Replies to post #300 on Contrarian Value Ideas

[gfp927z]

Derf, Good point about the class action suits, which will be a thorn in ADM's side for quite a while. That said, the chart looks like it might bounce up to the 50 MA, even if it's only a short term trade. It's a dominant company at a 30% discount, so I was thinking about a small position for the longer haul, but may just watch from the sidelines.

With Broadcom, a pullback will probably be healthy since the semis and Ai stocks have had such a big run. Along with AVGO, I have a little in KLAC, MPWR, ADI, MCHP, and NVDA. Only small positions, but I figure this makes it easier to 'stay the course' :o)


>>> Why Broadcom Stock Was Sliding Today


by Jeremy Bowman

Motley Fool

March 8, 2024


https://finance.yahoo.com/news/why-broadcom-stock-sliding-today-170211445.html


Shares of Broadcom (NASDAQ: AVGO) were moving lower Friday after the diversified semiconductor company posted solid results in its fiscal 2024 first-quarter earnings report after the market closed Thursday, but failed to raise its guidance.

High expectations were also baked into the stock. The company is viewed as a beneficiary of the AI boom, and as its shares have risen in recent months in consequence.

As of 11:59 a.m. ET, the stock was down by about 6%.

A good -- but not good enough -- quarter

Broadcom, which also just completed its purchase of VMware, said that revenue jumped by 34% in the quarter (which ended Feb. 4) to $12 billion, edging past the consensus estimate of $11.72 billion. Organic revenue, which excludes the impact of the VMware acquisition, was up 11%, accelerating from just 4% growth in the previous quarter, and the company said it was seeing strong demand for AI-related products.

In its semiconductor solutions segment, it reported 4% growth to $7.4 billion, while VMware drove a 153% jump in infrastructure software revenues to $4.6 billion.

Further down the income statement, adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) increased by 26% to $7.16 billion, and adjusted earnings per share rose 6.4% to $10.99, which beat the consensus estimate of $10.29.

CEO Hock Tan noted the strengthening tailwind in AI, saying, "Strong demand for our networking products in AI data centers, as well as custom AI accelerators from hyperscalers, are driving growth in our semiconductor segment."

Guidance falls a bit short

Friday's share price pullback seems to be driven by the company's decision to maintain its full-year guidance at $50 billion in revenue and $30 billion in adjusted EBITDA. It kept that steady forecast even as it has had one quarter to integrate VMware and as it's seeing increased demand for AI products.

Even with Friday's slide, Broadcom shares are still up 18% year to date and have more than doubled in the last year, showing the stock is benefiting from AI tailwinds. While this session's dip may be disappointing for investors, it shouldn't change anyone's long-term thesis on the stock.

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[gfp927z]

Derf, >> LLY <<

Yes, a lot of overextended stocks right now in need of a consolidation. Fwiw, I inventoried my own holdings this week and some are so near-term overbought it's not funny --> EME, FIX, MEDP . But since these have great long term charts, and are only small positions, I'm figuring it's best to just hang with them long term.

Btw, SMG continues to move cautiously higher. Looks like a test of 70 soon, and then a move up to 80 (Feb 2023 high) might be possible. But just a guess based on the chart. I always liked SMG's lawn + garden business, but the Hawthorne / cannabis side has been holding the stock back. If they would announce plans to spin off Hawthorne --> a fast recovery for SMG stock.



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[gfp927z]

Signs of a bubble --> Single stock leveraged ETFs -


>>> Inflows into bullish Nvidia ETF hit record on AI frenzy


Reuters

Mar 7, 2024

By Bansari Mayur Kamdar


https://finance.yahoo.com/news/inflows-bullish-nvidia-etf-hit-155124143.html


(Reuters) - Investors have piled into Nvidia-focused exchange-traded funds (ETFs) this year on the frenzy around AI, with inflows into a bullish fund that tracks the shares of the chip designer hitting an all-time high on Wednesday.

Net daily inflows into the GraniteShares 2x Long NVDA Daily ETF hit a record of $197 million, according to LSEG Lipper data. The assets managed by the ETF have grown to $1.41 billion from $213.75 million at the start of the year.

WHY IT'S IMPORTANT

Risk-averse investors have largely stayed away from leveraged ETFs tracking single stocks that aim to provide returns over extremely short periods.

These ETFs, which made their U.S. debut in 2022, have become popular among speculators looking to bet on the most volatile shares based on earnings and other news.

CONTEXT

Nvidia, which controls about 80% of the high-end AI chip market, has surged nearly 82% since the start of the year after a stellar forecast and amid renewed euphoria around AI.

Leveraged single-stock ETFs seek to amplify the returns of an underlying stock for a single day, generally by two or three times, using financial derivatives and debt as leverage.

KEY QUOTES

"Nvidia has been the hottest stock in 2024 and many investors are eager to seek out higher returns in exchange for added risk," said Todd Rosenbluth, chief ETF strategist at VettaFi.

"We expect to see continued demand for single stock leveraged ETFs as a new wave of must-own companies emerge."

THE NUMBERS

Net monthly inflows into leveraged ETFs tracking Nvidia such as the GraniteShares 2x Long NVDA ETF, the Direxion Daily NVDA Bull 1.5X Shares ETF and the T-Rex 2X Long Nvidia Daily Target ETF hit a record in February.

The GraniteShares ETF has already crossed its net monthly flow record within the first six days of the month.

Assets of the three Nvidia-linked ETFs jumped between five and 11 times since the start of 2024, while their prices are up between 143% and 218% year-to-date, outperforming other ETFs.

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