Technology Stock of the Week: Cisco
Cisco (CSCO) shares have been displaying relative strength against the broad Nasdaq 100 Index over the last three months as the stock prepares to break to new high territory.
The networking company has spent the last decade growing and contracting by way of acquisitions, but the networking company appears ripe to benefit from networking growth from AI.
The company has been investing heavily into AI developments while announcing cost-cutting measures.
In August, the networking company – which found its leadership during the .com revolution – announced the cutback of 7% of its workforce.
The move, while painful, was made to focus on improving Cisco’s margins after substantial investments in growing their AI business.
Shares of Cisco are preparing to move above the wide trading range that has held shares for the last two years.
A move above $60 will complete that breakout and target an additional 25% upside potential as the stock targets $70.
Growth Stock of the Week: Iron Mountain
Maintaining the focus on AI, Iron Mountain (IRM) is one of the few companies that provide data center services for AI, and other businesses.
As one of the largest data center companies in the world, Iron mountain’s stock price has grown more than 125% over the last year, a reflection of the increasing demand for valuable data center space.
The growth outpaces almost every AI technology company but comes with a bonus. Iron Mountain shares trade with less than half of the volatility seen in the Magnificent Seven stocks.
Lower volatility isn’t Iron Mountain’s only bonus.
Shares of Iron Mountain pay a quarterly dividend amounting to a 2.6% dividend yield.
Shares of Iron Mountain have continued to press to new all-time highs each of the last six months, recently rallying above $125 on their way to a target price of $160.
Stock Under $10 of the Week: Valley National Bank
Regional and small banks are preparing to reap the rewards of lower interest rates.
The Fed is likely to maintain a steady and slow pace in lowering rates in 2025 as inflation edges towards its target. That move will increase demand for borrowing on everything from mortgages to discretionary spending, areas that benefit regional lenders like Valley National Bancorp (VLY).
Valley Nationals’ chart turned bullish in July as the stock’s 50-day moving average began an ascending pattern. A bullish 50-day moving average forecasts higher prices over a stock’s 4-6 week outlook.
In addition, VLY shares crossed into a long-term bullish pattern in August as they closed above their 20-month moving average.
Shares should face some resistance at $10 as the price level holds psychological significance for a stock on the climb. That said, a break above that price level will attract additional buyers as VLY targets its next move to $12.
Income Stock of the Week: Dominion Energy Inc
Utility companies have been on of the sleeper sectors of 2024 as the Utilities Sector ETF (XLU) has returned 40% over the last year.
Companies that currently, or plan to, supply electricity to technology companies to power the massive demand from AI are the underpinnings of the strength. But there’s more.
With interest rates falling, investors have shifted to a search for yield as rates from banks and bonds are set to drop.
Dominion Energy (D) offers both.
Amazon.com recently announced a partnership with Dominion to develop nuclear modular reactors marking Dominion’s inclusion in the Nuclear AI Club.
In addition, shares of Dominion generate a dividend yield of 4.48%, putting it in rare air for technically strong income stocks.
Shares of Dominion are riding the wave of their bullish trends with a target price of $75.
Bearish Stock of the Week: DR Horton
Housing stocks have seen a dramatic slowdown of late as interest rates have continued to climb higher.
Over the last month, rates on the 30-year fixed mortgage have moved back above 7.25% as the bond market starts to move back into a long-term bear market trend.
This, combined with data that shows housing sales – existing and new – continue to slide to their lowest numbers in more than a year, has shares of DR Horton (DHI) and other homebuilders breaking into short-term bear market trends.
Shares of DR Horton just moved below $180 last week, threatening further declines to support at $160.
Those that watch the charts will note that DR Horton’s 20-day moving average crossed below its 50-day moving average last Thursday. That patterns forecasts lower prices as DHI shares are gaining negative momentum.
Rates are likely to head lower in 2025, but between now and then, DR Horton shares are likely to suffer about 12%.
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Source: Money Morning