Dear Trader,
Everyone's chasing the OpenAI announcement.
Andrew is doing the opposite.
He spent most of the week loading up on a chip name nobody talks about – one that's been left for dead while the rest of the AI trade ran.
And on the leave side, he's flagging a healthcare stock that's quietly making new 52-week lows while the broader market is making new highs.
Andrew's take below.
I have spent most of the week writing about this stock, and now I am adding to the Pit Report.
That stock is Qualcomm Inc (QCOM).
The base bullish case is that phones will deliver AI abundance. QCOM knows something about phones and chips.
This also might be one of the most undervalued companies around for a chip stock. I picked up more shares this week, and the stock is starting to pick up long-term option accumulation.
QCOM 1-Year Chart
A couple of important things about QCOM. It has increasing revenue, just not as fast as the Street wants. It is making record revenue nonetheless.
Part of the semiconductor vibe has been exponential growth, and 20 percent per year is just not enough to get investors excited. I tend to discount any OpenAI announcements since there usually is a buying opportunity right after. This is a great spot in one of the all-time growth companies.
This Stock Needs a Hospital
If the theme is healthcare, this is week two of a healthcare stock getting the call for a stock to avoid. It does appear that less government spending might be hitting healthcare companies. Several of these stocks are appearing on my NEAR 52 WEEK LOW scanners.
Stryker Corp (SYK) is on its way to making a new 52-week low. Stocks in the last year have done well, but this healthcare name is slowing down quite a bit with multiple compression. That just means investors are paying less for the current earnings levels.
SYK 1-Year Chart
Revenues are declining in SYK, and for a higher multiple Med Tech stock, that is not a good thing. Federal payments are slowing down for Affordable Care Act, so that could mean less money for hospitals and spending. Making yearly lows at all-time market highs is not a good look.
All right, everybody have a good day.
AG
So one chip name Andrew thinks the market is sleeping on, and one healthcare name he says is heading in the wrong direction at the wrong time.
The real question: what will the team pick on Monday?
Join the Ticker Highlight Show Premium before Monday at 10:30 AM ET to find out.
See you there,
Charles Delvalle
Managing Editor, Option Pit