Welcome to the Weekend Blitz, where we provide both our best investment ideas of the week and share important information with BNL members. This week we are looking at stories related to Tesla Motors Inc (NASDAQ:TSLA), Alibaba Group Holding Ltd (NYSE:BABA), Micron Technology, Inc (NASDAQ:MU), and NVIDIA Corporation (NASDAQ:NVDA).
Before getting to our TSLA stock, BABA stock, MU stock, and NVDA stock stories, let’s talk about performance.
Must know BNL news!
A couple things to note: In addition to research coverage on more than 50 companies and complete access & notifications to two market beating portfolios (and Eddy’s Options), BNLFinance.com is also giving its members a 12-hour look at all articles before they publish. Given our growing reach, we feel this is important.
Speaking of market beating portfolios, results from 2016 are in, and it does not look all that unusual from years past. Although, it looks quite different than how most people performed.
|Portfolio||2016 Performance||Versus S&P 500|
|David’s Dividend Portfolio||18%||+50%|
As members know, the strategy for 2017 is a bit different from years past. However, after years of consistency, we expect the same results for 2017. We will also begin to integrate options in 2017, with “Eddy’s Options”.
BNL’s best ideas of the week
NVDA stock owners pay attention to MU stock
Never-mind the fact that Nvidia Corporation (NASDAQ:NVDA) does not have the same business as Micron Technology, Inc (NASDAQ:MU), both have some big similarities when it comes to NVDA stock and MU stock performance.
NVDA stock was one of the best performing of 2016 after the perfect mix of macro help, business success, and bullish sentiment. Like MU stock in 2013, NVDA stock was mostly dead money for many years before turning it around in late 2015 and throughout 2016.
However, there is an overwhelming belief among NVDA stock owners that the good times we keep rolling and never stop. MU stock owners had the same false narrative before watching 2/3 of MU stock value wiped out.
Fact is when securities like MU stock and NVDA stock double many times over, they typically become overbought and overvalued in the process. This is one of many similarities we discussed last week, when explaining why NVDA stock owners could learn a valuable lesson from MU stock. (read here)
The impact of Ant Financial IPO on BABA stock
Alibaba Group Holding Ltd (NYSE:BABA) is a true juggernaut. If Alibaba were an American company, there is little doubt that its valuation would match that of Amazon and Facebook. However, BABA stock hardly reflects the growth of Alibaba’s business, the fact that Alibaba’s gross merchandise volume is largest in the world, or that a rising take rate is a huge catalyst to deliver better-than-expected revenue growth for many years to come.
Nonetheless, we could argue all day on whether Alibaba’s core business is fairly valued, but what’s undeniable is that BABA stock pays no mind to the billions of dollars that Alibaba has invested throughout the world, or its equity investments. We believe that all changes with Ant Financial’s IPO.
In an article written last week, we explain why BABA stock has upside of 50% in 2017. We explain why the expected valuation of $60 billion for Ant Financial is too cheap, and why it could be double that amount by the time of its IPO. We believe the realization of Ant Financial’s IPO will have a profound effect on investor sentiment, forcing the market to take a long hard look at Alibaba’s portfolio.
In retrospect, Ant Financial’s IPO will be very much like Amazon’s decision to unveil AWS performance. It will be a game-changer for BABA stock (read here)
TSLA stock reality check
Tesla Motors Inc (NASDAQ:TSLA) had a great end to 2016. Not only did it blow away all competitors by Consumer Reports, but research firm KGI cited channel checks to conclude that Tesla Motors is ramping production and strengthening automation to ensure the company hits its 2nd-half 2017 production target of 100,000 units of the Model 3. Finally, Baird analyst Ben Kallo named TSLA stock his top pick for 2017.
While this all sounds nice, short interest has surged, Donald Trump creates new risks, and TSLA stock valuation is obscene. Thus, Kallo may predict 60% upside in TSLA stock, but the more likely scenario for TSLA stock owners is a 75% loss. (read here)