Mag 7 Name With Upside as Small Caps Take Over, Investors Buy the Dip
A best bet among the Magnificent Seven names has emerged.
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We have some mild bounce action on Thursday morning with small caps IWM leading. The Magnificent Seven names are mixed, with Apple AAPL and Microsoft MSFT lagging, but breadth is positive overall and some dip buying is taking place. I’m not doing too much as I wait for further consolidation in names that I like
With big-cap technology earnings reports starting tonight with Netflix, I’ve been reviewing the Magnificent Seven names for the stock that is most likely to have a positive response to its report. My conclusion is that the best bet is Amazon AMZN.
What is interesting about Amazon is that analysts believe that it has the highest potential upside of all of the Magnificent Seven names, with an average target price of $223.05, which would be a gain of 19.5% over the current price. There are 44 analysts who follow the stock and all of them have buy ratings. The lowest target price is $200, and the highest is $250.00 versus the current price of $185 or so.
By comparison, NVDA has potential upside of 17%, Microsoft 15%, Meta META 14%, and Alphabet GOOGL 13%, based on analyst target prices.
Amazon is also not technically extended as it approaches the same levels it hit after its last earnings report. It has consistently beat estimates, which is typical for Magnificent Seven names, but it has been very steady overall. It is also moving quickly on integrating AI, and AWS is doing well.
This morning, the company announced that Prime Day was their biggest Prime Day shopping event ever, with record sales and more items sold during the two-day event than during any prior Prime Day. These numbers won’t be in the June quarter, but they will influence guidance.
Technically, the stock is breaching its 50-day simple moving average on Thursday morning. That level has been very good support for the stock, and any buys under the 50-day since early 2023 have turned out well. What is hitting the stock now is rotational action rather than something fundamental. The likelihood of a bounce into its earnings report looks good
Amazon will report its earnings after the close on July 25, 2024. I have a position and will likely accumulate more before then.
At the time of publication, DePorre was long AMZN.
