Ticker Reports for October 5th
Lock In Your Profits: These 3 Stocks Are Set to Deliver
The stock market can trick old buyers into selling their profitable holdings at the first sign of a dip or slowdown. This effect is further amplified for new buyers who are anxious to know whether their ideas were right or wrong. Often, their profit and loss statements give them the answer. As the S&P 500 trades at the lower end of its recent bracket, these questions could keep investors up at night.
However, the answer doesn’t have to be that hard. Some stocks could use trimming as they’ve run their course, but some show the potential to keep moving higher. Driven from both fundamental – and technical – reasons, there are three stocks today that deserve a second look from investors going into the next quarter, as they propose more upside potential.
Stocks like HSBC Holdings Inc. (NYSE: HSBC) are making the list of potential runners, a financial sector play riding off of China’s new stimulus. Then, investors can consider the effects today’s economy will have on shares of Uber Technologies Inc. (NYSE: UBER) as more people need to supplement their income, and car repossessions drive the need for Uber. Finally, a precious metal super cycle is not done bringing Hecla Mining (NYSE: HL) stock to its full potential today.
HSBC: Asia’s Banking Giant Has More Room to Run Higher
Regional banks in China are considered safe enough for some investors. Still, the majority would be under the belief that most of those banks are too risky and illiquid to invest in. This is where HSBC comes into play; its international reach and $167 billion in market capitalization make it a safer choice for investors to consider.
Now that the stock trades at its 52-week high, some may wonder whether it has what it takes to push another leg higher. According to analysts at DBS Bank, HSBC stock earned a Strong Buy rating, though there aren't too many price targets to speak of.
Investors can use the stock's $1.98 dividend payout as a gauge, however, which translates into an annual yield of 4.38% today. High dividend yields are not synonymous with expensive stocks, which means HSBC could have more room to move higher based on this, but there's more.
Bears know that China's new stimulus and interest rate cuts will have a positive effect on all of Asia's economies, so HSBC is at the forefront of the profit and bull center. Because of this, HSBC stock's short interest declined by 6.1% in the past month, showing signs of bearish capitulation.
Finally, to drive the bank's growth, Wall Street analysts now forecast up to 19.9% earnings per share (EPS) growth forecasts, above most other names in the banking industry, all because of its exposure to China and the rest of Asia.
Uber Stock Still Holds Double-Digit Upside Potential
Even though the stock now trades at 92% of its 52-week high, the odds of making a new high before the year is over become slim, at least for those scared of buying near a top. Despite this trend, analysts at Citigroup decided to reiterate their Buy target on Uber stock, with a $98 share price target to go with it.
To prove these analysts right, Uber stock would need to rally by as much as 34.3% from where it trades today and definitely set up to hit a new annual high to put those buying the top fears to rest. To drive this double-digit upside, investors can lean on Wall Street’s EPS growth forecasts for $0.60 a share next year.
Compared to today’s $0.47 EPS, this represents a growth rate of 28% over the next 12 months, justifying the price targets set so far. The bullish sentiment doesn’t stop there, however, as some institutional capital also recently made its way into the stock.
Leading the way in institutional buying were those from the Czech National Bank, who pushed their Uber stock holdings higher by 7.5% as of October 2024, bringing their net investment up to $32.2 million today. Investors can also consider this factor for their potential buy decision into the next run higher.
Silver's Catch-Up to Gold Fuels Hecla Mining Stock's Rally to a New High
As gold prices reached a new all-time high, a potential arbitrage opportunity may be found in silver, as the precious metal (historically correlated to gold) has yet to catch up in price action. This is where Hecla Mining stock comes into play for this catch-up, meaning it could reach a new high despite trading at 92% of its 52-week high level.
This could be one reason why analysts at HC Wainwright landed on a Buy target for the stock along with a $10.25 price target, calling for a net upside of up to 55.3% from today’s already high price. That’s also a reason to justify those at Van Eck Associates boosting their holdings in Hecla Mining stock by 6.8% over the past two quarters.
The new addition brought the group’s net investment to $291 million today, or 9.8% ownership in the company. Being a $4.2 billion company also gives Hecla Mining the benefit of growing more aggressively than other comparable peers, leaving investors with the potential to ride another wave higher.
Sell NVDA Now?
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Is It Time to Consider Rotating Back into Semiconductor Stocks?
The semiconductor sector, long a leader in market performance, has faced headwinds in recent months. After an impressive run last year and through much of 2024, the industry took a sharp hit in July as expectations for a Federal Reserve rate cut grew, and the now infamous Japan carry trade unwind played out. This led to investors rotating into more defensive areas of the market.
The popular VanEck Semiconductor ETF (NASDAQ: SMH), a benchmark for the sector, plunged from its all-time high of over $280, falling toward crucial support at $200 in just one month. This abrupt selloff ignited fears of deeper losses and prompted a shift into safer sectors like Utilities and Industrials.
Yet fast forward two months, and the picture looks brighter for semiconductors. The SMH ETF has stabilized above critical rising moving averages and pared losses, now sitting just 13.6% below its peak. The ETF has formed a bullish technical setup, posting two consecutive higher lows and consolidating around the $250 level—close to a potential breakout zone. This turnaround raises an important question: could rotation back into the semiconductor sector be starting?
To answer that, let’s look at the sector’s top holdings, which account for much of SMH's weight and drive the sector's performance. NVIDIA, Taiwan Semiconductor Manufacturing, and Broadcom together comprise nearly 43% of the ETF’s total weighting.
Let's examine these key players' recent momentum and outlook to better assess whether the semiconductor sector is again positioned for upside.
NVIDIA Powers AI Revolution, Poised for Strong Growth
NVIDIA (NASDAQ: NVDA), the ETF’s largest holding, has been a standout performer and is currently consolidating after a strong rebound from its August lows. From a technical perspective, the stock is in a bullish pattern and hovers near a critical breakout level above $125.
Analysts remain overwhelmingly positive on NVIDIA, with a consensus price target suggesting a 16% upside from current levels. The stock is rated as a Moderate Buy by analysts, with 39 out of 43 analysts recommending it as a Buy. Notably, Rosenblatt analyst Hans Mosesmann holds a Street-high price target of $200, representing a 71% upside. Mosesmann is particularly bullish on NVIDIA's software, which he believes will significantly bolster the company’s sales mix and valuation over the next decade.
NVIDIA’s dominance in powering artificial intelligence (AI) models like ChatGPT is well-known. Still, upcoming products like the highly anticipated Blackwell AI chip are generating massive demand, according to CEO Jensen Huang.
TSM Set to Benefit From Rising Chip Demand and AI Growth
Taiwan Semiconductor Manufacturing (NYSE: TSM), the second-largest holding in SMH, is in a similar position to NVIDIA, consolidating in an uptrend and close to a potential breakout.
The stock popped over 2% recently as momentum continues to shift upward, with analysts forecasting an 11.4% upside from current levels.
TSM, as the primary chip manufacturer for NVIDIA, stands to benefit from the overwhelming demand for NVIDIA’s Blackwell chip. Additionally, the recent fundraising by OpenAI to boost its computing capacity will likely translate into more business for TSM, as OpenAI is expected to purchase chips from NVIDIA, and TSM will handle production.
Broadcom Joins Peers in Uptrend, Poised for Further Gains
Broadcom (NASDAQ: AVGO), SMH’s third-largest holding, mirrors the bullish trends seen in NVDA and TSM. The stock is showing signs of consolidation within a new uptrend, and analysts are forecasting a 10% upside.
Broadcom remains well-positioned as a critical player in the semiconductor supply chain, with significant exposure to both cloud computing and AI growth themes.
Like its peers, Broadcom enjoys strong analyst support, with a firm Buy rating and continued optimism around its future prospects.
Is the Rotation Back On?
The semiconductor sector appears to be on the verge of a potential comeback, with the SMH ETF stabilizing and key players like NVIDIA, TSM, and Broadcom positioned for further upside. Bullish technical setups and strong analyst sentiment for these stocks suggest that the sector could be ready to regain its leadership position in the market.
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Chevron-Hess Merger Approved: Should You Buy Before Earnings?
With so many news items clamoring for investors’ attention, investors may not have noticed that the U.S. Federal Trade Commission (FTC) approved the merger between Chevron Corporation (NYSE: CVX) and Hess Corp. (NYSE: HES). The approval came with the single stipulation that former Hess chief executive officer (CEO) would not join Chevron’s board of directors.
The approval was widely expected but has been an additional headwind for Chevron shareholders. Since the announcement, the stock is up nearly 4% and is now trading positive in 2024. That’s still a far cry from rival Exxon Mobil Corp. (NYSE: XOM) which is up 21.9% for the year and is near its 52-week high, which would also be its all-time high.
That may make CVX stock look quite attractive to value-hunting investors prior to the company’s earnings report on November 1, 2024. Here are some things for investors to consider.
Chevron-Hess Merger Moves Forward, But Delays Persist
The FTC approval is a key step in finalizing the merger between the two oil giants, which was approved by Hess shareholders in May. But one hurdle remains. Chevron and Exxon Mobil are in arbitration regarding pre-emptive rights with Hess’ Stabroek Block assets in Guyana.
Chevron is still confident that arbitrators will rule in the company’s favor. And when it is approved, Chevron will have increased influence in the oil markets. However, both sides acknowledge that the merger won’t be finalized for another 12 months.
It's Still a Challenging Year for Oil Stocks
On a broad basis, oil prices are still a reflection of supply and demand. That is, the market is well supplied, and there appears to be only moderate demand. It’s a contradiction to the consensus belief that the consumer is healthy.
That's why investors in energy stocks were optimistic to start the year. The belief at the time was that the Federal Reserve would have cut interest rates several times by now. In theory, the cuts would stimulate demand and raise the price of oil. Instead, there’s been just one rate cut, albeit of 50 basis points, and it’s too early to tell if it will stimulate demand.
Oil is also not following the script regarding geopolitical tensions. Despite much of the Middle East being on war footing, the price of oil has not spiked as it has at other times. One reason for that is that the OPEC+ nations have decided to lift their production freeze beginning in December.
The Reasons to Buy CVX Stock Haven’t Changed
Does the merger approval signal the all-clear for investors to buy CVX stock? Yes, in the fact that it probably sets a higher floor. Analysts give CVX stock about an 18% upside with a price target of $179.
However, many analysts have been lowering their price targets on Chevron over the past 60 days. That’s likely due to concerns about oil demand, which is typical of the industry's cyclical nature.
However, there are reasons why Chevron is one of the most widely held dividend stocks. For starters, it is one of the largest integrated oil companies in the world. Even without the Hess assets, the company is well positioned to meet the world’s demand for oil, which is always cyclical and will eventually recover.
In fact, the International Energy Agency (IEA) predicts that oil and natural gas will remain vital to the world’s energy needs through at least 2050 and likely beyond. Nevertheless, Chevron is also working purposefully to carve out a position in the renewable energy space.
And Chevron is a fundamentally sound company. Its rock-solid balance sheet includes a debt-to-equity ratio of just 0.13. This gives the company the firepower to take on leverage in downtimes without compromising its commitment to shareholders.
Proof of that commitment is found in the company’s commitment to its dividend. Chevron has increased its dividend for 37 consecutive years. The dividend has a current yield of 4.37% and has been growing at an average pace in the last three years that’s more than double the current rate of inflation.
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