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Steven Cress, head of Quantitative Strategy at Seeking Alpha joins us to discuss sudden opportunities in the AI space given the recent pullback. We discuss Nvidia’s (NVDA) one good value metric (3:25), the top 3 buy-the-dip opportunities (5:28) and how Quant Ratings spied Foot Locker’s (FL) problems (13:05).
Some highlights (a full transcript will be added later):
- Cress discusses the stocks in his article today: Top 3 AI Stocks: Buy the Dip
- Nvidia (NVDA) has a Quant Rating grade of F for Valuation, but there is one metric that bucks the trend. The “pretty powerful” PEG ratio trades at a 20% discount to the sector. That standalone metric marries “both growth and valuations.”
- Meta (META) was about to "go down a huge rabbit hole" with the Metaverse, but has "sort of got religion" and is putting money into traditional businesses and AI.
- Amazon (AMZN) is on a razor's edge for buying, but if analysts keep raising estimates and we get the usual seasonal lull it could still be a good chance to pick up shares.
- Microsoft (MSFT) missed the cut with an F in Valuation, and Cs on Growth and EPS revisions.
- Unlike when we were in the tech bubble the “really fantastic thing about the AI era is that you have some major corporations, some of the largest in the world, that are able to implement and facilitate AI quite quickly.”
- “Companies that are incredibly profitable … have dedicated a good portion of their business to AI and they are already really quickly optimizing it.”
- Foot Locker (FL) was flagged as a potential dividend cut or suspension due to its payout ratio vs. the sector, combined with weak dividend coverage and its cash flow payout ratio vs. the sector.
- Going back to 2010, 93% of all companies that cut dividends had a grade of C+ or lower, with 67% of all those cut having an F.
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