Five (Surprising) Stocks to Watch

5 Surprising Stocks to Own Now

There’s been a good deal of market uncertainty over the last year.

All thanks to inflation, interest rate hikes, fears of recession, Russia, and the collapse of Silicon Valley Bank, which triggered a sell-off in bank stocks, forcing regulators to backstop the industry. And while markets are still unpredictable even now, there are plenty of safe investment opportunities to jump into. In fact, we found five in some of the hottest, fastest-growing industries to buy now.

Piedmont Lithium (PLL)

Let’s start out with the red-hot lithium story.

With accelerating demand for electric vehicles, and all things green, there’s significant demand for lithium with little supply. Sure, Goldman Sachs and Bank of America want you to believe we’ll see a lithium surplus this year.  

“There could be a surplus of lithium in 2023 as higher supply volumes are set to supersede slowing demand for the metal,” said Bank of America Securities’ head of Asia Pacific basic materials, Matty Zhao. “We see a lot of supply coming out from lithium mines … We are expecting 38% lithium supply growth this year. That’s why 2023 is likely to turn into a surplus year for lithium.”

The prediction is honestly laughable.

According to Stellantis CEO Carlos Tavares, there may not even be enough lithium for EVs. 

“We know that we need lithium. We know that we are not producing as much as we need. We have right now 1.3 billion cars (that are) internal combustion engine powered on the planet. We need to replace that with clean mobility. That will need a lot of lithium. Not only the lithium may not be enough, but the concentration of the mining of lithium may create other geopolitical issues,” he told Detroit News.

Even major automakers—like Ford Motor and General Motors – are racing to secure supply with deals with Albemarle and Lithium Americas, for example. 

One of the companies benefiting from the lithium story is Piedmont Lithium, a $1.1 billion lithium company based out of North Carolina.

For one, Roth MKM analysts just raised their price target on PLL to $190 from $150 a share, with a buy rating. All thanks to its Definitive Feasibility Study for its Tennessee Lithium Project demonstrating strong economic viability. 

Two, North Carolina regulators just asked the company for additional information to approve the company’s mine permit application.  If all goes according to plan, Piedmont’s North Carolina mine could become one of “America’s largest sources of lithium for electric vehicle batteries for Tesla Inc. and other automakers,” as noted by Reuters.

Three, in early 2023, the company amended its supply contract with Tesla. Under the new contract, Piedmont Lithium will supply approximately 125,000 tonnes of spodumene concentrate to Tesla between the second half of 2023 and the end of 2025.

SoundHound AI (SOUN)

By now, you’re familiar with the artificial intelligence story. 

Grand View Research says the global AI boom could grow from about $137 billion in 2022 to more than $1.81 trillion by 2030. All as it transforms just about everything, about well, everything, including healthcare, governments, transportation, manufacturing, education, the media, even customer service. 

While we can always look at AI heavyweights like Alphabet, Microsoft, Nvidia, C3.AI, and Palantir, for example, the big payoff could come from the lesser known AI companies, which could eventually find themselves an M&A target.

Look at SoundHound (AI), a leader in conversational intelligence, offering voice AI solutions that let businesses offer incredible conversational experiences to their customers, for example.

Granted, that may not sound exciting.  But consider this.

The company is working to integrate voice assistants into vehicles and restaurants, both of which could bring in more than $500 million a year in revenue for the company. Even better, according to Automotive World, about 90% of new vehicles are expected to have embedded voice assistants by 2028. Another big plus for SOUN.

Also, not only is the company already seeing an “incredible surge in demand for conversational AI,” it just reported a 56% jump in revenue year over year. Gross margins jumped to 71% from 59%. And, according to CFO Nitesh Sharan, “Our top-line grew by 56% and every cost category improved sequentially, fueling steady progress towards profitability.”

Analysts over at Cantor Fitzgerald doubled his price target on SOUN to $6.20 from $2.80, with a buy rating.  SoundHound is one of the few companies that can take advantage of the AI frenzy currently occurring at every business across the globe,” he noted.

Viking Therapeutics (VKTX)

Obesity is a massive problem in the U.S.

In fact, you could say it’s bursting at the seams. According to the World Health Organization, global obesity has tripled since 1975.  In 2016, more than 1.9 billion adults were overweight. About 650 million were obese. About 39 million children under five were overweight or obese in 2020. Then more than 340 million children, ages five to 19 were considered overweight or obese in 2016. Unfortunately, when these numbers are updated they could be worse.

While regular diet and exercise could help prevent obesity, we may have the next best thing with medication.  That’s where Viking Therapeutics (VKTX) may benefit. At the moment, its VK2735 treatment is supposed to stimulate incretin hormones, which trigger a feeling of fullness, which can lead to possible weight loss.

Phase 1 trials with the treatment showed that patients lost 6% of their mean body weight, as compared to a placebo. Phase 2 trials are expected to start soon.

Even better, the company is in Phase 2 trials for a treatment of NASH, or non-alcoholic steatohepatitis, which is already showing positive results.  

In May, for example, the company “announced positive top-line results from its Phase 2b clinical trial of VK2809, the company’s novel liver-selective thyroid hormone receptor beta agonist, in patients with biopsy-confirmed non-alcoholic steatohepatitis (NASH).  The study successfully achieved its primary endpoint, with patients receiving VK2809 experiencing statistically significant reductions in liver fat content from baseline to Week 12 as compared with placebo,” as noted in a company press release.

Better, analysts at Roth MKM initiated a buy rating on the stock, with a $32 price target. They believe VKTX could have a blockbuster opportunity in a $26 billion NASH market. They’re also exciting about the company’s obesity drug, and see peak potential sales of $6.1 billion by 2035.

Roblox Corp. (RBLX)

Apparently, the demise of the metaverse has been greatly over exaggerated. That’s according to Lego and Epic Games, which partnered to launch new experiences in the digital world and the real world. Apple just launched its Vision Pro product, which gives it access to the metaverse. Even Nike is jumping into the metaverse with Fortnite to build a presence.  

While we can always buy Apple or Nike stock to take advantage, another hot metaverse stock to consider is Roblox (RBLX).  Starting out as a gaming platform for kids, it’s now one of the top destinations for immersive gaming for other age groups, too. 

Even better, the company just announced positive sales numbers. Bookings, for example, were up 23% year over year through April. Revenue jumped 22% year over year to $655 million. Daily average user growth was also up 22% year over year to 66 million. Plus, users spent about 14.5 billion hours interacting with RBLX content – up 23% year over year.

Analysts seem to like RBLX, too. Benchmark analysts just upgraded the RBLX stock to a buy rating. Roth MKM upgraded RBLX to a buy. Barclays raised its price target to $32 from $28, with BTIG raising its price target to $60 from $55. 

Canaccord also initiated coverage with a buy rating and a price target of $48 a share, and noted: “Bookings growth is anticipated to outpace expense growth moving through 2023 and into next year, which should contribute to margin expansion. The company is also targeting free cash flow at 25%+ of bookings over the long term,” per Seeking Alpha.

Enbridge (ENB)

Or, if you’re looking for safety with a high-yielding opportunity, there’s Enbridge (ENB). 

With a yield of 7.1% (which is higher than the broader market), the company offers safety in the energy infrastructure space, operating the second-longest natural gas pipeline in the U.S., North America’s longest crude oil pipeline, and a high-growth renewable power generation business. With regards to its renewable energy business, “projects in operation or under construction (and their 2,173 MW net generation capacity) are enough to meet the electricity needs of about 966,000 homes,” says the company.

The company also has about $12.9 billion worth of commercially secured capital projects that are under construction. Expected to come online through 2028, those projects include natural gas pipeline expansions, an LNG export terminal project, and offshore wind project in Europe.

Even better, Enbridge has a strong history of dividend payouts. The company has paid dividends for over 68 years.  Most recently, it declared a quarterly dividend of $0.8875 per common share, which was payable on June 1, 2023 to shareholders of record on May 15, 2023. 

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