Top AI stock picks and Foot Locker's disappearing dividend with quant pro Steven Cress
Aug 23, 2023
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Steven Cress, head of Quantitative Strategy at Seeking Alpha, discusses the recent pullback in AI stocks, Nvidia's value metric, top buy-the-dip opportunities, and how Quant Ratings detected Foot Locker's problems.
NVIDIA, a leading AI stock, may be overvalued based on its valuation metrics, but its peg ratio suggests it could still be a hold or potentially an attractive buy.
Taking advantage of the recent pullback in the AI sector can provide attractive investment opportunities, especially in stocks like Meta and Google that have performed well in the sector.
Deep dives
Analysis of NVIDIA as an AI stock
NVIDIA, a leading AI stock, is not on the top three list due to its valuation grade, which is an F. Despite its strong growth, profitability, momentum, and EPS revisions, NVIDIA's valuation metrics, such as PE, PEG, and price-to-sales ratios, indicate that the stock may be overvalued. However, the peg ratio, which combines growth and value, shows that NVIDIA is slightly undervalued compared to the sector. While the overall valuation grade is an F, the peg ratio suggests that the stock could still be a hold or potentially an attractive buy.
Strong performance of Meta and Google in the AI sector
Meta and Google are two of the stocks that have performed well in the AI sector. Meta had a strong buy rating and experienced a positive turnaround when they refocused on their traditional businesses and AI investments. Google has also maintained a strong buy rating. The article recommends taking advantage of the dip in stock prices in the AI sector, especially with the recent pullback in the NASDAQ and tech ETFs, making valuations more attractive for investment opportunities.
Factors affecting the inclusion of Microsoft in the AI stock list
Despite having a good year with a 35% increase in stock price, Microsoft did not make the top AI stock list due to lower factor grades in valuation, growth, and EPS revisions. The quant ratings for Microsoft indicate average to weak performance in these areas compared to other stocks on the list. However, it is important to note that the AI industry is continuously evolving, and companies like Microsoft may still have a significant presence and potential in the sector.
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).
For full access to analyst ratings, stock quant scores as well as dividend grades, subscribe to Seeking Alpha Premium at seekingalpha.com/subscriptions (new subscribers get the 1st month for under $5)
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