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CNBC
a day ago
- Business
- CNBC
Best Stocks: Rounding out our biotech exposure with a big winner, one we missed and another we're still early on
(This is The Best Stocks in the Market , brought to you by Josh Brown and Sean Russo of Ritholtz Wealth Management.) Josh — One of the primary purposes of keeping this Best Stocks in the Market List is to help us keep our biases in check. For example, my attitude toward the biotechnology segment of the stock market these days can be described as "extreme apathy." I simply do not have time for the names in this group. The industry isn't working, hasn't been working, and has represented a massive opportunity cost versus the major averages over the last few years. But that's just my bias talking. It's informed (I have the data), but it's a bias nonetheless. In the meantime, there is a small number of biotechs on our list, two of which we've written about for CNBC Pro already and one that we should have written up much earlier. You may recall our column from June in which we talked about Gilead Sciences and Alnylam Pharmaceuticals . Both are still included in the Best Stocks list. ALNY has become an incredible winner, up 50% since the day of our write-up. GILD is more of a work in progress, up 5% since in a very tough tape for anything health care. The one we neglected to mention, Insmed (INSM) , is the biggest winner of the three. Sometimes it just works out that way. Sean and I can only cover so many names for you each week. We're trying! In today's update, we'll do an overview of the list and then hit these lonesome three biotech names that have transcended all other stocks in their sector to be among the very best in the U.S. stock market this year. Sector leaderboard As of Aug. 18, there are 182 names on The Best Stocks in the Market list Top sector ranking Top industries Top 5 best stocks by relative strength Sector spotlight Sean — We wrote up a piece on GILD and ALNY in early June. Both stocks are still on the list, and we got another entrant in INSM, rounding out our biotech exposure. Below is the most well-known biotech ETF, which happens to have all 3 of our stocks in its top five holdings: You can see this group of biotechs has ripped off its "liberation day" lows. They just bounced off their 50-day moving average and broke right through their 200-day moving average. The sector is gearing up for a golden cross, assuming we continue trending higher. Biotech stocks have historically shown resilience and even outperformance during Federal Reserve rate-cutting cycles, benefiting from a valuation boost and improved funding conditions (as most capital-intensive businesses do). Because many biotechs generate most of their cash flows in the future, lower interest rates reduce discount rates and increase the present value of those expected earnings. While biotechs generally like rate cuts, the three stocks on our list are in slightly different breakout phases. We were late on Insmed (INSM) You can see this stock is ripping, up 95% over the past three months and up 16% the past week. On Aug. 12, Insmed announced the Food and Drug Administration approved Brensocatib, the first and only treatment specifically for non–cystic fibrosis bronchiectasis, a chronic lung condition. This approval sparked immediate investor enthusiasm, driving the stock higher. Alnylam (ALNY) was a home run We wrote this one up on June 9; the stock is up 48% from that day. Alnylam delivered stellar second-quarter results, far exceeding expectations. Revenues were up 64% year-over-year. The company received regulatory approvals in the European Union, Brazil, UK, Germany and Japan for their cardiomyopathy treatment. We noted the FDA approval in the U.S. as a tailwind for the stock. It's still early for Gilead (GILD) The stock has been trending nicely, up a reasonable 5% since we wrote them up in June. They reported earnings in early August, beating on both lines and raising guidance for the full year. Gross margin improved from 78.7% to 87% and they authorized a new $6 billion share repurchase program along with a 79 cent per share dividend. Risk management Josh — Gilead is the world leader in treating HIV, and its newest approved drug, Yeztugo, got a special shoutout during the earnings call on Aug. 7. Yeztugo is a twice-a-year injection used to prevent HIV, and CEO Daniel O'Day said the first prescription was written within hours of launch — and the first dose was delivered within days. The company is expecting 75% U.S. insurer coverage within six months, and 90% coverage within one year. This, along with other positive developments in the company's pipeline as well as the affirmation of full-year guidance, should support the current rally. GILD found overhead resistance at $120 — precisely where you would have expected it to — as some of those who bought at these levels back in March lighten up just in case the stock fails again. I'm willing to give GILD the benefit of the doubt. I think it trades through $120 and can stay there. Especially if the biotech's long and miserable downtrend is finally being snapped as Sean has shown above. GILD won't give you the maximum bang for your buck in a biotech bull market, but it's been a sector leader and should hold its own. This name has been above its 200-day at all times over the last 12 months (see above). Traders can use $110 for risk management, investors can trail it with a 200-day simple moving average, currently around $102 - I'd keep updating that stop at the end of each week. So long as the sector is in comeback mode and GILD hangs near highs, I'd want to be long. DISCLOSURES: (None) All opinions expressed by the CNBC Pro contributors are solely their opinions and do not reflect the opinions of CNBC, NBC UNIVERSAL, their parent company or affiliates, and may have been previously disseminated by them on television, radio, internet or another medium. THE ABOVE CONTENT IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY . THIS CONTENT IS PROVIDED FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSITUTE FINANCIAL, INVESTMENT, TAX OR LEGAL ADVICE OR A RECOMMENDATION TO BUY ANY SECURITY OR OTHER FINANCIAL ASSET. THE CONTENT IS GENERAL IN NATURE AND DOES NOT REFLECT ANY INDIVIDUAL'S UNIQUE PERSONAL CIRCUMSTANCES. THE ABOVE CONTENT MIGHT NOT BE SUITABLE FOR YOUR PARTICULAR CIRCUMSTANCES. BEFORE MAKING ANY FINANCIAL DECISIONS, YOU SHOULD STRONGLY CONSIDER SEEKING ADVICE FROM YOUR OWN FINANCIAL OR INVESTMENT ADVISOR. INVESTING INVOLVES RISK. EXAMPLES OF ANALYSIS CONTAINED IN THIS ARTICLE ARE ONLY EXAMPLES. THE VIEWS AND OPINIONS EXPRESSED ARE THOSE OF THE CONTRIBUTORS AND DO NOT NECESSARILY REFLECT THE OFFICIAL POLICY OR POSITION OF RITHOLTZ WEALTH MANAGEMENT, LLC. JOSH BROWN IS THE CEO OF RITHOLTZ WEALTH MANAGEMENT AND MAY MAINTAIN A SECURITY POSITION IN THE SECURITIES DISCUSSED. ASSUMPTIONS MADE WITHIN THE ANALYSIS ARE NOT REFLECTIVE OF THE POSITION OF RITHOLTZ WEALTH MANAGEMENT, LLC" TO THE END OF OR OUR DISCLOSURE. Click here for the full disclaimer.
CNBC
04-08-2025
- Business
- CNBC
Best stocks: After last week's outperformance, there is a new 2025 sector champ
(This is The Best Stocks in the Market , brought to you by Josh Brown and Sean Russo of Ritholtz Wealth Management.) Josh — If I asked you what is the most important geographic location on earth for the modern internet, you might be tempted to guess Silicon Valley or perhaps somewhere in Asia. You'd be wrong. Believe it or not, it's in Loudon County, Virginia, known by the locals as "Data Center Alley." The Alley is home to the world's largest cluster of data centers. According to the Wall Street Journal, approximately 70% (SEVENTY PERCENT!) of the entire world's internet traffic passes through this Northern Virginia cluster every day. And the build-out in this region is not nearly complete. Data centers use a ton of electricity, which means that whomever is supplying that electricity is looking at an ocean of demand as far as the eye can see. With that in mind, it's time to introduce you to a new name on our Best Stocks in the Market list — Dominion Energy (D) . The story here is incredibly simple. Thirty years ago, when the consumer internet was born, the majority of its users were gaining access via America Online. AOL was based in a suburb of DC and moved itself to Ashburn, VA — right in the heart of Loudon County. This was the birth of the data center and, to this day, it remains ground zero for newly contracted gigawatt (GW) demand. Amazon invested $52 billion in Loudon County data center infrastructure between 2011 and 2021 and has committed to spending another $35 billion between now and 2040 on an estimated 42 million square feet. Dominion is supplying the bulk of the electricity needed, with an estimated 9 GW of data center load under service contracts and another 5 GW in newly signed construction letters. In addition to AWS, Dominion is also serving Meta, Microsoft's Azure and the Google Cloud. This past July, Dominion formally announced a rate increase proposal to its regulators in part stemming from its crucial work on behalf of the AI-enabled data center buildout happening on its turf. It wants more money to support the new demand as well as to continue serving its 4.1 million customers. A decision is expected to come this September, which could serve as a major catalyst for the stock should it go into effect this January. In the meantime, you have a stock approaching new 52-week highs with a 4.4% dividend yield while you wait. Sean's going to get into some broader commentary about what's going on with the Best Stocks list below. I'll be back with some risk management commentary should the trade not work out. Sector Spotlight Sean —Continuing with our focus on utilities last week, we had a new entrant hit our list on Friday while the rest of the market was selling off. With this new addition, which we will discuss in further detail below, utilities are now tied for the 3rd most populous sector on our list. There is a total of 16 utility companies out of 152 on the Best Stocks in the Market: Taking a look at the industry makeup, the electric utilities industry is tied for the 3rd most populous with 9, and the multi utilities industry is tied for 7th with 5 companies on the list. Last week , we compared utility breadth to the S & P 500. Instead, let's compare to the all-mighty tech sector. AI seems to be everywhere. The "AI is the only thing keeping the market afloat" memes are rampant, and although that is a fair observation, utilities are lighting it up compared to tech. No matter how you slice and dice the data, utilities are seeing momentum right now. As of Friday's close, the median utility stock has an RSI of 64. 90% of utes are above their 20- and 200-day moving average, 94% are above their 50 day moving average. The median utility stock is within 3% of 52-week highs. Compare that to tech: the median RSI is 41. Only 38% of tech is above their 20-day moving average, 47% are above their 50-day and 57% are above their 200-day moving average. The median tech stock is 14% below 52 week highs. In other words, despite all the hype about the tech sector, the typical stock in the group is only about 6% away from a bear market. Last week, utilities were the second-best-performing sector YTD. Well, we have a new sector in pole position: We are long-term investors. Our default setting is optimism. Two positive reflections from this analysis: first, AI will affect a lot more companies than just tech firms, and the market is pricing in that reality. Which leads to thought number two: there is still a catch-up trade to be had, even in tech. Most stocks have not performed well over the past year; only a select few are leading us higher. 295 stocks are underperforming the S & P 500 YTD, representing 59% of the index. Rotation is healthy, and if we see some of the sleepier, value-oriented sectors wake up, we could be in for a great second half of the year. One stock that just hit our list, with what looks to be a great set-up for the second half of 2025, is yet another utility: New addition to Best Stocks: Dominion Energy Date added: 08/012025 Sean — Dominion Energy is a multi-utility stock paying a 4.42% dividend, making it a top-50 dividend payer in the S & P 500. D has 27,000 MW of generation capacity from a diversified portfolio of nuclear, natural gas, coal, hydro, solar and offshore wind energy projects. The company also acts as one of the nation's leading developers of renewable energy — Its Coastal Virginia Offshore Wind project is under construction off the Virginia coast. The company reported earnings on Friday, beating on revenue and EPS expectations, vaulting the stock onto our list. From that earnings call, management reaffirmed guidance on earnings, its creditworthiness, and its dividend payout. They also gave investors an update on the Coastal Virginia Offshore Wind project. The project represents "the fastest and most economical way to deliver nearly 3GW to Virginia's grid to support America's AI and cyber, shipbuilding, and military + defense preeminence" via Dominion's earnings presentation. This project has rare bipartisan support from both the state of Virginia and Congress. The project is fully state and federally permitted, and is 60% completed, with an expected completion date of 2026. This project will deliver substantial electricity to Virginia's grid to support America's data center market, military installations, and shipbuilding operations, which positions Dominion to capitalize on data center demand in its service territory. Management noted that "9 of our top 10 all-time peak days in Virginia have occurred this year." (data via Quartr) As demand for power accelerates, more and more companies are primed for the next move higher. Scale, stability, and energy diversification are quietly leading the market higher in 2025. Risk management Josh — Let's not make this more complicated than it needs to be. The utility sector is extremely strong as Sean has shown above. Dominion is emerging as one of the strongest stocks in the sector. This is the kind of tailwind you want when considering a new position. Below I am showing you a five-year chart with a 200-week moving average which the stock is now challenging: A weekly closing price below $50 means something may have changed. Traders can use that as their pivot point while longer-term investors may want to just grit their teeth and live through it — a decline like that would only make the dividend yield even more juicy. In its last earnings report, Dominion reaffirmed full year guidance so I feel good about the opportunity remaining intact going into the fall rate case decision. Good luck out there. DISCLOSURES: None All opinions expressed by the CNBC Pro contributors are solely their opinions and do not reflect the opinions of CNBC, NBC UNIVERSAL, their parent company or affiliates, and may have been previously disseminated by them on television, radio, internet or another medium. THE ABOVE CONTENT IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY . THIS CONTENT IS PROVIDED FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSITUTE FINANCIAL, INVESTMENT, TAX OR LEGAL ADVICE OR A RECOMMENDATION TO BUY ANY SECURITY OR OTHER FINANCIAL ASSET. THE CONTENT IS GENERAL IN NATURE AND DOES NOT REFLECT ANY INDIVIDUAL'S UNIQUE PERSONAL CIRCUMSTANCES. THE ABOVE CONTENT MIGHT NOT BE SUITABLE FOR YOUR PARTICULAR CIRCUMSTANCES. BEFORE MAKING ANY FINANCIAL DECISIONS, YOU SHOULD STRONGLY CONSIDER SEEKING ADVICE FROM YOUR OWN FINANCIAL OR INVESTMENT ADVISOR. INVESTING INVOLVES RISK. EXAMPLES OF ANALYSIS CONTAINED IN THIS ARTICLE ARE ONLY EXAMPLES. THE VIEWS AND OPINIONS EXPRESSED ARE THOSE OF THE CONTRIBUTORS AND DO NOT NECESSARILY REFLECT THE OFFICIAL POLICY OR POSITION OF RITHOLTZ WEALTH MANAGEMENT, LLC. JOSH BROWN IS THE CEO OF RITHOLTZ WEALTH MANAGEMENT AND MAY MAINTAIN A SECURITY POSITION IN THE SECURITIES DISCUSSED. ASSUMPTIONS MADE WITHIN THE ANALYSIS ARE NOT REFLECTIVE OF THE POSITION OF RITHOLTZ WEALTH MANAGEMENT, LLC" TO THE END OF OR OUR DISCLOSURE. Click here for the full disclaimer.
CNBC
20-06-2025
- Business
- CNBC
Best Stocks: An under-the-radar play on the AI buildout that was founded more than 90 years ago
(This is The Best Stocks in the Market , brought to you by Josh Brown and Sean Russo of Ritholtz Wealth Management.) Josh — During the last earnings season, the hyperscalers all affirmed their guidance for capital expenditures this year. The AI data center and infrastructure buildout is not slowing down. Earnings results and AI-related commentary from Oracle and AMD over the past week make it clear that this theme remains on fire. Lots of the companies on the Best Stocks in the Market list are direct or indirect beneficiaries of all this spend. Today we're going to introduce you to a name you may not have heard much about yet. In 1932, inventor Arthur Schmitt founded a company to produce electrical connector components for radios in Chicago. Before long, military demand for these components and others skyrocketed thanks to the run-up into World War II. Nearly a century later, Schmitt's company, now called Amphenol (APH) , is still supplying these components to customers around the world. If it has cables, printed circuit boards, sensors, antennas or modules, it needs connectors to make all these things work together. Amphenol's products enable secure, high-performance connections, especially in harsh or high-speed environments where durability is not optional and only the top quality components will do. Amphenol is in three businesses: Harsh Environment Solutions sells ruggedized connectors, cable assemblies, and sensors for aerospace, defense, industrial, and automotive applications. Interconnect & Sensor Systems is made up of commercial electronics, automotive sensors, and fiber‑optic/copper connectors. But it's their third and largest business that we're focused on today. Despite the diversified nature of the company, the upside surprises are coming from their involvement in the global data center build-out. This vertical — Communications Solutions — is 45% of Amphenol's business and growing rapidly, fueled by incredibly strong demand coming from broadband, mobile networks and data center interconnects. After the last earnings report, which Sean will detail below, Wall Street woke up to the fact that there's no AI without connections between the chips and the hardware, the servers and the electrical equipment, the architecture and the energy. Amphenol's products are involved at every stage of this. Best Stock Spotlight: Amphenol Corp (APH) On the list since: 12/16/2024 One-year price chart with moving averages, RSI: Sean — Amphenol has as pretty of a chart as you'll find. Below is a total return price chart over the past 5 years using a logarithmic scale (On a log scale, equal vertical distances represent equal percentage changes, so a move from $10 to $20 - a 100% gain - looks the same as a move from $100 to $200, it helps visualize longer term charts): The stock has seen some downtrends over the past 5 years, but its long-term trend is incredibly consistent - up and to the right. Looking at the stock on a weekly basis, buyers have tended to come in around the 50-week moving average. And if you're lucky enough to have a shot at the 200-week, investors are hammering the buy button. Every move toward the 200-week was followed up with heavy buying volume over the past 5 years: There are not many stocks that have shown this type of strength over long stretches of time. Going back to June of 2020 (5 years), this stock has spent 82% of its time above its 200-day moving average. Comparable to Nvidia Nvidia (NVDA), which is possibly the best stock to have ever existed, spent about 80% of its time the past 5 years above its 200-day moving average. Not to proclaim that this is the next NVDA, but this highlights how strong of a stock this is, and more importantly, how difficult it can be to wait for a dip. The stock is just as strong on a fundamental basis. From its Q1 earnings, Amphenol hit a record $4.8B in sales, up 48% year-over-year. EPS came in at $0.63, up 58% year-over-year. The company achieved record adjusted operating margin of 23.5% in Q1 2025, representing a 250 basis point improvement from 21.0% in Q1 2024 (1 basis point equals 0.01%0. Earnings growth and margin expansion were primarily driven by strong operating leverage on stronger sales volumes. The most significant growth driver was the IT datacom market, which represented 33% of sales and grew 134% organically year-over-year, with particular strength in artificial intelligence-related applications. (Earnings data via Quartr) AI is a massive driver for this company. The CEO had this to say on what's going on with AI: "It is a revolution that creates for our industry a disproportionate opportunity because of the unique nature of the architecture and the intensity of the interconnect solutions that are associated with that architecture. And so when you stack that all together, it's a great revolution. It's a more interconnected intensive revolution, and we've taken more than our fair share of that. The result has been that our IT datacom business has grown very robustly." This stock has a great story, strong technicals, and exciting fundamentals. What more could you ask for? Risk Management: Josh — It's tempting to look at the chart of Amphenol and say "Well, I guess I missed it." And, of course, you're certainly not looking at a ground floor buy-in here. But it's been my experience that more stock market opportunities have been lost by people thinking they already missed their chance than for any other reason. If you've been investing for a while, it's likely you already have some of your own war stories of this variety — Tesla, Bitcoin, Netflix, Nvidia, Broadcom, Palantir, etc. It's really hard to buy a stock that's just doubled. It's even harder to imagine a doubling happening again. Having a solid risk management plan in place prior to entry can help investors over this mental hurdle. APH is currently in the process of consolidating its huge post-earnings rally. RSI has cooled off to just below 70 and that's a good first step. I'd be watching for a price dip into the high $80s, which would be a retest of the most recent breakout area before entering the position. The risk of waiting for that lower entry is you may not get the chance. It happens. Traders will want to keep an eye on the rising 50-day, currently $81.50, as a place to lighten up or exit. Investors will want to give this situation the benefit of the doubt and a little bit of a longer leash. There's a gap below $71, I like that level as a stop as it would tell me the sellers have taken control and something may have changed with the story. DISCLOSURES: (None) All opinions expressed by the CNBC Pro contributors are solely their opinions and do not reflect the opinions of CNBC, NBC UNIVERSAL, their parent company or affiliates, and may have been previously disseminated by them on television, radio, internet or another medium. THE ABOVE CONTENT IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY . THIS CONTENT IS PROVIDED FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSITUTE FINANCIAL, INVESTMENT, TAX OR LEGAL ADVICE OR A RECOMMENDATION TO BUY ANY SECURITY OR OTHER FINANCIAL ASSET. THE CONTENT IS GENERAL IN NATURE AND DOES NOT REFLECT ANY INDIVIDUAL'S UNIQUE PERSONAL CIRCUMSTANCES. THE ABOVE CONTENT MIGHT NOT BE SUITABLE FOR YOUR PARTICULAR CIRCUMSTANCES. BEFORE MAKING ANY FINANCIAL DECISIONS, YOU SHOULD STRONGLY CONSIDER SEEKING ADVICE FROM YOUR OWN FINANCIAL OR INVESTMENT ADVISOR. INVESTING INVOLVES RISK. EXAMPLES OF ANALYSIS CONTAINED IN THIS ARTICLE ARE ONLY EXAMPLES. THE VIEWS AND OPINIONS EXPRESSED ARE THOSE OF THE CONTRIBUTORS AND DO NOT NECESSARILY REFLECT THE OFFICIAL POLICY OR POSITION OF RITHOLTZ WEALTH MANAGEMENT, LLC. JOSH BROWN IS THE CEO OF RITHOLTZ WEALTH MANAGEMENT AND MAY MAINTAIN A SECURITY POSITION IN THE SECURITIES DISCUSSED. ASSUMPTIONS MADE WITHIN THE ANALYSIS ARE NOT REFLECTIVE OF THE POSITION OF RITHOLTZ WEALTH MANAGEMENT, LLC" TO THE END OF OR OUR DISCLOSURE. Click here for the full disclaimer.
CNBC
27-05-2025
- Business
- CNBC
Best Stock: A former high flyer that's coming back into favor because of improving fundamentals
(This is The Best Stocks in the Market , brought to you by Josh Brown and Sean Russo of Ritholtz Wealth Management.) Josh: This week we saw a few new names hit the Best Stocks in the Market list, including a former high-flier that's now come back into favor. Remember the Snowflake (SNOW) IPO? It was a big deal. At the time it came public in September 2020, investors were clamoring for cloud computing stocks and the whole tech sector was red hot. SNOW debuted with the largest IPO in history, raising $3.36 billion. And, if you can believe it, the stock turned out to have been underpriced. Shares were sold to the public at $120, but ultimately got as high as $300 on the first day of trading. The company had a valuation of $75 billion right out of the gate, a multiple of approximately 75 times its projected full-year revenues. Fun fact — it's the first time I can remember seeing Berkshire Hathaway on the holders list of a hot new issue (Warren Buffett's firm sold its whole position out a long time ago). If you thought that was the top, you hadn't seen anything yet. By Thanksgiving the following year, Snowflake hit its all-time high of $401.89 per share. That was the top of the post-pandemic tech rally. From there, a collapse of over 70% to an all-time low of $107 in September 2024. Shareholders who had held from the IPO for the next four years were now looking at unrealized losses after all that volatility. But then a funny thing happened. The CEO stepped back and took the chairman's role while promoting internally to bring the company's head of AI into the C-Suite and onto the board of directors. The company put together a few quarters in a row of 25% growth and has begun surprising The Street to the upside. Sean's going to share some more of the details below. This is a stock that's still 50% below its all-time high, but is now a double off of the lows and climbing. In my experience, institutions don't mind paying up for a growth company as the story improves. Snowflake's biggest drawback for most professionals has been its long and winding path to full-year profitability. Best stocks stats As of 5/27/2025 morning, there are 106 names on The Best Stocks in the Market list. Top sector ranking: Top 5 Best Stocks by Relative Strength: New addition: Snowflake Sean: SNOW was added to our Best Stocks in the Market list last week following a great earnings report. SNOW is classified as "IT Services" below, but software and software-related names are the strongest stocks in the market right now: The IGV (iShares Expanded Tech-Software Sector ETF) is up 2% in total return YTD and up 20% the past year, nearly doubling the performance of the Nasdaq 100 over the past year. Snowflake is a cloud-based data platform that enables organizations to store, manage, and analyze large volumes of data seamlessly across multiple cloud environments. You can't do anything useful in AI if your data isn't clean, organized and unified. Snowflake helps companies optimize their data for machine learning, model-training and other stuff. SNOW went public in September of 2020, right before we experienced the largest tech bubble since the dot-com implosion in 2001. It's had a difficult couple of years if you look at the chart since its inception: As a trader, it's not the prettiest chart. But if it can maintain support around the $190 level, which has been an important level of resistance for the stock going back to 2022, there's some room for the bulls to push this higher. Looking at the chart below since inception, on a weekly basis the stock has been in a down trend, but after this latest earnings beat, both moving averages are beginning to flatten, showing possible support for an uptrend: As an investor, the stock has not been rewarding, but the fundamentals are improving. During last week's earnings call, SNOW beat on the top and bottom lines, with revenue growing 4%, EBIT (earnings before interest and taxes, also known as operating earnings) growing 74%, and EPS growing 13%, all YoY. (Data via Quartr.) SNOW now has 606 companies paying them over $1 million dollars in revenue each, a figure which is up 27% year over year. Gross margins have expanded from 59% in 2021 to 67% today, bringing the company closer to its profitability goals. SNOW's net revenue retention rate hit 124% for the quarter, which is a great sign. A net revenue retention rate of 124% means that, on average, a company's existing customers are spending 24% more, even after accounting for customer churn, downgrades, cancellations, etc. In simpler terms, if you started the year with customers paying $100, by the end of that year, the same group is paying you $124 without adding any new customers. It means existing customers are growing in value to the business. SNOW is not profitable on an operating basis, but with the growth and scale they are achieving, profitability on an operating and net income basis is on the horizon, which would mean higher stock prices with it. Risk Management Josh: Below, I'm zooming in on the last 100 days or so because SNOW has run right back up to its February highs. It's just had a parabolic move higher after reporting great results. Ideally if I'm a trader, I'm waiting for an entry on a low volume pullback into the 190s. I'd use $175 - $180 as my line in the sand. That area should hold as support. If it doesn't, the setup didn't work. Longer-term investors can give it a wider berth and let the flat-lining 200-day (now at $160) turn up a bit. I'd be using that as a stop, checking it on a weekly closing basis each Friday. I was going to end this by saying "Stay Frosty" but then I'd have to slam my own fingers in a desk drawer just to distract from the cringe. And nobody wants that. Good luck out there, Sean and I will return later in the week. DISCLOSURES: (None) All opinions expressed by the CNBC Pro contributors are solely their opinions and do not reflect the opinions of CNBC, NBC UNIVERSAL, their parent company or affiliates, and may have been previously disseminated by them on television, radio, internet or another medium. THE ABOVE CONTENT IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY . THIS CONTENT IS PROVIDED FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSITUTE FINANCIAL, INVESTMENT, TAX OR LEGAL ADVICE OR A RECOMMENDATION TO BUY ANY SECURITY OR OTHER FINANCIAL ASSET. THE CONTENT IS GENERAL IN NATURE AND DOES NOT REFLECT ANY INDIVIDUAL'S UNIQUE PERSONAL CIRCUMSTANCES. THE ABOVE CONTENT MIGHT NOT BE SUITABLE FOR YOUR PARTICULAR CIRCUMSTANCES. BEFORE MAKING ANY FINANCIAL DECISIONS, YOU SHOULD STRONGLY CONSIDER SEEKING ADVICE FROM YOUR OWN FINANCIAL OR INVESTMENT ADVISOR. INVESTING INVOLVES RISK. EXAMPLES OF ANALYSIS CONTAINED IN THIS ARTICLE ARE ONLY EXAMPLES. THE VIEWS AND OPINIONS EXPRESSED ARE THOSE OF THE CONTRIBUTORS AND DO NOT NECESSARILY REFLECT THE OFFICIAL POLICY OR POSITION OF RITHOLTZ WEALTH MANAGEMENT, LLC. JOSH BROWN IS THE CEO OF RITHOLTZ WEALTH MANAGEMENT AND MAY MAINTAIN A SECURITY POSITION IN THE SECURITIES DISCUSSED. ASSUMPTIONS MADE WITHIN THE ANALYSIS ARE NOT REFLECTIVE OF THE POSITION OF RITHOLTZ WEALTH MANAGEMENT, LLC" TO THE END OF OR OUR DISCLOSURE. Click here for the full disclaimer.
