April 9th, 2024 | 07:00 CEST
Big Tech in focus - get in or get out? 100% with Singulus, caution for Nvidia and Super Micro Computer!
The direction for the second quarter is still uncertain in the stock markets. Big Tech stocks have so far more than met investors' expectations, but they have not risen across the board for two weeks. This is also causing the NASDAQ 100 index to enter a consolidation phase, which delivered a significant downward swing just last Thursday. The global markets are still characterized by ample liquidity and the hope that the central banks will cut interest rates by the early summer. However, the upward movement has become very selective. Fueled by a flood of money for the "Magnificent Seven", other major markets, such as the Nikkei 225 and the DAX 40 index, also reached new highs. However, investors should now be on their guard, as a correction could be lurking after the upcoming dividend round in April. We delve a little deeper.
time to read: 4 minutes
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Author:
André Will-Laudien
ISIN:
SINGULUS TECHNOL. EO 1 | DE000A1681X5 , NVIDIA CORP. DL-_001 | US67066G1040 , SUPER MICRO COMPUT.DL-_01 | US86800U1043
Table of contents:
"[...] In Canada, there is $1.75 of debt for every dollar of disposable income - and that was true even before the pandemic. [...]" Karim Nanji, CEO, Marble Financial
Author
André Will-Laudien
Born in Munich, he first studied economics and graduated in business administration at the Ludwig-Maximilians-University in 1995. As he was involved with the stock market at a very early stage, he now has more than 30 years of experience in the capital markets.
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Nvidia - Analyst price targets reached
The AI star Nvidia has already gained 85% in the first quarter of 2024 after the share price had already quadrupled in 2023. This increase makes the market leader for fast chips and graphics cards the second-best stock in the S&P 500 index. Analysts have had to adjust their revenue estimates for the current year upwards several times, and the consensus is now that revenue will rise from USD 60 billion to around USD 110 billion. With a market capitalization of USD 2.2 trillion, Nvidia is currently trading at a price/sales ratio of 22 and a P/E ratio of around 35. Of course, the demand for Big Data services is unbroken, and the wave of implementation in the AI sector is just beginning. However, the stock market seems to have already factored in the numbers for 2026 into its prices. On the Refinitiv Eikon platform, the average price target of the 53 "Buy" recommendations is USD 988, almost 12% above the current price. The share had already reached this level at its high in March. It is advisable to take profits for now and wait and see!
Super Micro Computer - Already in correction mode
The standout candidate from the S&P 500 analysis for the first quarter of 2024 is Super Micro Computer (SMCI). The Company was founded in San José, California, in 1993 and is now one of the world's leading providers of high-performance server solutions, liquid cooling for chips, intelligent storage systems, and data center technologies. Due to its high technological penetration, SMCI will likely remain a successful niche player for several years or even become the focus of a takeover due to its comparatively low capitalization of around USD 50 billion.
In the last few days, the share has already reacted very sharply downwards in technical terms, and yesterday, the share lost more than 3% to USD 915, outpacing the index. Exactly one month ago, the share had reached a high of USD 1,229. Super Micro Computer is followed by only 16 experts on the Refinitiv Eikon platform, with an expected price target of USD 935. With the current valuation, the 2024 price/sales ratio is 4, and the P/E ratio is approximately 50. With the current consolidation, the share will become somewhat cheaper again, but volatility is expected to remain high.
Singulus - The path is clear for a turnaround in 2024
When examining the second-line stock market in Germany, one will find Singulus Technologies from Kahl am Main in a small technological niche. The Company, founded in 1995, is well known to investors from the time of the Neuer Markt. A lot has happened since then, and the business model has been revised and modernized several times. Singulus specializes in thin-film technology and surface treatment. The Company develops and builds innovative machines and systems for efficient production processes, which are used worldwide in the photovoltaic, semiconductor, medical technology, packaging, glass & automotive, and battery & hydrogen markets. The Company's core competencies include coating technology processes such as cathode sputtering, surface treatment, and wet-chemical and thermal production processes.
Yesterday, Singulus reported its figures for the full year 2023. Revenue fell from EUR 87.9 million to EUR 73.2 million, slightly below the Company's own expectations. The revenue forecast, which has been revised several times, should reach the corridor of EUR 75 to 85 million. At EUR -10.1 million, EBIT was almost twice as negative as the previous year, which was also disappointing. This results in a loss per share of EUR 1.10, compared to a manageable EUR 0.01 in the previous year. The debt of EUR 112.8 million compared to a market capitalization of just under EUR 10 million remains a burden.
However, management remains positive for the current year. Revenues are expected to explode to between EUR 120 and 130 million, which would result in a double-digit EBIT in the books. However, according to management, this forecast can only be achieved if the current projects are completed without material delay and significant new orders are secured. Large-scale projects in the solar sector are the focus. Overall, it will be a remarkable turnaround if it succeeds, but the management also sees existential risks for the Company if it does not. However, Singulus Technologies serves interesting markets and benefits from the energy transition. For investors who get involved here, it remains a game with a digital outcome due to the ailing balance sheet. Those who buy should closely monitor every quarterly report and be prepared to act quickly if necessary. Speculative!
Valuations in the Big Tech sector dominate the trend on the NASDAQ. However, across the board, these stocks have already seen significant gains. Former blockbusters like Tesla and Apple have already turned, and for Nvidia and Super Micro Computer, volatility persists. Singulus, after a tough year in 2023, has provided a positive outlook, attracting buyers back to the stock. A turnaround for this well-known German high-tech share would not come as a surprise, but there are still uncertainties.
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Pursuant to §85 of the German Securities Trading Act (WpHG), we point out that Apaton Finance GmbH as well as partners, authors or employees of Apaton Finance GmbH (hereinafter referred to as "Relevant Persons") currently hold or hold shares or other financial instruments of the aforementioned companies and speculate on their price developments. In this respect, they intend to sell or acquire shares or other financial instruments of the companies (hereinafter each referred to as a "Transaction"). Transactions may thereby influence the respective price of the shares or other financial instruments of the Company.
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