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Zacks Investment Ideas feature highlights: Nvidia, Meta Platforms and AppLovin
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For Immediate Release
Chicago, IL – August 15, 2024 – Today, Zacks Investment Ideas feature highlights Nvidia (NVDA - Free Report) , Meta Platforms (META - Free Report) and AppLovin (APP - Free Report) .
Market Rebound: 3 Stocks for the Next Leg Higher
Last week the market experienced one of the fastest rises in volatility since the Covid-19 pandemic and the Great Financial Crisis. The VIX index rose above 60 on Monday morning, which was a 40-point jump from the day before. However, what followed was equally impressive as volatility fell nearly just as fast as it rose, and today the VIX is below 17.
We know now that the unwind of the Yen carry trade led to a capitulation of the most levered traders and it seems that the worst is already behind us. And it makes sense that we can look forward confidently and use this as an opportunity to pick up shares in the best stocks.
We have a nice list of bullish factors holding up this market; the economy remains robust while inflation continues to ease, the Federal Reserve will begin lowering rates soon leading to an expansionary policy and earnings at the best companies in the world continue to grow nicely.
Sometimes you must see through the scary headlines and look at the most important variables that drive markets such as Fed liquidity and earnings growth. When investors do it like that, they can see these sharp corrections for what they really are, opportunities.
Some of the best stocks in the world went on sale this last week and here I am going to identify three of my favorites. Nvidia, Meta Platforms and AppLovin have been some of the best performing stocks in the last year and based on their Zacks Ranks, growth forecasts and valuations remain unambiguously attractive.
AppLovin Stock Boasts a Top Zacks Rank
Lesser known than the other two, AppLovin is a mobile technology company that specializes in mobile app growth, monetization, and user acquisition through its suite of software and services. AppLovin provides a powerful platform that enables app developers to enhance their marketing strategies, optimize user engagement, and maximize revenue. The company operates one of the largest mobile ad networks in the world and has also expanded into app development, acquiring and partnering with various gaming studios.
AppLovin really has it all, as the stock enjoys powerful momentum pushing it higher, strong growth forecasts and a very reasonable valuation. Additionally, AppLovin has a Zacks Rank #1 (Strong Buy) rating, boosting the odds of a near-term rally. Analysts have unanimously raised earnings estimates by a significant margin in just the last week. Over the next three to five years, analysts expect earnings per share (EPS) to grow 20% annually.
Even with the incredible appreciation the stock has experienced over the last two years it still trades near its lowest relative valuation. Because sales and earnings are growing so fast, the stock has actually gotten cheaper over the last year. Today, APP is trading at a one year forward earnings multiple of 22.9x, which is right in line with the broad market and well below its three-year median of 64.5x.
Meta Shares Approach All-Time Highs
Meta Platforms is another stock that has put up truly stellar earnings results and price appreciation since the 2022 lows. In the chart below we can see that the price of META is bumping up against its recent all-time highs, and if it clears that level could begin another major bull leg.
Also visible in the chart is just how well Meta Platforms stock held up during the recent market correction and how quickly it has snapped higher.
Also worth noting is that Meta Platforms boasts a Zacks Rank #2 (Buy) rating, reflecting upward trending earnings revisions and improving the near-term outlook of the stock. In the last month FY24 earning estimates have increased by 3.7% and FY25 by 2.6%. Current year sales are expected to grow 19.6% and next year's sales are expected to climb 14%. Furthermore, analysts project EPS to grow 19% annually over the next three to five years.
Meta Platforms is trading at a one year forward earnings multiple of 24.9x, which is just above the market average and just below its 10-year median of 25.1x. META also now pays a tidy 0.38% dividend to shareholders.
Nvidia Continues to Show Impressive Growth
For the first time in nearly two years, Nvidia is not at the top of the Zacks rank, however it still boasts a Zacks Rank #2 (Buy) rating. Nvidia has of course been hugely influential to the broader market and the primary beneficiary of the AI boom. The company's vision into what AI could be, and its ability to position itself as the key piece of infrastructure for the technology had set it on a path to more than triple its sales and nearly 7x its EPS in the last two years.
Over the last month the stock experienced its sharpest correction since the big bull run began, but like the others, investors have been snapping up shares during the sell off. Also like the others, Nvidia still enjoys a reasonable valuation, attracting new investors.
We can also see that the price action in NVDA is looking quite bullish as well, as on Monday, the stock broke out from a descending channel.
Today, Nvidia is trading at a one year forward earnings multiple of 45.8x. This is above the broad market average and just above its 10-year median of 42.7x. Although that may appear elevated to some investors,analysts forecast NVDA EPS to grow 37.6% annually over the next three to five years, simply indicating a valuation priced for tremendous growth in profits.
Final Thoughts
As markets show signs of rebounding, the potential for the next leg higher is enticing. Nvidia, Meta Platforms, and AppLovin have all demonstrated strong fundamentals, impressive growth forecasts, and reasonable valuations that make them attractive picks. However, it's essential to remember that the market is unpredictable and can turn volatile without warning.
While the current outlook might be optimistic, investors should always prioritize risk management. Maintaining a diversified portfolio, setting stop-loss orders, and not overcommitting to any single position can help mitigate potential downsides. The market will ultimately do what it wants, and staying vigilant while focusing on long-term goals is key to navigating these opportunities wisely.
Why Haven't You Looked at Zacks' Top Stocks?
Since 2000, our top stock-picking strategies have blown away the S&P's +7.0 average gain per year. Amazingly, they soared with average gains of +44.9%, +48.4% and +55.2% per year.
Today you can access their live picks without cost or obligation.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performancefor information about the performance numbers displayed in this press release.
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Zacks Investment Ideas feature highlights: Nvidia, Meta Platforms and AppLovin
For Immediate Release
Chicago, IL – August 15, 2024 – Today, Zacks Investment Ideas feature highlights Nvidia (NVDA - Free Report) , Meta Platforms (META - Free Report) and AppLovin (APP - Free Report) .
Market Rebound: 3 Stocks for the Next Leg Higher
Last week the market experienced one of the fastest rises in volatility since the Covid-19 pandemic and the Great Financial Crisis. The VIX index rose above 60 on Monday morning, which was a 40-point jump from the day before. However, what followed was equally impressive as volatility fell nearly just as fast as it rose, and today the VIX is below 17.
We know now that the unwind of the Yen carry trade led to a capitulation of the most levered traders and it seems that the worst is already behind us. And it makes sense that we can look forward confidently and use this as an opportunity to pick up shares in the best stocks.
We have a nice list of bullish factors holding up this market; the economy remains robust while inflation continues to ease, the Federal Reserve will begin lowering rates soon leading to an expansionary policy and earnings at the best companies in the world continue to grow nicely.
Sometimes you must see through the scary headlines and look at the most important variables that drive markets such as Fed liquidity and earnings growth. When investors do it like that, they can see these sharp corrections for what they really are, opportunities.
Some of the best stocks in the world went on sale this last week and here I am going to identify three of my favorites. Nvidia, Meta Platforms and AppLovin have been some of the best performing stocks in the last year and based on their Zacks Ranks, growth forecasts and valuations remain unambiguously attractive.
AppLovin Stock Boasts a Top Zacks Rank
Lesser known than the other two, AppLovin is a mobile technology company that specializes in mobile app growth, monetization, and user acquisition through its suite of software and services. AppLovin provides a powerful platform that enables app developers to enhance their marketing strategies, optimize user engagement, and maximize revenue. The company operates one of the largest mobile ad networks in the world and has also expanded into app development, acquiring and partnering with various gaming studios.
AppLovin really has it all, as the stock enjoys powerful momentum pushing it higher, strong growth forecasts and a very reasonable valuation. Additionally, AppLovin has a Zacks Rank #1 (Strong Buy) rating, boosting the odds of a near-term rally. Analysts have unanimously raised earnings estimates by a significant margin in just the last week. Over the next three to five years, analysts expect earnings per share (EPS) to grow 20% annually.
Even with the incredible appreciation the stock has experienced over the last two years it still trades near its lowest relative valuation. Because sales and earnings are growing so fast, the stock has actually gotten cheaper over the last year. Today, APP is trading at a one year forward earnings multiple of 22.9x, which is right in line with the broad market and well below its three-year median of 64.5x.
Meta Shares Approach All-Time Highs
Meta Platforms is another stock that has put up truly stellar earnings results and price appreciation since the 2022 lows. In the chart below we can see that the price of META is bumping up against its recent all-time highs, and if it clears that level could begin another major bull leg.
Also visible in the chart is just how well Meta Platforms stock held up during the recent market correction and how quickly it has snapped higher.
Also worth noting is that Meta Platforms boasts a Zacks Rank #2 (Buy) rating, reflecting upward trending earnings revisions and improving the near-term outlook of the stock. In the last month FY24 earning estimates have increased by 3.7% and FY25 by 2.6%. Current year sales are expected to grow 19.6% and next year's sales are expected to climb 14%. Furthermore, analysts project EPS to grow 19% annually over the next three to five years.
Meta Platforms is trading at a one year forward earnings multiple of 24.9x, which is just above the market average and just below its 10-year median of 25.1x. META also now pays a tidy 0.38% dividend to shareholders.
Nvidia Continues to Show Impressive Growth
For the first time in nearly two years, Nvidia is not at the top of the Zacks rank, however it still boasts a Zacks Rank #2 (Buy) rating. Nvidia has of course been hugely influential to the broader market and the primary beneficiary of the AI boom. The company's vision into what AI could be, and its ability to position itself as the key piece of infrastructure for the technology had set it on a path to more than triple its sales and nearly 7x its EPS in the last two years.
Over the last month the stock experienced its sharpest correction since the big bull run began, but like the others, investors have been snapping up shares during the sell off. Also like the others, Nvidia still enjoys a reasonable valuation, attracting new investors.
We can also see that the price action in NVDA is looking quite bullish as well, as on Monday, the stock broke out from a descending channel.
Today, Nvidia is trading at a one year forward earnings multiple of 45.8x. This is above the broad market average and just above its 10-year median of 42.7x. Although that may appear elevated to some investors,analysts forecast NVDA EPS to grow 37.6% annually over the next three to five years, simply indicating a valuation priced for tremendous growth in profits.
Final Thoughts
As markets show signs of rebounding, the potential for the next leg higher is enticing. Nvidia, Meta Platforms, and AppLovin have all demonstrated strong fundamentals, impressive growth forecasts, and reasonable valuations that make them attractive picks. However, it's essential to remember that the market is unpredictable and can turn volatile without warning.
While the current outlook might be optimistic, investors should always prioritize risk management. Maintaining a diversified portfolio, setting stop-loss orders, and not overcommitting to any single position can help mitigate potential downsides. The market will ultimately do what it wants, and staying vigilant while focusing on long-term goals is key to navigating these opportunities wisely.
Why Haven't You Looked at Zacks' Top Stocks?
Since 2000, our top stock-picking strategies have blown away the S&P's +7.0 average gain per year. Amazingly, they soared with average gains of +44.9%, +48.4% and +55.2% per year.
Today you can access their live picks without cost or obligation.
See Stocks Free >>
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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performancefor information about the performance numbers displayed in this press release.