5 Stocks to Buy Immediately, According to AI


Stocks to buy - 5 Stocks to Buy Immediately, According to AI

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In the late 1970s, Louis Navellier – then a college student, now a senior analyst at InvestorPlace – accidentally beat the market. By running financial data through a Wells Fargo mainframe computer (an enormous privilege at the time!), he came across a model that beat the S&P 500 by a considerable margin.

Since then, he’s developed his system into Portfolio Grader, a quantitative stock-picking system that has trounced the market. It’s found picks like Oracle (NYSE:ORCL) at $6… Intel (NASDAQ:INTC) at under $1…

In fact, every dollar invested in Louis’s A-graded stocks in 1998 would have risen fiftyfold by 2024.

These quantitative systems are generally focused on finding stocks for the long run. We’re not asking these systems to predict what’s going to happen next week… let alone the next 24 hours.

And that matters. Especially if you’re an options trader… active investor… or even a long-term buyer seeking a better entry price. In these cases, it’s essential to know when stocks will rise (and not just which ones).

That’s where AI trading systems like TradeSmith’s Predictive Alpha come in. These systems analyze hundreds of technical aspects, scouring share prices and volume metrics for “clues” of trader intent. (If you’re a $10 billion fund selling $100 million of stock in a company that only has $50 million of average turnover a day… you’re going to influence prices no matter what.)

That’s why I’m so excited this week to introduce Jonathan Rose, a veteran trader who has mastered the ins and outs of these types of trades. In his latest Masters in Trading presentation, he outlines the strategies, indicators, and other market clues he uses to notch returns of 197%… 317%… even 1,147% in 30 days or less.

In the meantime, I’d like to leave you with five tactical picks from TradeSmith’s Predictive Alpha system that our writers at InvestorPlace.com – our free news and analysis site – also have highlighted this week.

These are five companies we expect will do well over the next 30 days, which makes them the ideal “buy the dip” stocks for a recovering market.

Nvidia (NVDA)

In this photo illustration, a woman holds a smartphone with the Nvidia Corporation (NVDA) logo displayed on the screen
Source: rafapress / Shutterstock.com

TradeSmith’s Predictive Alpha ranks Nvidia (NASDAQ:NVDA) as its top pick this week, projecting a 3.6% return over the next 30 days. (That translates to a 52% annualized rate thanks to compounding). The quantitative system sees Nvidia’s recent 15% selloff as overdone.

It’s admittedly been difficult for investors to stomach Nvidia’s sky-high prices. Even though my own models project that shares could be worth $1,600 by 2027, the company’s eyewatering price-to-earnings (P/E) ratios make it seem like an enormous bet on a future that may never arrive.

Fortunately, Nvidia’s recent pullback now puts prices back into more “normal” territory. Shares now trade at 25 times 2026 earnings – not far from the average S&P 500 firm. And Ian Cooper writes at InvestorPlace.com that these lower prices present a compelling buying opportunity:

Nvidia could see even more upside with the AI and metaverse boom. After climbing to a high of $967.66, it’s now back to $830.41. This weakness could be a long-term opportunity. From that last traded price, I’d like to see NVDA run well above $1,000 a share this year.

Strong results from Qualcomm (NASDAQ:QCOM) are also making a bullish case. Last Thursday, the smartphone chipmaker announced that earnings had surged 37% to $2.3 billion, driven by record automotive revenues and strong AI demand. This comes as a stark contrast to Advanced Micro Devices (NASDAQ:AMD) and Intel, which had previously announced worse-than-expected Q1 results.

That tells us that the “AI chip slowdown” seen by some Nvidia rivals are company-specific issues. Nvidia itself continues to score a top A grade in Louis’s Portfolio Grader, and rising analyst earnings estimates suggests that a near-term recovery will soon be underway.

Meta Platforms (META)

In this photo illustration the Meta logo seen displayed on a smartphone and in the background the Facebook logo
Source: rafapress / Shutterstock.com

Predictive Alpha similarly rates Meta Platforms (NASDAQ:META) as a perfect “buy-the-dip” stock. The system forecasts a 3.1% upside over the next month.

In short, investors have become increasingly pessimistic about how much Meta will have to invest in data centers and AI – capital-intensive projects that will yield few immediate results. Wall Street analysts have quietly trimmed their target prices by $5 since last month.

However, Meta is now seeing a surge in its core advertising business, with ad volume growth outpacing user growth almost threefold. As Yiannis Zourmpanos puts it in an article on InvestorPlace.com:

A 6% increase in the average price per ad YOY suggests that Meta’s advertising platform is now more efficiently monetized…

Looking forward, Meta will continue to expand its income by investing in data analytics, ad targeting skills, and advertising technologies. Therefore, ad impressions and average ad pricing will continue to rise due to the company’s emphasis on increasing user engagement, growing the ad inventory, and boosting ad relevancy.

Election years are typically excellent periods for advertisers, and we’re seeing old patterns play out at Meta Platforms.

Even better, Meta’s stock currently trades for just 22 times forward earnings, making it one of the cheapest “Magnificent Seven” stock by that metric. Though Wall Street might seem bearish about Meta’s near-term prospects, our quant systems suggest the selloff has now gone too far.

Intuit (INTU)

Person holding cellphone with logo of US financial software company Intuit Inc. (INTU) on screen in front of business webpage. Focus on phone display. Unmodified photo.
Source: T. Schneider / Shutterstock.com

In April, InvestorPlace.com’s Marc Guberti highlighted Intuit (NASDAQ:INTU) as a stock to buy whenever the market falters:

Rising profit margins and a solid moat are strengthening the company’s long-term prospects. Analysts are bullish on the stock and rated it as a “Strong Buy.” The average price target suggests an 11% upside.

Essentially, Intuit is an “evergreen” stock that tends to make money in both good times and bad. Over the past three recessions, Intuit saw revenues rise double digits as consumers traded down for cheaper online accounting services. And during good times, Intuit also does well as small businesses migrate from pen-and-paper bookkeeping to digitized services like QuickBooks.

A recent selloff in tech stocks now provides us with that market “falter” we’ve been waiting for. Shares of Intuit have now fallen 8% from their peak, which puts it near the top of Predictive Alpha’s list. The quantitative stock-picking system believes shares will recover 3.1% over the next 30 days.

Intuit is expected to announce strong results on May 23. The IRS only began accepting returns on Jan. 29 this year, and so much of Intuit’s early season tax business will be pushed into its fiscal third quarter. Analysts expect revenues to rise 9% to $6.6 billion, and for earnings per share to surge 10% to $9.36. These are phenomenal growth rates for a mature blue-chip firm.

Intuit also earns a high score in both Portfolio Grader (where it scores a “B”), signaling long-term gains to come. The firm is highly profitable and fast-growing, and its recent decline in short interest suggests that bears are beginning to throw in the towel. That makes the tax software firm a rarity: a stock that’s attractive to both short- and long-term investors.

Target (TGT)

Image of the Target (TGT) logo on a storefront.
Source: jejim / Shutterstock.com

On Tuesday, McDonald’s (NYSE:MCD) and a host of other large brands warned that consumers were “starting to crack.” Rising inflation and dwindling savings have begun to impact demand. Starbucks (NYSE:SBUX) also has felt the pinch – same-store-sales declined 3% in Q2.

That perhaps makes Target (NYSE:TGT) the strangest short-term pick by Predictive Alpha this week. Shares of the retailer are expected to rise 3.1% over the next 30 days, bucking a broader trend of negative consumer news.

There are several reasons for optimism. As Josh Enomoto notes at InvestorPlace.com, Target is more rock-solid than most realize:

A big-box retailer, Target may face pressure amid the broader economic anxieties. However, as far as its direct peers are concerned, the only consumer base that features a higher average income is the one undergirding Costco.

Second, Target is also better shielded from the yo-yo demand that has put firms like Starbucks on the defensive. Seventy-five percent of the U.S. population lives within 10 miles of a Target, and as the saying goes, “we’ve all got to eat.”

Finally, InvestorPlace.com’s Will Ashworth writes that Target is one of the few firms that has added significant headcount over the past five years and maintained strong returns on invested capital. It’s a faster-growing firm than most realize, and Ashworth previously recommended shares as a bargain buy when TGT traded at around $126.

Airbnb (ABNB)

A hand holds up the Airbnb (ABNB) logo outside a home in Estonia.
Source: AlesiaKan / Shutterstock.com

Finally, Predictive Alpha highlights Airbnb (NASDAQ:ABNB) this week for its 3% expected return over the next 30 days, a 43% annualized rate of return.

Shares of Airbnb are only slightly higher today than when it first went public in 2020. The novelty of home rentals has worn off, and the firm has only managed to meet sky-high IPO expectations, not exceed them.

However, this flattish long-term performance masks some incredible moves in Airbnb’s stock. In April 2022, a delayed Covid-19 exit sent shares plummeting 40%. A recovery in tech stocks and consumer demand has since reversed that loss.

Jeremy Flint, as he writes at InvestorPlace.com, now believes a bookings boom is set to put Airbnb back on a faster track of growth:

Airbnb’s user base is returning to the platform’s original concept of offering spare space as a budget-friendly alternative to hotels. Despite facing significant challenges, such as a $10 million fine for misleading international customers by listing prices in USD rather than local currencies, Airbnb’s market dominance remains unchallenged…

In its most recent earnings report, Airbnb disclosed nearly a 17% increase in revenue year-over-year and a 15% rise in gross booking value. Spurred by the holiday travel surge, this growth is expected to continue as we move into the spring and summer travel seasons.

Since September, Airbnb has seen the number of shares sold short decline from 34.8 million to just 16.6 million – a 52% drop.

Stocks for the Long Short Run

In 1994, economist Jeremy Siegel published Stocks for the Long Run, an investment tome that was often referred to as “the buy and hold Bible.” By investing in the U.S. stock market and holding on for extended periods, even ordinary investors could turn small investments into vast fortunes.

However, critics have since pointed out that not every investor has a 40-plus year investment horizon. Some might not even have five years. And the incredible run that U.S. stock markets saw in the 20th century might fail to repeat in modern times. America, after all, saw its economy move from a middling one to the world’s greatest superpower during this period. (Buy-and-hold investors in Turkey, Argentina, and China have done far worse).

That means investing in the 21st century will need some combination of long-term investing paired with tactical trading. Nvidia might be a phenomenal long-term stock… but is $700 a good entry price? $800? $1,000?

That’s where Jonathan Rose’s Masters in Trading Summit comes in. In this video event, he shares how to analyze short-term market moves and detect signals that long-term stock-picking algorithms might otherwise miss. And he’s giving this presentation away for free to InvestorPlace.com readers.

On the date of publication, Thomas Yeung held no positions in stocks mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Thomas Yeung is a market analyst and portfolio manager of the Omnia Portfolio, the highest-tier subscription at InvestorPlace. He is the former editor of Tom Yeung’s Profit & Protection, a free e-letter about investing to profit in good times and protecting gains during the bad.

Article printed from InvestorPlace Media, https://investorplace.com/2024/05/5-stocks-to-buy-immediately-according-to-ai/.

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