Here's Why Uber Is My Top Long-Term Pick
I have a long list of stocks that I’m watching, but I don’t see any reason to rush with new buys right now.
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Following the pounding on Tuesday, we have tentative bounce action on Wednesday. There is plenty of green on the screens, with breadth running about four to one positive, but this is not an energetic snap-back so far. The Russell 2000 IWM is only up 1%, and the Nasdaq 100 (QQQ) is up 0.75%, which still leaves large gaps to fill in order to recover.
There are some interesting statistics about how when then is a 90% down day when the indexes are at highs, the market was lower a month later all 16 times that it happened. In addition, every single time, the next 10% move was to the downside.
This market has done a lot of unusual things in recent years, so I wouldn’t put too much weight on these sorts of stats, but it is something to keep in mind. For now, we have to watch to see if the Tuesday lows are undercut. That is the key support level at this point. If we see a lower low, it is going to embolden bears and trigger some technical selling.
My top long-term pick, Uber UBER, announced a buyback of up to $7 billion this morning. I recently discussed why I viewed the name as a good long-term buy and hold. This news shows that UBER is making the transition to being a true blue chip that institutions will want to hold.
It was added to the S&P 500 and is now returning capital to shareholders via buybacks. The buybacks add substantial support to the stock and will help it to continue to trend higher. I will continue to look for opportunities to build my position.
I’m keeping things short-term right now as we see how market conditions develop. I added a small amount of AdvisorShares Pure US Cannabis ETF MSOS this morning, which has been fading and causing some frustration for folks who expected significant news to hit any day. I think the news of the rescheduling of cannabis will come, but we just don’t know when
Small-cap favorites Xeris Biopharma Holdings XERS and Humacyte HUMA are testing recent highs. HUMA has broken over $4, and XERS is working hard to take out heavy resistance at $3.
One of my favorite charts right now is Apellis Pharmaceuticals APLS, but the biotechnology sector is still not in favor. I’ll be adding to APLS when the biotechnology sector acts better.
I have a long list of stocks that I’m watching, but I don’t see any reason to rush with new buys right now. The market risk is more to the downside than the upside.
At the time of publication, James "Rev Shark" DePorre was long UBER, XERS, HUMA, MSOS, APLS.
