May 30th, 2022 | 10:52 CEST
Nvidia, Aspermont, Alibaba - Shares with doubling potential
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"[...] 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
Nvidia - Partnership with Mercedes-Benz as a growth driver
Who would have thought that the Nvidia share would lose more than 50% in value from the end of November? Probably very few, and yet it only went south from November 22 at a high of USD 346.47. On May 12, the stock marked its current low for 2022 at USD 155.67. Should investors grab it now? What speaks for the Company is that it covers a lot of trends, such as gaming, artificial intelligence (AI), mining of cryptocurrencies or data centers that make data analysis, high-performance computing or AI possible in the first place. While Microsoft and Meta are intensifying their cooperation in AI applications, Nvidia is on board with its graphics processors.
Another growth driver may become the automotive industry, where the Company plans to develop an in-vehicle computer system together with Mercedes-Benz. At the same time, an AI infrastructure is to be established. While the automotive division's revenue in 2021 was only USD 566 million, it is expected to grow to 11 billion in the coming years. Growth is important because currently, the prices of cryptocurrencies are falling. That, in turn, could impact sales of graphics cards, as they are needed for cryptocurrency mining. In its latest quarterly results, the Company fell short of analyst expectations despite a growth of 46% to around USD 8.3 billion.
Primarily, this is due to supply chain problems. With China's strict Zero-COVID strategy in place, these problems could linger longer. But that did not stop Cathie Woods from investing in Nvidia again. In total, the Ark fund purchased USD 43.8 million worth of shares. The stock has made up about 20% from the low and currently stands at USD 188.07. Piper Sandler has issued a buy recommendation with a price target of USD 350. The share has potential, even though it is still not cheap if you look at the price-earnings ratio.
Aspermont - Quarterly figures convince again
Aspermont comes up with a real transformation story. From a print publisher with a history of over 180 years, it has become the leading media services provider for the global commodities industry. The Company owns over 30 B2B media brands in the mining, energy and agriculture industries and boasts over 3.6 million users in 190 countries. The Company's success is based on its Everything-as-a-Service (XaaS) model, which consists of three pillars. First, there is the content that attracts the target groups, and second, the service business for business customers. The third pillar uses the collected data to develop new products and services.
The latest quarterly figures show how well the business is doing. Total revenue climbed 39% YOYN to 4.8 million Australian dollars AUD. Gross profit rose by 43% to AUD 3.1 million, and this with an increasing gross margin of now 65%, after 63% last year. Over the six-month period, gross margins rose by as much as 67%. Commenting on the figures, Managing Director Alex Kent said: "The resumption of live events has contributed to exceptional growth (72%) in our services business this quarter. We expect a similar impact in our services business in the fourth quarter when even more live events take place."
In addition to the growth turbo of live events, the fintech platform Blue Horseshoe is also scheduled to launch this year. Companies will be able to raise capital on this platform. Furthermore, the print archive is to be digitized and made available to customers as a research platform. All content is to be translated into all the world's languages since 75% do not speak English. In this way, a large new customer base will be opened up. Despite all the good news, the share is running sideways and is currently quoted at AUD 0.021. The analysts at GBC see a target price of AUD 0.11. In order to reach this target, the share would have to increase fivefold.
Alibaba - Quarterly figures exceed expectations
Chinese tech giant Alibaba has been on a long slide. On October 27, 2020, the stock was trading at USD 319.32. Today, it is only USD 93.41. The main reason for this is the political uncertainty in China, which has repeatedly put a spoke in the stock's wheel. Currently, there is a lockdown in many Chinese cities due to the Zero-COVID strategy of the Chinese government. It was, therefore, reasonable to assume that Alibaba would also suffer from the restrictions. Especially since the Company previously reported that it had achieved maximum market penetration in China.
However, the figures for the first quarter speak a different language. Analyst expectations were exceeded in terms of both sales and profits. Sales were USD 32.2 billion, up 9% from the same quarter a year ago. Diluted earnings per share were USD 1.25. Even more interesting, the Company has more than 1 billion active customers in China for the first time. More people flocked to Alibaba's platforms due to the lockdowns - fewer clothing and electronics were purchased, but more groceries and drugstore supplies. Management expects the supply chain issues to slowly resolve in the coming months.
After the numbers, the stock put on a rally that took the stock to USD 95.09. The share formed a head and shoulder formation 2 days earlier, which was then confirmed by the rise. If the break of USD 102.69 succeeds, a test of USD 124.11 is likely. A total of 40 analysts cover the stock, and the majority see the share as a buy. The average price target is around USD 154. In contrast to its competitor Amazon, the stock is valued much more favorably, which is due to the political situation.
After the recent decline in the markets, promising stocks have what it takes to double. First and foremost is Aspermont, which is performing well operationally and has developed new business areas or regained them after the Corona Crisis. Second place goes to Alibaba. Even if there are political uncertainties, there is no question that China will be the largest economy in the long term. Alibaba will benefit disproportionately from this. Even though Nvidia is on the move in many trend markets, the stock is still not fundamentally cheap. It would have to climb above its last high for it to double.
Conflict of interest
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