Yo Pit Crazies,
I got my 3% off the bottom.
The SPDR S&P 500 ETF Trust (SPY) dropped 1.5% on me first. Then traders got caught short into the weekend, fearing the worst in the Persian Gulf after the Houthis fired on Riyadh.
The worst hasn't shown up as of this writing, SPY ripped 3%, and my "Perfect Storm” trade sprang to life.
Now I've got two names for you.
The first came off Sibyl, my idea-flow tool that flags when a name inside one of my themes hits a good price. I keep the themes in my head and Sibyl tells me when a stock finally deserves a trade. Most of that list still needs time, but this one's getting close.
The second came off my bottom-of-the-basement scanner, and that's a list no stock wants to make.
Let’s get into it…
The CEO Just Put $494k Here
AI stocks still get the headlines, but what are all those chip designers and electricians drinking on the job?
They need a boost!
My family drinks these crazy energy drinks when we go snowboarding, so I wasn't too surprised when beverage maker Celsius Holdings (CELH) popped up on the Sibyl list.
Right now, traders are buying long-term Celsius calls (bets that pay off if the stock climbs over the coming months). The last earnings cycle didn't start well.
On Aug. 6th, Celsius reported revenue of $818 million, up 11% from a year ago, but Wall Street wanted about $873 million and the stock fell as much as 18% before the open.
Look at the chart below. The earnings-day candle closed red, which is a no-go for me, but the stock came back to close higher the following day. Celsius trades around $28 as I write this, still under where it sat before the report.
1-Year CELH chart
Revenue keeps growing. Its Alani Nu brand passed $1 billion in retail sales in the first half of the year, and the company bought back about $100 million of its own stock last quarter. Then on Sept. 10th, CEO John Fieldly bought 18k shares for roughly $494k. And a director picked up another $1 million worth in the high $27s.
I get that super-pumped drinks don't come with a moat. But the people who run the place are buying with their own cash, and that tells me Celsius is a bargain worth snatching up.
Paying 3.5% in a 5% World
I'm sitting here Monday watching the chip stocks take off as they power AI.
AMD crossed a $1 trillion market cap and the semiconductor index jumped more than 3%. The companies that make the actual electricity keep going straight down.
Color me shocked.
How are the big power companies trading at their lows of the year? The funny thing is, I just noticed most of the Mag 7 sat unchanged until today. The easy hot money that loved power stocks has fizzled to a trickle, and right now that hot money hates Southern Co. (SO).
Southern is a large, diversified power generator in the South. Earnings are growing, just not fast enough for the hot money crowd.
Rates explain a lot of it.
The Fed hiked last week, the 10-year Treasury yield pushed back to 5%, and Southern pays about 3.5%. Why take stock risk for 3.5% when Uncle Sam pays 5?
My bottom-of-the-basement scanner (it looks for stocks within 2% of their 52-week lows) has been scary good lately. Several power names made the list and they're still at the bottom.
Fair Isaac (FICO) has been a bottom dweller for a month.
1 Year SO
SO trades around $85.60, a couple of bucks above its 52-week low of $83.80 and about 15% off its high near $101. It's down for the year after record demand for electricity.
Until I see the Ceres 10% bounce, I'm staying away.
Southern isn't a bad company by any means, but I hate it right now.
So which one does the crew pick for Monday's Ticker Highlight Show? Tap this link to join at whatever rate you want and get Monday's pick as soon as it hits.
Hopefully this was helpful,
Andrew Giovinazzi