Market review from UTEX – week 45

The major U.S. indices closed in the negative, losing just over 1% in weight.

Super Micro Computer collapsed by 45% on the news that its auditing firm Ernst & Young has withdrawn from its relationship with the company. Estee Lauder (-23%), Check Point Software (-17%), Advanced Micro Devices (-9%), and Eli Lilly (-8%) reported weakly.

Reddit (+38%), Paycom Software (+27%), and Roblox (+22%) shot up. Another strong report was shown by Carvana (+13%), an online store of used cars. Its stock rose by 780% over the year! The peak of the reporting season has passed.

Bitcoin tested the $73,000 level, but failed to break through the all-time highs and rolled back to $68,000, apparently in anticipation of the US election results.

A pivotal week lies ahead. The US presidential election will be held on Tuesday. According to various polls, Kamala Harris and Donald Trump are running virtually neck and neck. On Thursday, the Fed will announce its rate decision for the penultimate time this year. Markets expect another 25 basis point cut.

Top 5 stocks to trade in the coming days

🟡 Palantir Technologies (PLTR). Reported Nov. 4 after the close. The last report with revenue of $678 million (+27% y/y) beat all forecasts. For this quarter, analysts expect $699M in revenue (+25% y/y) as the company advances AI in the defense sector. On a negative note, the New York City pension fund, the third largest in the U.S., cut its position in PLTR. 

The stock is up 180% for the year and 74% for the quarter. Not a bad investment for a long-term portfolio, but better prices would be welcome. If there is a pullback or a gap down, you can try to buy. In February, we suggested buying PLTR above $16. Since then, the stock has risen 2.5 times.

🔴 Arm Holdings (ARM). Reported Nov. 4 after the close. With its power-efficient chips, Arm holds a market share of more than 90% among mobile devices. However, on Oct. 31, the company received a downgrade from Bernstein to Underweight and a $100 target (now $141) due to AI revenue concerns. There will likely be strong moves intraday. Exclusively for day traders with experience.

🟡 DigitalOcean (DOCN). Reported on Nov. 4 before the open. Like many tech companies that went public in 2021, the stock lost a lot of value over 2022-2023. Since November 2023 there has been a reversal, the stock has doubled in a year, and all recent reports have been better than expected. Given the company's small capitalization ($4 billion), there is enough potential. Intraday will be difficult, mid-term idea.

🟡 Lumen Technologies (LUMN). Report Nov. 5 after the close. Since July 2024, the telecom company's stock has risen from $1 to $7 amid rising demand for high-performance fiber optics due to the AI boom. But Kerrisdale Capital thinks AI won't save debt-overburdened Lumen and takes a short position. For those who like to trade on reports of inexpensive stocks.

🟡 iRobot (IRBT). Reported on Nov. 5 after the close. The company makes robotic vacuum cleaners and window cleaners like the Roomba iRobot. Amazon wanted to buy iRobot in 2022, valuing the company at $1.7 billion, but the deal was canceled in early 2024 due to antimonopoly laws. Shares fell from $40 to $7. Gross margins have been declining in recent years. Shares rose 16% last week ahead of the report. The bright outlook for iRobot is hard to believe, but expect surprises.

Successful trades!