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 Gainers📈 & Losers📉

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

For the 19th August 2024:

• Put the Fries in the Bag, Bro 🍟

• $5 Billion for What?! 🤔

Put the Fries in the Bag, Bro 🍟

Turns out I wasn’t the only one loving it. And that’s why McDonald’s was one of my biggest gainers today, up just over 3% as I’m writing this.

So what happened?

One of the worlds fastest growing independent investment banks, Evercore, upgraded their price target from $300 to 320.

It’s on the back of McDonald’s clawing back some market share & they’re convinced that trend will keep up for the rest of the year.

For Q3, they had McDonald’s penciled in for a 1% decline in US same store sales which they now expect to stay flat. And for next year they’re expecting same store sales to be up 3% instead of 2%.

In my opinion, I wouldn’t rush to add McDonald’s to the portfolio right now at the current price. I definitely wouldn’t make it a huge position size. That said, $300 is a 5% upside, $320 is around 10%, so if you’re looking to diversify & create a balanced portfolio there’s definitely worse options out there.

Current dividend yield is at 2.32% so does make it a little more appealing, too.

McDonald’s has been trading horizontally for the best part of the last year & seems to find a support around $250. When it consolidated around that price last month, I took my entry.

It’s a small part of the portfolio I’m building to $100,000 with a position size at just under 0.5%. But we’re already up over 11% & given my entry price, I’m happy to hold.

If we see any pull backs to this support level then I’ll be looking to increase position size, assuming fundamentals stay intact.

On the horizontal pattern we’ve also seen $300 act as a resistance pretty consistently so I’ll be paying close attention as we approach that level.

With this upgraded rating & if the positive sentiment continues I wouldn’t be surprised to see a break & hold above $300 now.

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$5 Billion for What?! 🤔 

First place was taken by AMD, up 4.35% for the day!

So why the spike? Is it temporary? Should we buy, sell or hold? Let’s dig in.

The spike came from announcing a $4.9 billion plan to buy ZT Systems—a server design company. But AMD isn’t trying to become a server business. So why exactly are they spending nearly $5 billion on it?🤔

It looks like a tactical play. Right now, AMD are playing catch-up to the king of AI, Nvidia. By snapping up ZT Systems, AMD is getting something super valuable: about 1,000 top-notch engineers who know their way around data-center hardware. This’ll give them a boost in the AI space, helping to design systems that can go head-to-head with Nvidia.

AMD’s planning to offload ZT’s manufacturing side, too.

Why buy something just to offload part of it right away?

Well, manufacturing servers is a tough business with tight profit margins, & AMD doesn’t want to compete with companies like Dell and Super Micro, who buy AMD chips for their servers. By selling off the manufacturing part, AMD keeps profit margins healthy & doesn’t step on their customers' toes.

It also stops them spreading themselves too thin by trying to be a chipmaker and a server manufacturer.

This deals all about think outside the box & I like it.

AMD knows that to compete with Nvidia, it needs more than just chips; it needs to offer full systems that AI-hungry companies can plug into their data centers. With ZT’s design expertise, AMD is positioning itself as the go-to alternative in a market that’s only getting bigger.

Today’s rally brings my current position to break-even so I’ll be adding more to the position. I think we can reasonably expect a 20-40% upside from current price

No real compelling losers to share today which is a good thing I guess. Although I do love a big pullback on a great value stock. Maybe another day this week….

That’s all! See you same time tomorrow week 👋 

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