Nvidia announced better-than-expected earnings on Wednesday, beating analysts’ forecasts for the seventh successive session. However, the market’s reaction was not enthusiastic, with the stock down by 2.1 percent at the close of business.
However, Nvidia (NASDAQ: NVDA) stock might experience short-term declines, but by beating earnings forecasts, it has helped markets avoid from bearishness. Therefore, I expect stock markets to follow a more predictable trend today.
Below, we look at stocks that could potentially experience an uptick in the near-term performance.
Once billed as the “Tesla of China”, and with its market cap hitting $100 billion at its peak, Nio stock price has declined sharply over the years, sending its market cap down to $7.7 billion as of this writing. However, Nio (NYSE: NIO) has a strong balance sheet, with $6.3 billion cash in hand as of the end of March 2024.
The company has invested heavily in research and development, but has only recently shifted its strategy to focus on sales and expansion. Nio company launched a low-priced model, the Onvo in May, with deliveries for the Onvo L60 SUV set to begin in September. In addition, the company recently announced that an even cheaper model, the Firefly, will hit the market in the first half of 2025.
The lower-priced models will enable it to target the mass market and compete against current cheaper EV models manufactured by competitors, including Tesla’s Model Y. Furthermore, the Chinese EV maker has embarked on expanding outside China and plans to start selling in the United Arab Emirates later this year.
The EV maker has reported double-to-triple digit percentage YoY increases in sales this year, with its May sales at 20,544 (+233.8%), June at 21,209 (+98.1%) and July sales at 20,489 units (+43.9%). CEO William Li has said that the company can break even if it sells 30,000 vehicles per month. That figure could easily be surpassed following the launch of cheaper models and market expansion.
On the 4-hour chart below, Nio stock price trades below its 20,50,100 and 200-SMA, near year-to-date lows. Also, the RSI reading is at 29, signaling an oversold stock. Therefore, with the aforementioned shifts in fundamentals expected to set in from September, this could be a good time to buy the stock.
Tesla stock price has fallen in each of the last three trading sessions, with Wednesday’s closing price of $205.75 sending it below the 20,50 and 200 SMAs on the daily chart. The company’s last earnings for the April-June quarter missed forecasts, with profit falling by 45 percent on weak EV sales.
The pioneer EV manufacturer faces stiff competition from heavily-subsidised Chinese EVs, and its troubles recently pilled up after Canada announced a tariff hike for EVs imported from China. Tesla’s Shanghai Gigafactory is its largest EV manufacturing plant outside the United States, and churned out 947,000 vehicles in 2023.
Nonetheless, the company’s biggest announcement of the year around the corner, with the Robotaxi reveal date just about a month away. That sets up Tesla (NASDAQ: TSLA) stock for a potential rally in the coming weeks. The stock is down 8.5 percent in the last month, and 17.7 percent year-to-date.
A move to the psychological round figure support at $200 could be imminent, providing a good opportunity to buy. On the chart below, the price is slightly above the 100-SMA, and the current bearish momentum could trigger a good entry point near the corresponding level at $196.36. However, a break below that level could signal potential extension of the downside, with a move below the double-top pattern neckline.
In July, Lloyds reported a 57 percent jump in profits to £7.5 billion ($9.5 billion) for the FY 2023, amid a high interest rate operating environment. The banking group’s share price is down by 3.9 percent in the last month, but has gained 22.1 percent year-to-date.
The high-interest environment should have typically led to a decline in earnings associated with reduced loan uptakes. The contrarian performance by Lloyds was, therefore, commendable. The Bank of England (BoE) lowered interest rates by 25 basis points to 5 percent on 1 August, and that is expected to remain in force at least until the last quarter of the year.
Lloyds Banking Group (LON: LLOY), availed a £2 billion facility with a 5.5x loan-to-income (LTI) to first time home buyers. The funds will be available to customers who apply for loans valued at more than 4.5 times their annual household income. The LTI income is a significant improvement from the previous ceiling of 4.49x, and could help grow the bank’s loan book as interest rates come down.
Lloyds share price hovers near the Volume Weighted Moving Average (VWMA) on the 4-hour chart. With the VWMA at GBX 58.61, and the price at GBX 58.64 this not only signals bullish control, but also presents a good entry point. Meanwhile, the Money Flow Index (MFI) is at 61, signaling a strong positive money flow.
This post was last modified on Aug 29, 2024, 10:34 BST 10:34