Reddit Buzzing Stocks!

Hello all, and welcome to my first post regarding Reddit Buzzing Stocks!

What is it?

I have built an AI algorithm which helps me identify the stocks that are most talked about on Reddit investment and trading forums, with the aim of identifying the most hyped and high potential stocks.

With the hype seen in recent weeks regarding GME and AMC stock, and the central role Reddit played, Investors and institutions are increasingly reading through Reddit forums to inform their investment decisions.

The algorithm does this by continuously tracking Reddit (for now, I am continually adding extra sources to it) posts and comments, analysing the sentiment of the chatter (whether that stock is spoken about in a positive or negative manner) and uses some AI trend- detection algorithms to identify which stocks have seen an abnormal surge in conversation.

I will use my Investment Banking experience to research the most talked about stocks, and distill stocks identified into some digestible research for you.

What is it not?

This is an early detection tool, meaning the stocks can sometimes jump in price, as well as sink. While I try my hardest to give you solid research, no one knows exactly how the stock market behave.

Please do your own research before investing

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Results from this week - [22/02/21]

Lots of volatility this week, especially with lots of earnings announcements this week. NVDA, FSR, AMD are all ones to watch. CRM (Salesforce) also expected to see some big shifts today, but is not included in this graph.

For me, the most interesting one is CVS, which has seen a 250% increase in discussions compared to last week.

CVS DD +250% in mentions

Market Cap: $92.35bn

Let’s start off with what I feel is a very overlooked stock, with very good fundamentals: CVS Health Corporation (Ticker: CVS).

This stock currently represents the 3rd biggest holding in Michael J Burry’s portfolio, at 10% of his overall holdings. (for those of you who don’t know him, I seriously suggest researching him. He was one of the earliest to spot the housing market crash of 2008, his character played by Christian Bale in the film “The Big Short“, and identified the GameStop short squeeze as early as AUGUST 2019).

Profile

CVS Health Corporation is a US based integrated pharmacy healthcare company. The Company provides pharmacy care for the senior community through Omnicare, Inc. Omnicare's operations include distribution of pharmaceuticals, related pharmacy consulting and other ancillary services to chronic care facilities and other care settings. It operates through three segments: Pharmacy Services, Retail/LTC and Corporate.

As of December 31, 2016, the Retail/LTC Segment included 9,709 retail locations (of which 7,980 were its stores that operated a pharmacy and 1,674 were its pharmacies located within Target stores). CVS also has online healthcare presence through its websites, CVS.com, Navarro.com and Onofre.com.br.

It also provides healthcare services through its more than 1,100 MinuteClinic medical clinics as well as their Diabetes Care Centers. Most of these clinics are located within or outside CVS stores.

Fundamentals

CVS has seen both solid revenue and Net Income flows. From 2019 to 2020, revenues grew from $257bn to $268bn (+4.6%) and Net Income from $6.6bn to $7.2bn (+8.2%). CVS beat every analyst’ earnings expectations in 2020.

Balance sheet wise, the company is a strong position with a Debt to Total Equity ratio of 0.93. In short, this number represents the amount of debt the company owes vs the equity it holds, with a lower number representing a less-risky investment. the Average ratio for S&P500 companies is 1.5.

CVS has a Price-to-Earnings ratio (the price of the stock vs the Earnings per share) currently around 9x, the lower the ratio means the cheaper the stock is compared to their total earnings. Current S&P market average is around 25x.

The company has seen sustained dividend earnings, and is forecasted for continued income growth, currently at 9% annual.

Increased growth catalysts

• There are rumours that CVS will open up some of their pharmacies to administer COVID-19 vaccines across the US. There are two things to consider from this:
• Increased revenue streams at scale from the current US administration (this could even become recurring revenue with all the talk of yearly booster jabs)
• Increased revenue from the extra footfall going into their stores (remember the last time you went into a grocery store to buy toothpaste and came out with 2 full bags?)
• The relatively new CEO, Karen Lynch, is a serial success machine. For the past five years (2016 to 2020), she was named to Fortune’s list of the 50 Most Powerful Women in Business.

Potential Downsides

• Amazon has announced its intention to enter the pharmacy space, which serves to the shake up the industry as a whole over the long-term.
• Personally, I think the regulatory landscape of the pharmaceutical world means Amazon is still a long way away from making massive strides, and this current scenario is actually beneficial to current CVS stock price, which is lowered and under-valued because of it.

Analyst Estimates

The 25 analysts offering 12 month price targets for CVS Health Corp have a median target of $86, with a high estimate of $102 and a low estimate of $72.

Summary

The company is displaying very impressive fundamental attributes, and is currently trading at a lower price than what it’s fully worth. That, along with its positive future projections and foray into administering COVID vaccines make it a very interesting stock currently.

It has been dropping in price slightly over the last few weeks and may continue to drop further before a big bounce; technical analysis shows a support point at $69 where price may fluctuate, and possibly bounce upwards from there. At that price, I would personally be tempted to buy into the stock.

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Please leave a comment if you'd like me to add to this thread each week with 'Reddit Buzzing Stocks' & I will keep it updated.

Thanks & I'm happy to answer any questions.

Interesting - I'm intrigued for your next post.

Guernsey said:

Interesting - I'm intrigued for your next post.

Click to expand...

Sure, I will post next week with the most 'Buzz Reddit' Stock.

Mate, post this stuff on your own subreddit and i'll join up.

GoGuerilla said:

Mate, post this stuff on your own subreddit and i'll join up.

Click to expand...

Sure, will do!

Good hustle OP.

VSYNC said:

Good hustle OP.

Click to expand...

Thanks man!

I never knew about this. Great share OP, and Goodluck

Yep, definitely interested, and if you get that sub reddit going, let us know

Very good initiative mate thanks

Thanks guys for the feedback.

Here are the most hyped stocks from the last week on Twitter & Reddit:

Twitter

• WKHS sees a dramatic increase in chatter this week, as it loses its USPS contract for Electric vehicle (EV) trucks (won by OSK)
• KOSS is linked to the Short-squeeze stocks (GME, AMC, NAKD etc)
• FSR spiked (both in chatter and stock price) as it released its Q4 results (be careful with EV stocks, they are very volatile currently)

The most interesting trend to take away from this (apart from another week of GME chatter) is the increased focus on recovering stocks, especially in the holiday space like ABNB, AAL which have rising in chatter and sentiment over the last few weeks, suggesting some big moves soon.

Reddit

• SNAP saw a big spike, as it announced very good earnings forecasts, but has been hit by the bond sell off, this could prove to be an interesting play
• Similar chatter to Twitter in terms of CCIV and WKHS
• JNJ is interesting, FDA have approved their vaccine for use, this could see some big moves on stock price soon
• RKT is an interesting one, lots of moves especially since Q4 earnings update.

Reddit will be very volatile over the next week, as lots of chatter will be focussed on the recent spike in GME price. This means you need to react faster to the chatter if you want to make some returns of the stocks discussed.

Interested, thank mate.

Will do, glad you enjoy it.

And why it was closed do not tell me???

I'll follow this, thanks.

Current market & Phillips 66 (PSX) Research

The market sell-off on growth stocks and bonds continues, and most likely will continue till the end of the week. To many, especially new traders, this seems like a full blown market crash.

Well, it's not... a market crash needs a catalyst. Think back to every single crash, whether it was the dot com bubble, the housing bubble in 08, and even the flash crash on black Monday in 87' they all had a catalyst, if not many.

But bonds prices are crashing!

I appreciate that bond yield outlooks have shifted which are causing sell-offs, but holistically, that’s because of improving economic outlooks.

My portfolio is tech and it’s all red!

What you are seeing is a shift away from growth stocks (which rely on future earnings) and into value and recovery stocks, if you are losing on all your positions, I suggest you use this as lesson to stay diversified in the future.

Can I take advantage of this sell-off?

There are 3 options:

1. As with all sell-offs, some stocks will recover quickly after, smart investors are using this as an opportunity to enter positions for discounted prices (this is step of one of the “buy low, sell high” method)
2. Some investors use patience, switch off the news and ride this out. Like Warren Buffett famously says "The stock market is a device for transferring money from the impatient to the patient."
3. You use this as a learning opportunity to appreciate when to take profits and stay diversified in the future.

Without further ado, here is my research on a stock that could be interesting in current market conditions.

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Phillips 66 (PSX)
First off, let me give some market context.

Cyclicals and value stocks generally outperform in a market recovery and I expect a rotation at some point (which we are likely seeing now), strengthened by a combination of inventory drops making headlines, covid cases going down, and a general outlook on resumption of normal. Any stimulus updates would be big news as well.

One of the stocks likely to take advantage of this recovery is Phillips 66 (ticker: PSX).

Phillips 66 is an energy manufacturing and logistics company operating through four main segments: Midstream, Chemicals, Refining, and Marketing and Specialties (M&S). The Midstream segment gathers, processes, transports and markets natural gas, and natural gas liquids (NGLs) in the United States. The Chemicals segment consists of its equity investment in Chevron Phillips Chemical Company LLC (CPChem), which manufactures and markets petrochemicals and plastics. The Refining segment buys, sells and refines crude oil and other feedstocks at refineries in the United States and Europe. The M&S segment purchases for resale and markets refined petroleum products, such as gasolines, distillates and aviation fuels, primarily in the United States and Europe, as well as includes the manufacturing and marketing of specialty products, and power generation operations.

Revenue and cash flow

Last year was a torrid time for oil companies and refineries, as lockdown meant very low demand for oil and petrochemical products. This got so bad, that at one point oil prices turned negative (https://www.bbc.co.uk/news/business-52350082).

During that time, PSX managed to increase its cash reserves by 56%, or $900m.

It also sustained a solid debt-to-equity ratio of 0.83 (the lower the better, lower than 1 is positive).

Year on year, Phillips 66's revenues fell -40% from $107.44bn to $64.13bn, which was an expected drop due to COVID. Analyst estimates are generally for revenues to recover this year to ~$80-90bn.

Given the rally on oil prices recently, and pre-COVID prices, I expect oil to have further upside, some news sources are suggesting $100 a barrel, for me that’s hefty, $75-80 is likely the right level. While this sustained price means higher input costs for PSX, it shows rallying demand for both oil and underlying products, which will only increase further if this “Supercycle“ talk is anything to go by.



Furthermore, it’s worth noting that while is demand is picking up, the big Texas freeze over the last weeks has meant that supply has not been able to catch up to demand, which will drive oil prices even further in the short term.

Sodium-ion Batteries

PSX has recently announced a technical partnership with UK company Faradion to develop a lower cost sodium-ion battery solution. Sodium-ion batteries can become a game changer due to their lower costs and increased sustainability, meaning a likelihood that electric car manufacturers will switch over to this technology once fully fleshed out (especially with news we’re seeing around Nickel shortages and Tesla’s struggles with battery component sourcing).

While still in early stages, this could prove to be a big income stream for PSX in the long term.

Possible downsides

PSX has a higher than market average dividend yield (4.4%) which amounts to a roughly $1.6bn bill this year, this will require a very quick recovery on net income to fulfill this. If not, dividend suspension or lowering news could affect the stock price.

Furthermore, the US Democratic administration platform calls out removing tax breaks for oil and gas companies while adding environmental regulations. This could have a negative impact on the long-term outlook for PSX, so this is possible not a multi-year hold.

Summary

This is an interesting stock to put on your radar as the economic recovery ramps up, and growth stocks take a bigger battering. While I don’t expect this stock to “pop“, there are some gains to be had.

As always, and especially during times like this, it’s vitally important that you are being sensible and ensuring you are only entering positions you have done your own research on, and with an amount of money you are comfortable with (will not need for a while).

Just made an account to tell you I really appreciate your idea/work. Thank you! I'm following this.

interested as well

Last week saw some recovery for the hard hit tech and growth stocks as investors became slightly more comfortable with inflation forecasts, meaning US bond yields tapered off, which raised stock prices (they essentially have an inverse relationship, as one rises, the other drops). In addition, the $1.9 trillion stimulus bill was completed by the US govt.

For some, reduced stock prices provided a buying opportunity, or at least an opportunity to average down the cost of some of the positions.

I don’t expect us to be fully out of the woods yet in terms or recovery, with Monday market opening likely to be red all over, as late on friday, bond yields jumped again following low demand for US govt bonds in auction (when you take into account inflation, the yields on those bonds means you essentially have less money value than what you invested), however, that should reduce by end of the week.



Still bullish
Taking a step back and Looking at the overall market, this correction was not just healthy, but overdue. While some assets are still overpriced, overall economy recovery provide a good backdrop for further mark growth, at least in the short-medium term. This current period provides an opportunity to “buy the dip“ on stocks which have a solid future, but also to reap the gain from some sectors that will see rapid growth over the next year. After all, rising inflation forecasts are due to the fact that most economists see the world economies recovering rapidly from the return of normality from COVID.

What will be the recovering sectors?
In short, think of any the stocks that you have not been able to use or shop from over the last year.

• Airlines & Travel
• Hospitality
• Manufacturing
• Consumer cyclical
• Events
• Retail

Buzzing stocks this week



This week has been a very busy one for the algorithm, with a lot of stocks picked up, and changing throughout the week. I am thinking of adding a UI to give real-time access to users, let me know if that is something you would be interested in.

Here’s my commentary on the most interesting ones in there:

• 3D Systems, ticker: DDD
  Since the time of writing and creating this graph, this stock has shot up %4.2 and up another %1.5 in pre-market. Down from All-time high from earlier this year, DDD benefitted from analyst upgrades last week, as its price suffered a big tumble. Furthermore, ARK initiated DDD position in ARKQ (Autonomous Technology & Robotics) ETF yesterday, putting it in the same basket as TSLA. Expect further gains short-term, and high volatility.
• Accsys Technologies, ticker: AXS
  This is a very interesting one, especially long-term. A sustainable wood company that produces high technology, alloy-like wood, planting a tree for every one it chops down. Has recently completed the building of 2 large production factories. I might even cover this on a separate article. Note: This company has a small market cap, meaning a low number of shares traded, which means it could take longer than you’d like to buy/sell your shares.
• Vermilion Energy Inc, ticker: VET
  Saw a price jump as analysts upgraded its price target last week. Energy companies are rising as demand is forecast to increase over the next few months. Not sure how this one will move in the near-future, one to watch.
• Teradyne, ticker: TER
  Another one seeing lots of chatter on the back of ARK positioning. This one is a very exciting prospect to me, and ticks A LOT of boxes, most importantly, very solid finances. The company saw Earnings per share (total earnings of the company, divided by number of shares, the higher the better) growth of 64% last year.

Summary
Expect a less wild ride next week than the last few weeks, but still with some turbulence. Reduced prices have created a number of opportunities, which are being picked up by the algorithm.

While there is likely still some downside in the market, longer-term I see a rosier picture, especially as economies recover and return to normality. I see now as an opportunity to purchase some opportunities at strategic prices, as well as a time to rotate into some of the recovery stocks, taking some profits from the growth/tech sectors along the way.