Tesla Inc. put options in near-term expiry periods are still at high premium levels, even after TSLA stock has rebounded. This is ideal for existing shareholders to sell short to gain extra income.
Scratch the surface of AI and data centers, and underneath you'll find a massive energy hog. Electricity consumption at U.S. data centers alone is poised to triple from 2022 levels, and that may even be too conservative of an estimate. All of this is good news for utility stocks, and one name in particular.
This morning a "Potential Dividend Run Alert" went out for Skyworks Solutions Inc (NASD: SWKS), at our DividendChannel.com Dividend Alerts service (a free email alerts feature). Let's look at the situation in greater detail, shall we?
First of all, what is a "Dividend Run" anyw
Chinese luxury electric vehicle maker Nio (NYSE:NIO) delivered 15,620 vehicles in April, up a solid 134% versus a year ago. Sales were driven in part by the recent launch of the company’s 2024 series of vehicles, including updated versions of the ES8, ES6, EC7, EC6, and ET5
CVS Health (NYSE: CVS) recently reported its Q1 results, with revenues and earnings missing our estimates. The company reported revenue of $88.4 billion and adjusted earnings of $1.31 per share, much lower than our estimates of $90 billion and $1.74, respectively. Not
We’ve received some mixed messages from the market recently. The
S&P 500 finished April with a 4% loss, its first monthly loss after five straight months of gains. But the month of May has started with gains in trading, and the earnings season for 1Q24 has turned out better than expected.
In addition, the Federal Reserve has indicated that it will be keeping interest rates ‘higher for longer,’ while inflation remains stubborn. A rate cut this year is still considered possible, but not likely until the fourth quarter of the year.
Watching the situation unfold, Bank of America’s head of U.S. equity and quantitative strategy, Savita Subramanian, sees reason for optimism. “I think we’re going to a soft landing, with a reasonable market environment, maybe better growth ahead than what we’re used to, higher rates, and a little bit higher inflation,” she said.
Subramanian’s outlook gives us a template for gains; she is sticking to her S&P target of 5,400 by year’s end, or a gain of 5.5% from current levels.
Embracing her bullish sentiment, Bank of America analysts are urging investors to seize opportunities, pinpointing two specific stocks. After running both tickers through
TipRanks’ database, it’s clear the rest of the Street is in agreement, with each earning a ‘Strong Buy’ consensus rating. Let’s take a closer look.
KKR & Co.
(
KKR
)
We’ll start in the world of global finance and asset management, with KKR & Company. KKR is an investment firm and asset manager that works with clients around the world, moving third-party capital into the capital markets. The company makes capital resources available to enterprise clients, working with them on debt and equity investments, public underwriting of new market deals, and other financial transactions. KKR puts long-term capital to work and creates a sound base of returns for its own investors and stockholders.
Some numbers will show the scale of KKR’s business. As of March 31, the company had $578 billion in total assets under management, a figure that included approximately $183 billion in private equity investments, $260 billion in credit, $61 billion in infrastructure, and $71 billion in real estate. The total AUM was up 13% year-over-year and included $31 billion in new capital raised during 1Q24.
Also in the first quarter, KKR reported solid earnings. The company’s adjusted net income came to $864 million, or $0.97 per share – an EPS figure that was 2 cents better than expected and was up 20% year-over-year. In another important metric, the fee-related earnings, KKR generated $669 million, or $0.75 per share, for a 22% year-over-year gain.
This stock falls under Craig Siegenthaler’s coverage for Bank of America, and the 5-star analyst is impressed by the company’s overall position and outlook for the future.
He writes, “We reiterate our Buy rating as we are bullish on KKR’s fundraising cycle, its income statement’s asymmetrical upside into a recovery and the potential for the S&P 500 Index add. KKR’s business is highly diversified with robust scaling opportunities in multiple verticals (infra, real estate, credit), broadly strong investment performance, core competency in product innovation and a best-in-class Asia privates franchise. Additionally, KKR’s business model is the most offensive in the group, which caused its EPS revisions to underperform in the 2022 bear market. However, we believe this will lead to a significant profit growth accelerator as markets continue to recover.”
That Buy rating is accompanied by a $134 price objective that points toward a one-year upside potential of 41%. (To watch Siegenthaler’s track record,
click here)
The bulls are out in force for this stock, as is clear from the 12 analyst reviews – including 11 Buys to 1 Hold – that support the Strong Buy consensus rating. The shares are trading for $95.01, and their $116.50 average price target implies a 22.5% gain for the coming year. (See
KKR stock forecast
)
Avis Budget Group
(
CAR
)
From global finance we’ll switch over to the car rental business and look at Avis Budget Group. This company is one of the world’s largest auto rental firms, and operates through multiple brands with a worldwide reach. Avis Budget’s brands include its eponymous car rental subsidiaries, as well as Payless Car Rental and Zipcar. Together, these operations form a network with activities in 180 countries. Avis Budget has over 24,000 employees working at more than 10,000 locations. The company has a rental fleet of ~655,000 vehicles, and realized $12 billion in revenue during the calendar year 2023.
While this company has a strong position in the car rental niche, it has also seen difficult times this year. The used car market is facing headwinds from oversupply and high interest rates. This hit Avis Budget in the pocketbook recently when the company sold off a record number of used vehicles.
In the company’s most recent quarterly financial results, for 1Q24, the company showed a 5% increase in rental days compared to the same quarter of the previous year. This fed into the $2.6 billion in quarterly revenue, which beat the forecast by $80 million. At the bottom line, Avis Budget saw a net EPS loss of $3.21, 33 cents per share lower than expectations.
Despite the earnings loss, Bank of America’s John Babcock remains upbeat on the car rental agency, explaining why, he writes,
“We reiterate our Buy rating on CAR. The company has historically been the stronger and better performing public US rental car company. We think the stock is trading at an attractive valuation and risks associated with higher fleet costs appear to be in the stock. Further, CAR should see an earnings recovery in 2025 supported by solid volume growth, relatively stable pricing and its productivity and efficiency efforts. Additionally, it could gain share from HTZ, which may be challenged by its liquidity position.”
Babcock’s Buy rating on the stock is
complemented by a $140 price objective that suggests a 21% one-year upside potential. (To watch Babcock’s track record,
click here)
There are 8 recent analyst reviews on CAR shares, and they break down to 6 Buys and 2 Holds for a Strong Buy consensus rating. The stock has a $169.5 average price target, implying a 46.5% upside from the current share price of $115.6. (See
CAR stock forecast
)
To find good ideas for stocks trading at attractive valuations, visit TipRanks’
Best Stocks to Buy, a tool that unites all of TipRanks’ equity insights.
Disclaimer: The opinions expressed in this article are solely those of the featured analysts. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
Snowflake (
NYSE:SNOW
) stock is fresh off a nasty snowfall following its recent quarterly results that coincided with a surprising CEO change and
disappointing guidance. Since its 52-week peak of $237.72 per share, SNOW stock has shed about 33% of its value. With plenty of AI innovations recently unveiled (with more likely to come), shares of the severely underrated artificial intelligence (AI) stock now seem way too oversold.
Undoubtedly, the last Snowflake quarter had a lot for investors to digest, perhaps too much such that they got a bad bout of indigestion. The softer guidance warranted a bit of punishment, especially given how lofty the multiple had become going into the quarter. That said, I think many investors are dismissing the capabilities of its new CEO, Sridhar Ramaswamy.
In my
prior piece covering Snowflake post-earnings, I urged investors to give Snowflake’s new CEO the benefit of the doubt, given what he brings to the table in expertise, specifically on AI during his time at Alphabet’s (
NASDAQ:GOOGL
) Google and Neeva.
Given a chance, I’d say that Snowflake’s new leader, a scientist and visionary who knows AI probably better than most other high-level executives, may prove a worthy successor as Snowflake repositions its skis for the era of generative AI. With new AI products unveiled and freshly lowered expectations, I’m not hesitant to stay bullish on SNOW stock while it’s going for less than $160 per share.
Snowflake’s Arctic AI Model Could be a Huge Deal for the Enterprise
With the recent launch of Snowflake’s new open-source enterprise large language model (LLM) Arctic, which boasts an impressive 480 billion parameters, Snowflake has officially boarded the LLM train. It will also be interesting to see how the technology “optimized for complex enterprise workloads” will translate into growth over the next few years.
Of course, it’s going to take some time before Snowflake’s latest AI innovations propel its stock higher again. After the latest sell-off in SNOW shares, however, expectations seem modest enough that a surprising beat may be in the cards in the near future. Additionally, I find the Arctic news to have been rather muted, especially given the potential advantages it may possess over other enterprise-focused LLMs on the market.
Indeed, AI model launches and announcements don’t seem as exciting in 2024 as in 2023. Some may view LLMs as becoming commoditized, with new chatbots seemingly being released regularly. From OpenAI to Anthropic to the Magnificent Seven companies, it seems every firm has a hand in the AI pie right now.
As the number of open-source and proprietary AI models grows over time, we may very well be witnessing a serious uptick in competition. That said, I don’t view LLMs as getting commoditized, not when there are so many ways that one model can differentiate itself from others. At the end of the day, it probably won’t matter how many offerings there will be; the herd will flock to the very best model for their needs, and it’s more than just about power or the number of parameters.
More efficient and custom-tailored AI models may be superior to raw power. And on that front, I view Snowflake as having the potential to make noise in AI. Reportedly, Snowflake’s Arctic is more cost-efficient to train than the competition, requiring one-eighth of the cost versus comparable rivals. That’s some serious efficiency that many investors may be sleeping on.
It’s More About AI Monetization in These Early Stages
After less than two years since ChatGPT took the world by storm, many of us are probably exhausted from hearing about the specs of the latest LLMs (parameters, benchmarks, etc.). We want to know how these innovations can make money and power growth. Until the air is clear on how these new models plan to earn money (some financial estimates would be nice), it may be tougher to raise the needle based on AI model launches alone.
Regardless, it may be a mistake to discount the growth potential of new LLMs like Arctic, given the edge it sports over the competition.
In the next innings of the AI boom, I’d expect efficiency and personalization to be the biggest differentiating factors between AI combatants. At this juncture, Snowflake seems to have both metrics down as it aims to empower and enable enterprise customers to harness the power of their data.
It’s not just the Arctic LLM that could help position Snowflake for AI upside. The company has no shortage of AI features to make users’ lives easier. From its Cortex service (for managing and improving software development processes) to Document AI (for transforming unstructured document data into structured data), it’s clear Snowflake can build a moat around its ecosystem by going all-in on AI.
Is SNOW Stock a Buy, According to Analysts?
On TipRanks, SNOW stock comes in as a Moderate Buy. Out of 37 analyst ratings, there are 24 Buys, 11 Holds, and two Sell recommendations. The
average SNOW stock price target is $211.26, implying upside potential of 32.6%. Analyst price targets range from a low of $125.00 per share to a high of $260.00 per share.
The Bottom Line on SNOW Stock
Indeed, there’s a great deal of uncertainty about just how much bacon a new AI can pull in over the course of many years. And for a firm like Snowflake, which uses a volatile usage-based revenue recognition model, I’d argue that it’s far better to err on the side of caution when it comes to estimates, especially in the face of great economic uncertainty.
With a robust and growing AI presence (Arctic and other AI innovations) and an “AI man” now running the show, I think Snowflake’s best days (at least for a public company) are still ahead of it.
Disclosure
As U.S. passes the bill to ban uranium import from Russia, U.S. based uranium companies are sure to enjoy the increased demand. Here are 2 stocks with upside according to analysts.