10 Stocks Tell You EVERYTHING about the Market

Hey bow tie nation, Joseph Hog with your weekly stock market update. Sundays before the week starts. This week nursing a little bit of a cold from a conference in Palm Springs, but but this week starting off with the stocks I'm buying and a complete review of the portfolio. One segment up 95%. Another AI stock up 30% in just a few weeks since recommending it. And the giant warning hidden in Costco earnings due out this week. And first up there, Costco, ticker COST. Not because I'm watching it to buy, but because this is going to be your best clue into the stock market when it reports earnings on Thursday after Walmart's disastrous report showing same store sales fell 3.6%, crashing that stock after we've heard the same thing from Dick Sporting Goods sticker DKs, Lululemons, and others. We need to be watching this trend play out. Costco does have a higher income membership base than Walmart and has usually been more resilient in these these weak consumer environments. But nation, if Costcoar says the consumer is weak this Thursday and the shares fall on that, you need to be thinking seriously about protecting your money and all your stocks. Consumer spending is more than 2/3 of the economy. Now, AI spending is doing a pretty damn good job of holding up the rest of the economy, but can't do it all. And we are seeing some massive warning signs that the consumer spending is falling off a cliff. Now, investors are expecting 10% sales growth and earnings to $653 per share, but a slowdown to 9% sales growth for the coming quarter. And my research points to that they'll probably beat expectations, but may surprise the market by warning that even on the lower sales growth to come could be a too high a bar and that's going to rock the shares along with the rest of the market. I'm going to highlight what this means for the broader stock market, the stock groups that I would avoid and and what I'm buying later in the video when we look at our market outlook. Netflix ticker NFL got rocked last week, falling almost 5% after an analyst at Wells Fargo downgraded the stock to a $57 target price, really on weakening engagement and a shortage of breakout hits planned for this year. The analyst estimates that Netflix viewing during the first half of the year was about 8% below the same period last year. That is a legit concern, but I think it's already priced into the stock and the shares are now very attractive for what is arguably the best media and streaming stock out there. It's down hard 40% over the past year from a high around $125 each and trading for a price to earnings that is less than half of where it was last year. Right now, you can buy Netflix for about 22 times the earnings the company generates versus having to pay 63 or 51 times PE just last year. Folks, the bigger picture here is Netflix is still the dominant player in streaming. Hell, it's the only service that we couldn't cut. And besides YouTube has the highest TV share of the group. Even on that weakness, sales are still growing at 13% a year with earnings expected to jump 41% this year. That is what you want to see from management. The ability to leverage that revenue growth into much higher earnings, much higher profits for investors on that $3.58 in per share earnings expected this year. Stock is trading at just 20 times price to earnings. So less than a third the co the cost from over the last year. Now Netflix has a huge advantage in its international production. lowerc cost film making compared to the Hollywood studios and this is an unstoppable competitive advantage. Average analyst targets are still for about $95 per share which is a 32% upside though I think it goes well above that even back above $100 within the next year. Here we see the average of 31 analyst with that $57 low estimate from Wells Fargo but all the way up to $135 per share from one analyst. I'll update you on all our portfolio stocks next including one group up 95% this year. But first, I want to share an investment I just made in Gigastar and your opportunity to tap into the growth in the creator economy. Are you out there in the bow tie nation? Know I used Gigastar to sell an investment in the YouTube revenue from this channel with investors getting 48% of all future revenue. So far, over three investment rounds, the 1300 investors in this channel have collected over $94,000 in distributions on their investments. And Gigastar is the platform that makes it all possible. Now, Gigastar is opening up a second investing round in the platform itself. The company has already raised over $9 million from venture capital, the part of the market I used to work in, investing in those fast growing companies before they go public. But now, that opportunity is opening to all investors. Now, because of SEC regulations, I can't go into a lot of the analysis on the investment. I'm going to link to the Weunder page in the description. There you're going to be able to see all the financials, the history. The company launched its first ever secondary market for creator tokens in August, which is going to be a big driver there. Revenue processed by the platform jumped 364% over the last year, and Gigastar revenue is expected to reach 1.3 million this year. Now, again, this could be an entire video talking through this investment and the upside. I spent nearly a decade in venture capital analyzing just these kinds of deals. So, for me, it was a no-brainer investing in Gigastar and its potential, building to over 6,000 shares in my own portfolio. Now, I want to get back to this week's stocks, but look for the link to the Weunder page in the description and check that out because the funding round is closing soon. I won't lie to you. This next one, Grab Holdings, took our grasping, down 55% over the last year. And even though we haven't been in it that whole time, it's still down quite a bit from the $3.60 price per share point when when I recommended it in June. Now, I've been buying more though because, as I pointed out then, this is one of the few true super apps out there. And even though it's only operating in a small region in Southeast Asia now, it dominates those markets and has seen massive international potential. Grab announced a $ 1.5 billion deal to acquire a controlling 60% stake in Atom Financial, an AI powered consumer lending company operating across the same region a few months ago. Now, Adam brings another 25 million transacting users to Grab's giant reach of over 54 million users along with buy now pay later and lending. And combined with the company's mobility, food delivery, payments, and existing financial products, folks, this is truly a super app and really the only one I know of. Now, of course, the limitation is still that geography, only serving in the eight countries within Southeast Asia, which means a restricted addressable market and dependency on the regional economy. But I'm investing for the future here. In its own market, it is the number one transportation platform, the number one fintech platform, and the fastest growing delivery service. Apply that to more countries and it easily beats the strong 24% annual growth it's putting up right now. Now, this is not an overnight turnaround story, but a deep value play on a stock with with a wide mode and a strong future, which is why I'm still buying. Tempest AI to criter [clears throat] Nancy Pelosi are buying. Folks, when two people that couldn't be more different couldn't agree on anything else or buying the same stock, maybe it's something to watch. And the company announced earlier this month a 9.5 million dollar funding from ARPA to develop the first autonomous clinical AI agent for heart failure cases. That system is expected to function as an extension of the clinical team and represents real progress in using AI in healthcare for patient outcomes. Then just two days after that, Tempest announced plans for a massive multimodal genomic database combining a 100,000 disease-specific whole genome sequences with clinical outcomes data. Folks, that would be a major step in drug development and testing. That could make Tempest a 100 billion plus company. Now, on this week's rally, the valuation isn't must buy territory anymore, but the company is still growing at a 25% annual pace and obviously has the government support if everyone in the government is buying up the stock. Its network connects 65% of the academic medical centers and 95% of the largest drug makers, putting it in the center of that AI drug development trend. Cyber security stocks in our portfolio were up big for a second week in a row and are now the market's hottest group. Zcaler ticker ZS jumped 20% last week alone and the rest of these are up double and triple digits. Crowd Strike Holdings ticker CRWD up 107%. Double your money. Fortnite FTN up 89%. Octa Inc. took her Okta up 87%. Zcaler the lagard here but still up 42% and Palo Alto Networks took her P&W up 136%. Nation the last few weeks fears over AI becoming Bender to kill all humans as brought the spotlight back on to how critical these companies are and echoes Palo Alto's warning in May that the companies have about 3 to five month windows to beef up their cyber security and protect themselves from this coming AI threat. And we're almost through that three to five month window right now. And as we see more stories of those rogue AI agents breaking out, doing things they shouldn't be doing. It's only going to accelerate revenue for this group already posting very strong growth. And yes, again, these stocks are ridiculously expensive. Crowd Strike is trading at 189 times price to earnings. Palo Alto at 86 times. Even adjusting for strong growth at 20% plus in earnings for these that PEG ratios are still expensive. PA NW and CRWD are the most expensive here at over four and six times price toearnings adjusted, but because they are the dominant players in the space, so you're going to pay more for that growth. Now, Zcaler still does have some value here, and Fortnite is the profitability engine of the group, but still say buy all five. Own the entire group of the best cyber security stocks because this is the one trend that will only become more important as AI develops. AI infrastructure stocks got hammered earlier in the week as investors worried that those calls for slowing down AI development would translate into less spending on on chips and networking and those data centers. By midweek, the market was catching on to what I've been saying though here folks that this entire AI is going to kill us all. Well, we have to slow it down. It's really just a red herring by the two largest AI developers. That's Anthropic and Open AI. Folks, the fact is we are not slowing down. The only problem is that they cannot build the data centers and that infrastructure behind this fast enough. So what we're seeing is OpenAI and Anthropic, the leaders there are trying to manage expectations before their IPOs, trying to lower the bar on that growth so investors just aren't disappointed. There is no way in hell we are going to slow down this AI revolution, especially from the people that are most positioned to benefit from it. Those AI models that open AI and anthropic. All the talk, it's just a red herring just managing those expectations. That's why we saw by midweek last week, these stocks were up big again. I've got a chart here of the major infrastructure companies, the ones I've been following most. We've got Nvidia, ticker NVDA, and advanced micro devices, ticker AMD, really the primary semiconductor chip makers. We've also got Broadcom, ticker AVGO, which is the leader in accelerator chips, as well as networking. probably a company with one of the biggest scope of products that go the best lineup of products that go into a data center. Micron Technology there ticker ticker MU obviously the one dominating that memory chip shortage. We got Taiwan Semiconductor TSM which manufactures the vast majority of these high performance chips around the world. RM Holdings ticker ARM, Marll MRVL, which is another one of those in the accelerator chip competitors with AVGO, and then Arista Networks ticker A&E, another dominant leader in the networking space. And we can see throughout the week, even on those fears of the AI slowdown, we still see some of these up as much as 15%. AMD up 15%, Marll and ARM holdings up 13%, MU 12%, really the only lagards here. AVGO and TSM only up 3% on the week. nation with competition from those Chinese AI models. The US frontier models like Open AI and Anthropic just can't afford to slow down and neither do they want to. We're expected to see over $2.4 trillion spent in global AI infrastructure over the next year. That's the data centers, everything that goes into them. These are not slowing down and I continue to pick up any of these dips the market gives us. Cryptocurrencies and related stocks fell initially on failure of the Clarity Act last year, but then rallied by the end of the week in a story that I'm going to be talking about this Wednesday. Probably one of the biggest trends over the next year in tokenization and how the failure of the Clarity Act, so official Washington regulation on these failure of that really opens this up to rulemaking by the SEC and CFTC, which are already putting together rules for these cryptocurrency companies to tokenize massive segments of the economy. For example, we saw just last week the SEC green lit tokenization for US stocks, opening up a massive market to bring US stocks on chain and really start what is going to be a trillion dollar opportunity for tokenization and cryptocurrency stocks. And despite that early selloff, by the end of the week, almost all of these crypto-related stocks were up strong. Coinbase, the main cryptocurrency platform, there's ticker coin up 4.6%. Robin Hood very strong in that cryptocurrency infrastructure up 5.2%. Galaxy Digital, another platform here, up 4.7%. BMNR, which is Bitmine Immersion Technologies, and Ethereum Treasury Company holding Ethereum that was up 4.4%. And Micro Strategy, ticker MSTR, up 16% on the week. Now, of course, you out there in the nation know I prefer direct investment into Ethereum through these two Ethereum funds, the ETHA and the ETH. Those are two ETFs, so two funds that hold Ethereum directly. So, you don't have to have a cryptocurrency account yourself. you can have all that exposure, that direct exposure into Ethereum, really the backbone and the infrastructure behind this tokenization weight. I'm up an average a little over a 30% in these over $437,000 in profit and holding on to reach new highs here at $4,900 in Ethereum over the next year. Now, looking at the bigger picture here though, sector performance last week tells us a lot about where investors are finding safety and where those higher interest rates are starting to hurt. Only two of the 11 major stock sectors finished higher. Healthcare tracked by the XLV led by a 1.8% gain while information technology so XLK surprisingly gained 1% even on those worries of tech. That tech performance does hide some huge moves underneath the surface though within software, cyber security and AI infrastructure stocks all kind of reacted differently throughout the week. But overall technology held up remarkably well despite that broader market weakness we saw. On the other side of that, the consumer sectors were the big losers. and what I've been warning about over the last couple of months with both consumer staples and consumer discretionary stocks falling here. Now, that is important because consumer weakness is becoming one of the biggest trends I'm watching. But then the real story here is at the bottom of this sector tracker and it's something I pointed out last week. Real estate ticker XLR, although real estate stocks there fell 2%, financials XLF dropped 2.4% and utility stocks XLU among the worst performing sectors down 3%. Now, all three of these are sensitive to those interest rates, and the Fed just raised rates by a quarter of a percent. More importantly, Fed member projections now point to another increase by year end. And let me tell you folks, when the Fed raises rates, they don't just do it one time. They're going to do it again at least once this year, maybe another one or two times next year. That's why you got to be following these big picture ideas because sometimes those big economic forces mean all the stocks in those sectors are going to go down, even the best of the breed. So you really got to be careful here. These sectors get hit from two directions. Real estate and utilities are all really capital inensive businesses. So higher borrowing costs really pressure those earnings and valuation when they borrow all that money to spend heavily in their equipment. And because all three of these are very cash flow stable business models. Also they they tend to use a lot of debt. So higher rates means higher interest expenses. At the same time, they're also traditionally popular with income investors. As treasury and bond yields rise, investors have less reason to accept that additional risk in owning maybe a utility or a real estate stock or or another dividend stock for its yield. It's why I'm still cautious on this rate sensitive sectors. If rates stay higher or move even higher, which they probably will, the pressure isn't over on stocks in these three groups. Looking at the year-to- date here, energy stocks still looking good for outpacing the other sectors. even with hopes of negotiations coming up. As I pointed last week, there is not a chance in hell Hormuz opens up before the midterm elections in November. So, I'm buying any dips in these energy stocks like Chevron to ticker CVX, Diamondback Energy, FNG, and Devon Energy to DVN. Now, tech stocks have slowed down, but are still a buy on any of the dips in these AI names, especially those infrastructure stocks. really about the only stock I would avoid here or at least be ve very careful if you're buying on any dips would would be those consumer discretionary. So any retailers, any travel stocks as well as those stocks in those three sectors, the real estate, utilities, and consumer staples. Don't miss your chance to invest in Gigastar with me and over 2,000 other investors. Click through the link in the description to check out that investment round on Wefunder. Don't forget to join the Let's Talk Money community by tapping that subscribe button and clicking the bell notification.