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 Gainers📈 & Losers📉

Our Biggest Gainers & Losers of the Day in the $100,000 Build Portfolio

For the 20th September 2024:

• Drugs Are Bad, Mmkay? ❌💊

• A Better “Buy” Than Nvidia?! 🤯

Drugs Are Bad, Mmkay? ❌💊

It always makes my heart skip a beat. No, not bad drugs.

I’m talking about when one of my larger holdings is down over 5% in single day. Thanks for the adrenaline rush Novo Nordisk.

But red days don’t have to be bad days. In fact, they can be some of the best days to go shopping for your favourite stocks if everyone else is reacting in blind panic to news that’s actually not that bad when you know the company a little better.

So is that what’s going on here? 🤔 

What caused the dip? 📉 

Novo Nordisk released some trial results for their new obesity pill, monlunabant. Lower doses of the drug showed promising weight loss results but higher doses didn’t equal more weight loss. Now, I’m not an expert but I would’ve thought lower doses & decent weight loss would’ve been a good thing on it’s own… anyway…

That’s what caused a bit of a panic sell-off. The market expected this new treatment to deliver strong results across the board. When it didn’t, investors pulled out. But are they hitting the panic button too early?

Big Picture: Novo Nordisk is still dominating the game 

In a word - Yes. I think they are.

Novo’s existing weight-loss drugs, Wegovy & Ozempic, are huge money-makers. For context on demand, Wegovy sales were up 105% in Q1 and 52% in Q2. And the only reason that number isn’t higher isn’t through lack of demand. It’s been a supply side issue.

Novo has struggled to keep up with the booming demand for these drugs as hoards of people want the equivalent of a “Get Rich Quick” pill for weight loss. Oh, and the fact it helps with type 2 diabetes….

The good news is Novo are getting a grip on the supply constraints which means the company is set for a strong second half of 2024 and even stronger growth into 2025.

Want more reasons to sleep easy tonight as a Novo investor?

These super popular weight loss drugs are semaglutide-based. Novo are the only company in the US with FDA approved products that contain semaglutide. No FDA approved generic versions of semaglutide currently exists. You know what that means, right?

If you want to fast track your waist line or manage your diabetes, you’ve got to go through these guys!

 Why you shouldn’t be too worried about today's drop

1/ Natural correction after big gains - Novo Nordisk has had a massive run-up over the past few years. After big gains, it’s normal for stocks to see some profit-taking or a pullback. The “bad news” just gave it a little extra juice & the investors with level heads a better entry point.

2/ Supply constraints easing - Not being able to produce enough Wegovy & Ozempic to meet demand has been holding them back. Remember I said they’re finally getting a handle on it? Novo’s been working on scaling up production by building new manufacturing plants in Denmark, the U.S. & Brazil. Once these come online, they’ll be able to fulfill more orders, setting the stage for more growth in 2025 & beyond.

3/ Pipeline is looking strong - Today’s trial results weren’t ideal but didn’t anyone ever teach you not to put all your eggs in one basket? The R&D team at Novo were taught that & they’ve got a huge lineup of promising drugs in the pipeline. One standout is CagriSema. It’s a combination of semaglutide & another obesity treatment called cagrilintide. Early data shows this combo could be even more effective than Ozempic & Wegovy, which is why some analysts have earmarked CagriSema to become Novo’s best-selling product by 2030.

Phase 3 results for CagriSema are expected this year. The drug has already shown much better weight-loss results than either component on its own. If extended trials flop on this, expect another drop like today. 😅

Plus, Novo is planning head-to-head trials against its biggest competitor, Eli Lilly’s tirzepatide (Mounjaro), to prove its dominance in the weight-loss space. Ballsy move. I like it.

What are the risks? ⚠️ 

I think the future looks bright for Novo but the reason we don’t full port single stocks is because there’s always some risk. Here’s some things we need to keep an eye on for Novo.

1/ Production scaling - I’ve mentioned it a few times already but Novo needs to make sure they can meet the booming demand for their drugs. They’ve already acknowledged the shortfall & that demand for Wegovy exceeds supply so that’s a good start. And with new plants coming it’s good to see them taking steps to tackle it head on. The good & bad news is that they still expect demand to outstrip supply even with these additional plants. The whole time they can’t give people the products they’re begging for, they’re “losing” money.

2/ Rising competition - The other heavy hitters aren’t going to sit aside & watch Novo eat up all the market share in the obesity treatment market. Eli Lilly are already in the lab cooking up some competition. Novo will need to innovate to stay ahead & hopefully start seeing some successful trials!

Long-term outlook: Growth, growth, growth! 🚀

Today’s dip is a buying opportunity.

Once supply chain issues are solved& production ramps up, they’re well-positioned to dominate the growing global market for obesity treatments.

Analysts expect 20%+ revenue growth in the next couple of years & with all the innovations they have in the pipeline, I think that might even be a bit conservative.

Technical analysis shows price has consolidated almost perfectly within this range before. Today’s drop puts us at the low end of the range so should be a good spot to enter. A move to previous highs gives a gain of 20% but I expect we’ll move beyond that.

In the short term, the market will continue to react to the trial news, it always does with pharma companies. But unless anything is announced that rocks the foundations at Novo, I’ll keep buying the dip.

Look at the long-term picture. Novo is still one of the top players in the obesity space where the market is growing as more & more of the population struggle to control their weight. They’ve got a solid moat with the products they have & their innovations like CagriSema & oral amycretin could make that even wider.

Double helping of Novo Nordisk, please! 🍽️

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Schedule a call with a Vinovest advisor to learn more.

A Better “Buy” Than Nvidia?! 🤯 

This stock bit flat today but I have to tell you about it. I think it’s a hidden gem in the tech space.

While everyone keeps loving on the chip golden child, Nividia, I think there’s better gains to be had where they’re less attention.

Let’s talk about AMD! 👇️ 

1/ AMD Secures the PlayStation 6 Contract 🎮- I’m more of a Xbox guy but this is still big news! AMD just locked in a huge contract to supply processors for Sony’s PlayStation 6. And this isn’t their first rodeo with consoles, either. AMD has been the go-to supplier for PlayStation & Xbox consoles since the PlayStation 4 era. 📦

What does it mean for AMD’s bottom line? Well, here’s some numbers for you.

During the PS5's peak in 2022, estimates are AMD earned $3.8 billion just from PlayStation 5 chip sales. That’s 16% of the company’s total revenue! We might not see PS6 on the shelves until around 2028, but even conservative estimates for PS6 chips puts AMD’s revenue from this at around $3 billion per year once it launches. If you’re an investor that likes future earnings potential, you can’t turn your nose up at that.

And there’s more PlayStation news!

With PlayStation 5 Pro expected to drop this November, AMD could see a nice revenue bump just in time for the Santa rally. In short, gaming’s been a reliable money make & it doesn’t look like that’s changing any time soon.

2/ Taking the Fight to Nvidia in AI 🤖- Everyone loves an underdog, right? Nvidia’s been running the show lately but if squint at the horizon, you can see AMD catching up. And fast!

AMD’s new MI300 GPU accelerators are giving Nvidia some serious competition in the AI space. Ready for some jargon? AI benchmarks show AMD’s latest MI300X chip coming dangerously close to Nvidia’s best-in-class H100 GPUs in AI inference performance.

In English, that means is AMD is closing the tech gap in a space Nvidia dominated.

But here’s where it gets really interesting.

AMD isn’t just playing catch-up—they’re undercutting Nvidia on price. They're offering a better price-to-performance ratio. That’s a perfect option for companies looking to integrate AI without breaking the bank.

AMD just reported more than $1 billion in quarterly revenue from their AI accelerators for the first time & big names like Microsoft are using AMD’s chips to power AI models like GPT-4 Turbo. So, while Nvidia is still the king of AI for now, it looks like AMD’s assassination attempt is well underway.

3/ Explosive Data Center Growth 📈- Let’s talk about where AMD’s really shining right now. Data Centers. The company reported an eye-popping 115% year-over-year growth in data center sales in Q2 2024. That’s right, triple-digit growth! 💥

This surge is being driven by AMD’s EPYC server CPUs & their MI300 AI accelerators. These chips are specifically designed to handle the huge computing demands of AI applications. With AI being the hottest buzzword right now, this segment of the business is booming.

Now, you might want to take a seat for this next bit. I don’t want you to pass out standing up.

Analysts are projecting that AMD’s profits could grow 50% faster than Nvidia next year. 😲

That’s mostly thanks to these new AI accelerators, which are in high demand from big players like HPE, Lenovo, Dell, & more. And while Nvidia still leads in total revenue, AMD is closing the gap fast. With their competitive pricing & improving tech, AMD could be an absolute monster in the data center market in the next few years.

The cherry on top of all this? 🍒 

AMD is trading at a lower valuation compared to Nvidia. That makes it an even better value play if you're looking to jump into the AI boom without paying a premium.

Don’t wait until they fully close the gap with Nvidia to jump on this one. The gains might be gone by then.

That’s all! See you same time tomorrow 👋 

P.S Hit reply & let me know what you thought of today’s newsletter. All feedback is welcomed ❤️