In December 2021, the World Economic Forum reported on an investigation regarding the reasons for the decline in long-term investing. Some key reasons included the emergence of high-frequency machine trading, low fees & commissions, focus on short-term results and shorter company lifespans. It seems to be an era of stock trades rather than value investing.
In my personal view, the rewards for long-term investing remain exceptional. Massive wealth creation comes from holding quality stories with patience. At the same time, an active investor should not miss out on short-term trading opportunities.
There are dozens of examples every quarter where certain stocks have surged by 50% to 100%. Profits from successful stock trades can be allocated to long-term ideas. It also boosts overall portfolio returns to support the key objective of comfortably beating inflation — of course, beating index returns.
The focus of this column is on potential stock trades that can deliver at least 50% returns in Q2 2024. These returns are likely on industry or company-specific catalysts. I have avoided talking about purely speculative ideas and focused on fundamentals.
Kinross Gold (KGC)
Gold has trended higher by almost 13% year-to-date and trades at $2,320 an ounce. In comparison, Kinross Gold (NYSE:KGC), a quality gold miner, has trended higher by just 6%. Clearly, KGC stock has been a laggard, but that’s likely to change. At a forward price-earnings ratio of 20, the stock is attractively valued and poised for a big rally.
I must add that gold will likely remain in an uptrend, with potential rate cuts coming in the second half of 2024. Kinross is, therefore, positioned to benefit from higher realized prices. Last year, Kinross reported operating cash flow of $1.7 billion. Given the upside in gold, the company is on track to deliver an operating cash flow of more than $2 billion.
That will translate into two positives. First, KGC stock has an attractive dividend yield of 1.88%. I expect healthy dividend growth that’s likely to translate into stock re-rating. Further, Kinross ended 2023 with a liquidity buffer of $1.9 billion. Strong cash flows will add to the financial flexibility, and Kinross is positioned to make aggressive capital investments. Potential asset acquisitions might also be in the cards.
Cipher Mining (CIFR)
There is little doubt that Bitcoin (BTC-USD) will continue to dominate headlines in the coming quarters. That will either be because of the halving event or potential expansionary policies. Either way, the catalysts are in place for cryptocurrencies.
Among Bitcoin mining stocks, Cipher Mining (NASDAQ:CIFR) looks attractive after remaining sideways for year-to-date. CIFR stock trades at a forward price-earnings ratio of 21 and will likely go ballistic in the coming months.
In terms of expansion, Cipher ended February with a hash rate of 7.4 EH/s. Steady expansion is expected in the coming quarters, with capacity likely to increase to 25.1EH/s in the first half of 2025.
Therefore, the best part of growth is still to come, and Cipher has ample financial flexibility. As of February, the company reported a cash buffer of $69.4 million. Further, Cipher had 1,433 Bitcoin in its balance sheet which adds to the liquidity buffer. It’s, therefore, a matter of time before CIFR stock skyrockets.
Archer Aviation (ACHR)
Archer Aviation (NYSE:ACHR) is among the undervalued flying car stocks to buy for a strong reversal rally. From highs of $7.5 in August 2023, ACHR stock has corrected to current levels of $4.3. With the company on track for commercialization of eVTOL aircraft in 2025, the selling is overdone.
In the United States, Archer is constructing three conforming Midnight aircraft for certification and expects to complete 400 test flights in 2024. In the UAE, the company has joined hands with Falcon Aviation to develop a vertiport network in Dubai and Abu Dhabi. Commercialization in the U.S. and UAE is due in 2025, with Indian operations likely to commence in 2026.
It’s also likely that Archer will pursue entry into new geographies in the coming quarters. It’s worth noting that the company already has an order backlog of $3.5 billion. The backlog will likely swell and provide revenue visibility for 2025 and beyond. For now, successful flight testing and certification progress will serve as catalysts for ACHR stock trending higher from oversold levels.
On the date of publication, Faisal Humayun did not hold (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.
