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

For the 29th December 2024:

Christmas is over. Time to pack away the decorations & take down the tree. But what’s this?

It looks like there’s a gift under the tree that’s been missed! I’m talking about AMD so let’s unwrap it. 🎁

AMD stock has been on cruise control for the past 12 months. When I say cruise control, I mean it’s down nearly 16% while all other semiconductors are halfway to the moon. But that’s exactly why they could be the best buy.

AMD is gunning for Nvidia’s AI throne 👑

Meet the MI300X.

It’s AMD’s new AI chip, designed to give Nvidia’s H100 GPU a run for its money. Why should you care? Because Nvidia can’t make enough of their chips to meet demand. That leaves the door wide open for AMD to break in & steal Nvidia’s clients that don’t want to wait around.

Data centres are coming in hot, too.

AMD’s Data Centre revenue is up 100% year over year which means they’re pulling in 52% of total revenue (vs. 28% last year).

Nvidia still bullies this space (their Data Centre business makes up a massive 88% of total revenue 🤯), But the numbers tell us AMD’s got momentum & their slice of the pie is getting fatter. 🍰

Here’s the stuff that makes me want to open my wallet.

AMD’s P/E ratio is 24.4X. That makes them 22% cheaper than Nvidia’s 31.5x.

I really think Investors are sleeping on AMD’s AI potential. The growth is in the numbers & if their Data Centre arm keeps growing, it’s only a matter of time before the market starts to jump on board.

I want to be there first in the best seats. 💅

If AMD keeps beating earnings (which they do pretty consistently) & hits $6-$7 EPS, there’s no reason you couldn’t fairly value them somewhere around $225 to $250 per share.

That’s put the low end upside somewhere around 80%. Wall street analysts aren’t as keen as me but they still have an upside target of over 46%.

Those sort of percentage gains don’t come for free. There’s some risks you have to be aware of.

Competing with Nvidia is a brave move. Nvidia’s gross margins & free cash flow are leaps & bounds ahead of AMD. That doesn’t mean AMD is dead in the water. We’ve seen they’re still able to grow & at a super impressive rate. It’s just whether they can keep it up when the competition is that impressive which is brings me to my next point…

Nvidia being behind on delivery is a massive win for AMD.

But if AMD stumbles on ramping up its shiny new MI300X chip or its next-gen AI accelerators (MI325X & MI350, dropping in 2025), this whole growth story could fall apart.

And obviously there’s the risk that demand for AI etc falls off a cliff & the market takes a turn but I wouldn’t lose any sleep over this one. I think AI’s going to be in hot demand for a little while yet.

At $125ish , this stock feels like a gift from Mr. Market 🎅. Who am I to turn down a gift?!

I added a little to my position on Christmas Eve which makes them 0.5% of the portfolio right now.

Risks considered, I think that size is about right. 2025 could be the year they catch up with the other semiconductors.

Growing data centre revenue, a solid product lineup to fight Nvidia & a juicy valuation.

If they look like they’re following the roadmap for 2025 I might add a little more size down the line.

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Utilities, boring, right? WRONG.

There’s nothing boring about a dividend cheque, backing cleean energy & a 20%+ upside.

Let me tell you about NextEra Energy.⚡

NextEra isn’t your classic dinosaur utility stock. It’s more like the Tesla of the utility world. Here’s why:

And that’s probably one of the best things about a reliable utility company. Even when the market is throwing a tantrum, everyone still needs somebody to turn the lights on.

NextEra is one of the best examples of a company that’s able to stay cool, calm & cash-flowing in a downturn.

They don’t just hoard the cash, either. Over the past 25 years, they’ve raised their dividend every. Single. Year.

Dividend aristocracy at it’s finest.

Yield currently sits at just under 2.9% & the dividend has averaged a CAGR of 8%. It’s expected to grow another 10% year on year in 2025.

All other factors aside, this is an income investors wet dream.

Here’s why I think they’re a solid bet for the future.

Younger generations have the environment more front of mind than ever. NextEra isn’t just a utility company. It’s a renewable’s power house.

Clean energy is expected to dominate by 2030. Companies that are already ahead of the curve will be infinitely more efficient than those trying to play catch up.

I will say, renewables in general can be volatile. Political winds change (looking at you Trump), energy prices fluctuate & investors get jittery.

The good news is NextEra has a foot in both camps. Stable utilities & fast growing clean energy. That should help to buffer over the volatility in the short term.

When a company has stable & predictable dividends like NextEra, you can use them as a pretty good measure of value.

It’s called a Dividend Discuont Model or DDM for short.

It calculates what a stock’s really worth based on all the future dividends you’ll get (discounted to today’s value).

That pulls out a number somewhere around $82/share which is 14% upside from current price. Wall Street seems to be a little more optimistic. Average target sits at $87.15 which is 20.86% upside.

Combining technical analysis & fundamental valuations, I’ll be shooting for a price target around $85. A middle ground between all these numbers. 😅

Before you go all-in, some things to keep in mind.

Long-term contracts & energy price swings can add a little turbulence. Make sure you know what happens on the ride before they strap you in.

Another thing.

Politics matter in energy. A Trump W last election cycle spooked solar stocks & NextEra took a 5% hit. It trended down as much as 12% since.

I think the long term trend on renewables is only going one way so that Trump discount is only more reason to buy. That’s what I’m doing anyway.

Clean energy, growing dividends, undervalued price… what’s not to love?

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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 ❤️