Today I focus on three high profile stocks whose performances cover the whole spectrum. But long term they all have tremendous upside potential. At one end, Beyond Meat (NASDAQ:BYND) stock is the most loved, up 200% year-to-date. At the other end, Nvidia (NASDAQ:NVDA) cannot catch a break lately. Somewhere off to the side is Uber (NYSE:UBER), which is in limbo while it recovers from a controversial botched IPO process.
These are three entirely different bullish thesis, but they will all need the help from the overall market action. Maybe only BYND can defy gravity in falling markets because of its particular situation.
So with that in mind, my view is positive on the macroeconomic conditions. We have full employment in the U.S. and companies are delivering impressive profit and loss statements. Worry warts complain about deteriorating conditions based on the recent reports, but to me, the government data is highly unreliable.
Government reports are notoriously inaccurate and subject to huge revisions. But even if data continues to worsen into the summer, we know that the Federal Reserve is ready to save the day. Just yesterday, Federal Chairman Jerome Powell reiterated the Fed’s stance on rates. It is done raising them and seven members want to cut rates twice this year.
Clearly, the Fed put is back in and investors see this as a large safety net. Usually this makes it possible to buy-the-dips. Sellers will need new headlines to cause corrections and even then, they are not likely able to sustain them. The default price action absent from headlines is up.
The next hurdle is the G20 meeting coming next week. After a contentious month, we learned recently that the U.S. and China have recommitted to a new round of negotiations.
Presidents Trump and Xi are also tentatively set to meet in Osaka. These discussions are very volatile, but for now, the bulls have the reins unless politicians decide to blow the talks up. So we are likely to meander up into the June 28 event.
But the point of today’s write up is to argue for the long-term outcomes of these great stocks and each for its own reason. But starting out on a good note is a plus and that’s why we evaluate the immediate outcome of markets. Moreover, if the meetings yield results, then the S&P 500 will make a new all-time high and I bet it would go much higher than most experts’ estimates. With all of that said, here’s a deeper look into why BYND, NVDA and UBER would live up to their huge potential in a rising market.
Beyond Meat (BYND)
BYND stock has become a full-fledged phenomenon. It is making headlines every day. The consensus in the media that it’s definitely overdone and that it’s only rising because of a short squeeze.
But what if it’s not just a technical blip?
The debate over humans being meat eaters or not is ancient. There are solid arguments on both sides. It comes down to the motivation of not eating meat. Some believe it’s healthier, but the more interesting reason is moral. Vegetarians avoid meat to be more humane to the animals. On that front, the incremental upside demand on BYND products will come from the massive group of people who currently eat meat but need a reason to stop. If BYND offers that option to do the right thing and come close in look, feel and taste, hoards will make the switch.
The point is that there is tremendous demand lurking and it’s a matter of how fast Beyond Meat can ramp up production. This is similar to the Cannabis thesis where the companies’ bottleneck is production to meet demand. That’s why pot stocks like Canopy Growth (NYSE:CGC) and Cronos (NASDQQ:CRON) are bid so high over the massive addressable market.
So from an investment perspective, this thesis suggests that the high demand for a replacement product for meat will make BYND stock grow into its current astronomic valuation. Plug your nose and buy it.
Before Beyond Meat stole the show, Uber was the stock that hogged the headlines. This is the poster child of the unicorns.
Critics say that it remained private for too long and that it lost too much money. There is a strong wave of detractors who even believe UBER will never be profitable. During its last earnings report, the CEO clearly stated otherwise.
The bullish thesis for UBER stock is simple. This is an app that will be on almost every smart phone on the planet. There is very little chance the company fails in its mission. Uber is already disrupting passenger, food and freight deliveries. Recently we also learned that it will launch airborne deliveries, so the sky is literally the limit.
Its most tangible and immediate leap higher in earnings will probably come from the Uber Freight division. Business accounts are usually harder to acquire, but the recurring benefits from them grow faster and they are stickier. This addresses the concerns that investors have from their battle with Lyft (NASDAQ:LYFT). Lyft shows no intention of following Uber anywhere else.
The bottom line for UBER stock is that we don’t even have a clue to what the future upside potential will include. So betting against it now is short-sighted.
I don’t have an exact target for Uber stock since above here, there is nothing but open air. But like Amazon (NASDAQ:AMZN) and Netflix (NASDAQ:NFLX), this is a stock that is disrupting multiple industries and it will be three digits sooner rather than later.
Unlike the first two stocks to buy on this list, Nvidia is not bloated. The long-term thesis was already established, but things went wrong as it took a massive detour in October 2018.
The start of its correction was that it had too much love on Wall Street. So now the prism is simple: It rose too fast to its highs of $290 and consensus was too directional. This caused the wave of hate to overshoot the other way and go too low. So admiration turned into disrespect.
Both positions are wrong. Eventually, Wall Street will go back to the middle-of-the-range opinion, which would bring NVDA stock closer to $230 per share. After all, NVDA is a premier technology company that will be a major supplier to all the right technological advancements from AI to self-driving cars.