February 4, 2020

Stocks: TSLA, GOOGL, MU, INTC

Macro: SPY, EWY

Michael Kramer and the clients of Mott Capital own GOOGL and TSLA in the Thematic Growth Portfolio

S&P 500 (SPY) 
The good news is that stocks are rising this morning, and are rising above the downtrend that was noted yesterday based on the S&P 500 future. It means that the index’s next significant level of resistance comes around 3,296.

South Korea 

The rally isn’t just here in the US, with markets globally rallying. South Korea has seen as significant snap back rally in recent days.

Perhaps it is because of the better manufacturing data here in the US, or maybe it on hopes of more China Stimulus. It seems like some of that fear trade we were seeing are certainly easing.

Tesla (TSLA) 

Tesla shares are rising yet again. I remember when Tesla went from $35 to $200. I remember it very well because the place I was working for at the time was buying the stock as it was rising, and I was trying to buy it at the time for them. It prompts me to compare that experience to today’s recent rise. The jump then based on the premise that Tesla was going from a concept to a company that was selling its products. I think what you are seeing here today is something similar, as the company enters its next significant leg of growth.

The chart below shows that just becuse the stock is having a big run higher, doesn’t mean it has to come back down. In fact, if history repeats itself the stock is likely to stablize in the not to distant future.

Remember, two more quarters of earnings, and this is a stock that can very well enter the S&P 500. Don’t think investors aren’t thinking about that, and all the index funds that will need to get in.

Not only that, but if these earnings and revenue estiamtes turn out to be true, you could argue that the stock is even cheap trading at 38 times 2022 earnings estimates of $24 per share.

(Data from Ycharts)

Alphabet (GOOGL)

Alphabet is falling after results, but there was nothing not to like about the results, other than the fact that stock had a big move higher over the last month. A break of support around $1430 sends the stock lower to $1380. Here is an article I wrote for Forbes – Alphabet’s Post-Earnings Drop Appears To Be An Overreaction

Micron (MU) 

Micron stock is rising today and is approaching resistance at $55.65, and rise above that price pushes shares back to $58.66.

Intel (INTC)

Intel is rising again today, and remember we were seeing bullish options betting. Premium content – Intel Buyers Back?

Have a good one

-Mike

Mott Capital Management, LLC is a registered investment adviser. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risk and unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein. Upon request, the advisor will provide a list of all recommendations made during the past twelve months. Past performance is not indicative of future results.