Updating our “Quantamental” Views

We began publishing analyses of some of the largest and most owned stocks in the stock market a month ago.

We have analyzed stocks as professional investors for almost thirty years. Over that time, we have refined our method into what we call a "Quantamental" approach.

This is where we combine quantitative analysis (focused on technical analysis) and qualitative analysis (focused on earnings).

For the analysis we are sharing, we break it down into three parts and look to share an intermediate-term view of the stock, which is a view over three to six months.

Our analysis often will have some insights on the short-term and long-term for the stock, but our primary focus is on this period.

For today's issue of HX Daily, we are revisiting the four analyses we have published so far and their results. Here they are…

1. Tesla Inc. (NASDAQ: TSLA)

Published - July 9, 2024 – AVOID - $262.33

RETURN = -21%

Our first analysis was on electric vehicle leader TSLA.

The stock had just had an enormous run, trading from a low of $140 back in April to over $260 per share when we published.

We had concerns about the shares continuing the rally.

Our primary concern was that the stock was down so much in the last year – negative EARNINGS REVISIONS.

We noted that the company had seen continual negative revisions for many months. Until these revisions bottomed (and turned higher), we did not think the stock would have a prolonged rally.

The company reported on July 23 and – once again – disappointed investors.

Here is the updated chart of EARNINGS REVISIONS for TSLA…

You can see in the chart that the revisions continue to move lower.

If this trend continues, the stock will not move sustainably higher. We would not be surprised to see it revisit the previous lows.

UPDATED CONCLUSION - AVOID

2. NVIDIA Corporation (NASDAQ: NVDA) 

Published - July 16, 2024 – AVOID - $126.36

RETURN = -15%

We had a similar conclusion to avoid the stock in the near term with NVDA but for a different reason.

NVDA has had spectacular EARNINGS REVISIONS and has been crushing numbers.

Our concern was that the stock was very overbought. Even after pulling back from the recent all-time highs, it was still very extended from its short-term 50-day moving average.

We also asked ourselves – who was left to buy NVDA after the incredible first half of stock performance?

Our cautious stance ended up being right, as the stock has pulled back nicely.

Where do we stand now?

If you did now own NVDA – or were inclined to add to your position – we think right now is an ideal time.

The stock has now pulled back to its intermediate-term 100-day moving average.

It also recently traded below an RSI of 34, which happens rarely for NVDA. Here is how it has performed afterward…

The stock has seldom been this oversold in the last decade and has an excellent track record of trading higher.

The company reports at the end of August (8/28), and we think they will continue to post strong results.

One reason for the sell-off in large technology companies has been their continued high investment levels in AI infrastructure. Investors are concerned that they may not eventually see an adequate return on their investment.

Those investments, though, benefit NVDA.

With the stock at all-time highs, the bar was high for the results necessary to keep it moving upward. With the stock down 24% from that high, we think solid results will at least result in a short-term recovery.

UPDATED CONCLUSION - BUY

3. Amazon.com, Inc. (NASDAQ: AMZN)

Published - July 23, 2024 – BUY - $182.55

RETURN = -8%

Of our initial group of analyses, AMZN was the first one in which we said investors should buy the stock.

As the correction in the NASDAQ had already begun, AMZN stock had pulled back and reached a significant oversold level.

It has a track record similar to EARNINGS GROWTH and EARNINGS REVISION as NVDA but was not overbought.

We liked the setup into earnings, which were reported on Thursday, August 2.

You likely know how THAT turned out!

The company reported results that beat the estimates for EPS but slightly missed the revenue forecast. In the current market, that was enough to crush the stock, which traded down almost 9%.

Are we concerned? Not at all…

We think the stock moves higher if they continue to beat numbers and the earnings revisions move higher.

With Friday's sell-off, the stock hit an even lower (and rarer) RSI of just above 30.

Despite the stock being lower, we stick with our original conclusion.

UPDATED CONCLUSION - BUY

4. Alphabet Inc. (NASDAQ: GOOG) 

Published – July 30, 2024 – BUY - $171.13

RETURN = -1.6%

We just wrote up GOOG a week ago.

The company reported on Tuesday, July 23, and had similar results to AMZN.

In their case, they beat on both revenue and EPS, but there were "concerns" about the rate of growth at their YouTube business and the high level of capital expenditures.

The GOOG CEO Sundar Pichai commented about investments in AI, "The risk of under-investing is dramatically greater than the risk of over-investing."

This statement concerned GOOG investors, but is also one of the reasons we are constructive on NVDA shares.

Our analysis of GOOG is only one week old, but nothing has changed in our views. We continue to like the stock at these levels.

UPDATED CONCLUSION - BUY

HX Podcast

Enrique is joined by one of our readers and they discuss the outlook for the stock market in the near term and through year-end.  Enrique also gives an update on the HX FREE IDEA.

Check out our timely commentary to help YOU make money!

Click here to listen on your preferred platform or watch on YouTube below.

The HX Podcast with Enrique Abeyta brings you up-to-date financial market commentary along with evergreen insights into investing, trading and building your financial future. Enrique has 30+ years experience as a professional investor having managed billions of dollar in his firms. He brings on other world class investors and special guests to discuss investing and trading in a humorous and approachable manner.