma has other drugs in its pipeline and is actively seeking more partnerships or a potential takeover. I’m looking to add further to my position as the gap on the chart is filled.
At the time of publication, Rev Shark was long UBER and MREO.
