As the Market Frets Over Nvidia, One of My Favorite Stocks Is Discovered
With expectations so high for the chip stock, there is nervousness about the reaction to earnings. Meanwhile, small-cap and large-cap picks of mine are thriving.
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The most important stock in the market reports after the close on Wednesday, and the market is quite nervous about the reaction.
It is wildly anticipated that Nvidia NVDA will beat the $5.60 EPS estimate and $24.59 billion revenue estimate, but will $6.00 in EPS and $25 billion in revenue be enough to send the stock higher?
Nvidia is also likely to increase guidance, but EPS growth cannot maintain that pace for much longer. The current EPS growth estimate for the fiscal year ending January 2025 is 86%, but that will drop to 27% in the following fiscal year. The stock has a forward P/E of about 39, so it isn’t that cheap at this point.
I suspect there will be hesitation to chase Nvidia at this point with expectations so high, but there should be plenty of willing buyers on a dip. There is huge support around the $920 level, and that is where dip buyers will likely jump in if there is a sell-the-news reaction.
Small-caps continue to act well, and I’m extremely pleased to see that one of my favorite names, Humacyte HUMA, is being discovered. There has been very impressive insider buying there, plus the strong price action is attracting some attention.
I named First Solar FSLR as my top big-cap play for 2024 back in December. The stock has had a huge breakout Wednesday with the news that China is going to stop dumping cheap solar panels in the U.S. This is big news for First Solar, which is a large domestic producer. The company has some big EPS estimates and is still cheap on a PE/Growth basis.
I’ve been traveling for a few days and need to catch up. It looks like some good action in small caps is continuing, and that is a major positive.
I’ll have some details about my visit to Mar-a-Lago on Thursday.
At the time of publication, Rev Shark was long NVDA, FSLR and HUMA.
