Joe Cotton: A few surprises on the market last week; Stock pick of the week is Nerdwallet, Risky, Speculative
Market Assessment – Starting Saturday, December 11 at 7:45 p.m.
Last week, the DOW, to my surprise, rose sharply by around 1,300 points, easily rising above its critical 50-day moving average. So at this time we are NOT in a bear market.
However, high priced, high PE stocks with little to no income are definitely in a bear market. It is dangerous to own these stocks, and as you can see below. The high-priced Everbridge (EVBG) stock at $ 63.00, with no profit to speak of, lost almost half of its value as it plunged 52 points on Friday after the company released revenue growth estimates of 20-23% for 2022 (below street expectations) and also announced that its CEO is stepping down. Another casualty, Wayfair (W) 202.04, the home furnishing darling, who has a PE ratio of 229, lost 32 points on Friday and could go much lower.
On a brighter note, it looks like a lot of second tier speculative stocks have bottomed out (how could they get any lower?). .which would include our weekly stock, Nerdwallet, Inc. CAUTION IS ADVISED.
Our “Action of the Week” is Nerdwallet Inc. (NRDS) $ 16.18. We gave it a buy rating of $ 14.39 in our Monday 6/12/21 market letter. It operates a digital platform that provides advice to consumers on personal finance by connecting individuals and small and medium businesses with providers of financial products.
The company’s platform delivers value through a variety of financial products, including credit cards, mortgages, insurance, personal loans, banking, investments, and student loans. The company’s shares climbed 55% to $ 26 when it went public for $ 18 on November 4. It has declined considerably since then. On November 29, Bank of America launched the stock hedging with a buy rating and a price target of $ 40.00. Analyst Nat Schindler said, “We believe that strong revenue and margin growth, vertical growth initiatives, international expansion, new financial services partnerships and the penetration of a large market opportunity will result in a increase in the current share price. “
We love the action, believe it will double in 3 months and will buy it on Monday 12/13/21. It is a speculative and RISKY action.
Joe Cotton has won three national stock picking contests with annual payout percentages above 96%. Its 2020 Wall Street Best Stock competition winner was Inovio Pharmaceuticals (Symbol INO) with a return of 742% over 1 year.
This article is not investment advice and should in no way be interpreted as investment advice. For investment advice, consult a registered investment advisor or certified financial planner. Joe Cotton’s website is www.cottonstocks.net. Joseph W. Cotton of NKY is the editor of the market newsletter, Cotton’s Technically Speaking. He is a graduate of Xavier University, former bank manager and credit analyst, and former registered investment representative of Fidelity Investments. Contact him at [email protected]