🏃 Keeping the Cadence

Plus, some French stock selections

Happy Sunday to everyone on The Street.

Overall, the airline industry has recovered from the pandemic. The global airline commercial industry generated $26.4 billion in profits in 2019 and is expected to hit $30.5 billion this year.

Unfortunately for Spirit Airlines, it hasn’t had the same turbulence free recovery as its competitors.

Since the beginning of this year, Spirit Airlines has been fighting off claims of a looming bankruptcy:

  • In January, Spirit Airlines faced $1.1B in debt maturing next year

  • JetBlue offered a $3.8 billion acquisition offer to buy the struggling airline

  • A federal judge in Boston shot down that merger, claiming it violated antitrust law and alluded to the potentiality of bankruptcy

This Friday, Spirit CEO Ted Christie announced that Spirit Airlines is not considering a Chapter 11 bankruptcy filing and is encouraged by its plans for the future.

Maybe Christie has a genius plan to make a budget airline profitable under current market conditions… or maybe he’s just putting on a brave face. Only time and quarterly reports will tell.

🛬 Will Spirit Airlines Go Bankrupt In 2024

Login or Subscribe to participate in polls.

ICYMI: Here’s what drove the markets last week and what to keep an eye out for in the coming week. Click here to read our market review, and click here to read our market preview.

TOGETHER WITH MAGNIFI

Are you tired of juggling multiple login details for your various investment accounts?

Imagine the convenience of accessing all your accounts from a single platform, gaining a comprehensive view of your investments and actionable insights to enhance your portfolio.  

Magnifi simplifies investment management by effortlessly linking all your accounts, from your 401(K) and IRA to over 200 popular brokerages (including Robinhood, Schwab, and Fidelity). 

With the help of conversational AI, Magnifi not only simplifies your investment management but also helps you unlock a world of untapped opportunities across all your holdings, enhancing your investment performance.

Ready to experience the power of Magnifi? Start your free trial today.

Advisory services are offered through Magnifi LLC, an SEC Registered Investment Advisor. Being registered as an investment adviser does not imply a certain level of skill or training.

Keeping the Cadence

Another Winner in the AI Pipeline

When it comes to artificial intelligence, Nvidia (NVDA) seems to grab all the headlines.

However, Bank of America (BAC) is telling investors to check out another name that might benefit from the AI boom.

Cadence Design Systems (CDNS) creates technology that’s used to put together chips and circuits. Its hardware and software powers artificial intelligence systems.

Putting the C in Consistent

BofA likes the steady growth Cadence has experienced over the last several years.

Analyst Vivek Arya noted that the company has achieved “33% annualized returns” over the last decade, beating out some competition. 

Arya also argued that the company’s solid revenue can continue because artificial intelligence will demand more complex chips which Cadence equipment could aid in developing. 

The bank also believes the software company could expand into new markets, further boosting profitability.

Room for Improvement

Cadence shares are up about 29% over the last twelve months. It’s nothing to sniff at, but a far cry from Nvidia’s 215% gain over the same period.

Bank of America acknowledges that Cadence has not enjoyed the growth that some AI companies have seen. But the bank is hopeful that AI could bleed into more sectors over the next five years, giving the company some room to build. 

The bank has a price target of $350 on CDNS, roughly 20% above current levels. 

While the majority of analysts covering Cadence have buy or strong buy labels on the stock, a quarter of analysts see it as a stock to hold. Time will tell how the AI boom unfolds, but BofA is bullish on this stock.

Are you bullish or bearish on Cadence Design Systems (CDNS)?

Login or Subscribe to participate in polls.

Splitting Up

Trading a Stock Split

Recently, there’s been an uptick in stock splits. Even though stock splits don’t change an investor's existing position, they can kick-start price movement. 

For instance, stock splits result in reduced stock prices, creating a lower entry barrier for investors. This sometimes results in a buying frenzy. The lower price tag also tends to increase speculation.

The Trifecta

Wolfe Research analyzed stock splits over the past 20 years and found that stocks split over the past 10 years tended to outperform over the medium term.

According to Wolfe’s Chief Investment Strategist Chris Senyek, investors should look for three things in a stock split: a large market cap, a higher absolute stock price, and a history of previous stock splits. The analyst calls this the “sweet spot.”  

Senyek believes that the best time to trade splits is the period from one week before the split to one week after.

Splits in the News

A slew of stocks across a wide array of industries have either split recently or are scheduled to split soon. 

Chipotle (CMG) is preparing for its first stock split in June. Its 50:1 split aims to increase liquidity and employee access to company equity. Shares are up 37% this year but have fallen almost 4% over the past month. United States Lime & Minerals (USLM) is also planning a 5:1 stock split for July.

If Wolfe’s analysis is any indication, stocks that check all three boxes could provide an opportunity for investors.

Are you bullish or bearish on splitting stocks?

Login or Subscribe to participate in polls.

Some French Selections

Expecting Some Turbulence

The European Stoxx 600 index is up over 8% YTD and 13% over the past 12 months. 

However, Goldman Sachs (GS) is predicting short-term volatility in European stocks and advising that investors stick to a set strategy when investing in the market.

The investment bank has unveiled two stocks that could benefit investors seeking defensive positions in the European market. According to the firm, these stocks could provide strong “risk-adjusted upside.”

Air Liquide

Analyst Georgina Fraser highlighted French industrial gas and service company Air Liquide (AIQUF) as a potential play. Fraser says the company holds a large market share in a consolidated market that’s difficult for competitors to access.

As a result, it’s unlikely that Air Liquide will face disruption. This could allow the company to ink long-term deals and provide a tailwind for growth. 

The stock is up around 4% YTD and 17% in the past 12 months on the Euronext Paris exchange. Goldman has set a price target of $242.10, a 22% upside from Tuesday’s close.

Bureau Veritas

Goldman also pinpointed a French company specializing in inspection, certification, and lab testing. According to analyst Suhasini Varanasi, Bureau Veritas (BVI-FR) has involvement in energy transition, security and sustainability. This could allow it to outgrow its competition.

US investors can gain exposure to Bureau Veritas through the First Trust International Developed Capital Strength ETF (FICS) and the FlexShares International Quality Dividend Defensive Index ETF (IQDE). 

The stock is up over 16% over the past 12 months, and Goldman gives it around 33% upside. 

For investors interested in European opportunities, Goldman thinks these French picks are among the best bets.

Which stock do you think will outperform over the next 12 months?

Login or Subscribe to participate in polls.

TOGETHER WITH MAGNIFI

Are you tired of juggling multiple login details for your various investment accounts?

Imagine the convenience of accessing all your accounts from a single platform, gaining a comprehensive view of your investments and actionable insights to enhance your portfolio.  

Magnifi simplifies investment management by effortlessly linking all your accounts, from your 401(K) and IRA to over 200 popular brokerages (including Robinhood, Schwab, and Fidelity). 

With the help of conversational AI, Magnifi not only simplifies your investment management but also helps you unlock a world of untapped opportunities across all your holdings, enhancing your investment performance.

Ready to experience the power of Magnifi? Start your free trial today.

Advisory services are offered through Magnifi LLC, an SEC Registered Investment Advisor. Being registered as an investment adviser does not imply a certain level of skill or training.

Will the future of cybersecurity rely on blockchain technology?

🟩🟩🟩🟩🟩🟩 Yes ✅ 

🟨🟨🟨🟨⬜️⬜️ No ❌ 

Are you expecting a nuclear renaissance?

🟩🟩🟩🟩🟩🟩 Yes

🟨🟨🟨⬜️⬜️⬜️ No

Which stock do you think will outperform over the next 12 months?

🟨🟨🟨🟨⬜️⬜️ Lowe’s (LOW)

🟩🟩🟩🟩🟩🟩 Home Depot (HD)

Are you bullish or bearish on Tuya (TUYA) over the next 12 months?

🟩🟩🟩🟩🟩🟩 Bullish

🟨🟨🟨🟨🟨⬜️ Bearish

Join the conversation

or to participate.