- Reddit stocks are becoming much more sensible as retail investors continue to react intelligently to tightening fiscal policy.
- Tesla (TSLA): Tesla’s distractions and other current issues won’t matter in a few months based on historical precedent.
- Apple (AAPL): The tech giant is a victim of its own success but that shouldn’t stop investors.
- Walt Disney (DIS): Political headwinds have knocked it down, but fundamentals should cause it to rebound fast.
Investors who have come to expect Reddit stock lists to contain only highly risky investments may be a bit surprised. That’s because those lists, which track Reddit stocks by their popularity, are becoming increasingly sound.
One such list, APE Wisdom.io, reflects that idea. In fact, the most popular stock on that list is an ETF. ETFs are about as risk-averse as stock market investments come. It wasn’t that long ago that Reddit stock lists were much riskier. Today though, retail investors have become much more risk-averse. In short, these lists prove that retail investors are making better decisions.
Frankly, investors have to be. With the Federal Reserve announcing a one-half percent increase in interest rates, the market is quickly changing. Monetary policies are changing and that means the markets are changing. Tech plays are particularly intriguing given that they again shed value soon after the Fed news.
So let’s get into it and see where the quick gains may come in the month of May.
Reddit Stocks: Tesla (TSLA)
Tesla (NASDAQ:TSLA) is one of those tech stocks that suffered in the wake of the Fed’s May 4th decision to raise interest rates by half a percent. The market immediately cheered the decision because Jerome Powell indicated that the Fed was not considering a 0.75% interest rate hike. A day later though, the markets did come back down.
So why does this benefit Tesla investors in May? The answer is that Tesla is probably going to be a buying opportunity this month. That may seem to be counterintuitive given that company CEO Elon Musk is currently focusing on his purchase of Twitter (NYSE:TWTR) among many other things. By the way, my colleague Tim Biggam recently wrote an article on those distractions, you can find it here. He makes compelling arguments and I can certainly see if investors would be dissuaded by Tesla’s current problems.
However, investors who take a longer-term approach could likely find that May is a great time to establish a position in Tesla. TSLA stock is going to remain volatile throughout this year. You can guarantee that. But Tesla is also going to undertake a stock split which should occur on August 2nd during the firm’s annual shareholder meeting.
Tesla last undertook a stock split back in 2020. The result was that its shares increased by about 60% in the run-up to the decision. The investment thesis here is pretty simple: Tesla isn’t going anywhere and shares purchased now are going to be worth more when the split occurs.
Tech stocks are down. That means that any investment in Apple (NASDAQ:AAPL) in May will be down for similar reasons to a Tesla investment. Actually, that’s not particularly accurate, Apple has far fewer problems than Tesla currently does. Apple stock is down because it’s a tech stock, one, and two because it has performed so well that Wall Street worries it can’t continue at such a torrid pace.
But here’s the good news, even after Apple tamped down expectations for the June quarter, influential analysts remained very positive about its prospects. Morgan Stanley (NYSE:MS) analyst Katy Huberty maintained her target price of $195 and an overweight position following Apple’s cautious comments moving forward.
Apple is proving that it can navigate through very tough supply chains. Case in point, the company’s iPhone sales reached $50.6 billion most recently, eclipsing expectations of $48.4 billion. So an optimistic view would be that apple again deliver positive surprises following the somewhat less enthusiastic expectations for the June quarter.
And remember Morgan Stanley analyst Katy Huberty isn’t the only analyst who believes that Apple should trade around $190. That’s very close to the consensus analyst target price of $189.03.
Reddit Stocks: Walt Disney (DIS)
Forget for a moment, Disney’s (NYSE:DIS)issues with Reedy Creek and special taxation laws. Focus instead on the company’s trajectory as some sense of normalcy returns. Focus also on the fact that Disney is improving fundamentally.
In particular, look at the company’s parks and experiences business along with Disney+. When the company announced its quarter-one earlier this year, it proved that it is in a continued turnaround. The Disney parks division recorded $7.2 billion in revenues in the quarter, up from $3.6 billion a year earlier. That isn’t that big of a surprise given that the nation is basically fully open now. Regardless, it is strong news for Disney. But it’s reasonable to expect that the company will see continued improvement when second-quarter earnings are released on May 11th.
Combine that with the performance of Disney+ and you can see why Disney has a lot of potential to quickly rebound. Experts at Yahoo! Finance anticipate that Disney will see continued improvement in sales throughout 2022. Those sales are expected to increase by 35.6% this year alone. Combine that with DIS stock’s higher-than-average beta, which measure’s volatility, and you can see why share prices have potential to move quickly in the month of May.
On the date of publication, Alex Sirois did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.