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Wall Street Uncertainty Vanishes
Wall Street hates uncertainty, and this week, the two biggest uncertainties facing investors vanished – the trade war with China and inflationary concerns. Though much work remains between the world’s two largest economies to strike a full deal, representatives from each country confirmed that there was a lot more agreement on common ground than previously feared. Meanwhile, Tuesday morning’s inflation report came in below expectations for a third straight month. Grocery prices saw their largest decline in nearly five years, while gas prices fell for the third month in a row, debunking the claims that tariffs would cause inflation. Below are three important stocks to watch:
First Solar Explodes on Favorable Legislation
Shares of industry leader First Solar (FSLR) exploded by nearly 20% on Tuesday and are up 50% thus far in May. The stock had been rallying off lows recently, but news that solar incentives are staying around and are not included in the budget cuts sent the stock into overdrive. First Solar and other solar stocks will enjoy tax credits through at least 2028. FSLR also benefited Tuesday from two major upgrades:
Wolfe upgrading FSLR to outperform on better clarity on 45X credits. "FSLR stands to earn $10B from 45X, or ~$92/share. FSLR's domestic moat remains well intact as the only domestic solar module manufacturer of scale, and also doesn’t rely on foreign components such as cells or wafer"
Deutsche Bank (DB) commenting positive as well, naming FSLR a potential winner in their quick take on the House Draft. "[...] we believe First Solar (Buy rated) should emerge as the 'safe one' from changes, given the less impact on 45x credits, which investors had been fearing."
FSLR, which has seen shares underperform over the past six months, regained its 200-day moving average as volume swelled to five times the norm.
CoreWeave Carves Emerges from IPO U-Turn Base Structure
CoreWeave (CRWV) is turning the right side of a classic IPO u-turn base structure. Coreweave is a cloud computing company that provides massive amounts of processing power for large-scale computing and AI purposes. Shares gained nearly 10% and are within shouting distance of the all-time high achieved earlier this year ahead of earnings. The more I look at this stock, the more it reminds me of when Alphabet (GOOGL), then Google, broke out of a u-turn IPO base, sending the stock soaring. Like Google, CRWV is a liquid, emerging tech leader backed by institutional investors like Nvidia (NVDA). Obviously, CRWV will need to crush earnings when they report tomorrow to continue its massive move, but the price action is promising.