Summary
Highlights
The market has shown strength in October despite initial uncertainty and a government shutdown. The presenter is looking for the best stock pick for the month, acknowledging Tesla's recent pull-back after a strong run. The video will share several promising stocks, with one being officially designated as the top pick for October. An 'underdog' big tech stock will be discussed, which has been trending lower but is now showing signs of basing out and building higher lows, potentially signaling a breakout. The importance of identifying stop-loss zones for all recommendations is emphasized.
The presenter celebrates a successful prediction for SERV, a small-cap stock that yielded a 14% gain. It had shown a clear breakout from a descending resistance line, back-tested it as support, and then rocketed higher as predicted. While acknowledging the impressive run, the presenter advises caution for new investors due to potential 'tardy to the party' scenarios and stresses the importance of stop-losses. The target for SERV is set at $17.50, but the presenter warns about potential share dilution in small-cap companies once they reach higher valuations, making profit-taking crucial at certain points. The current plan involves holding until $17.50, with a stop-loss effectively raised to $11.90.
A lineup of hot stocks suitable for LEAPs (long-term options) is presented, with Intel (INTC) highlighted as a previous successful LEAP pick. The watchlist includes: Bristol Myers Squibb (BMY) as an undervalued healthcare stock; Google, still considered a strong buy after its September run and current breakout; PayPal, identified as a wildly undervalued underdog due to competition but showing strong underlying performance; Ethereum, with a favorable chart setup for a retest of recent highs; Meta, expected to run higher on positive earnings; Lyft, a significant player in tech growth with long-term breakout potential; and Amazon, which is lagging other big tech but has a bullish setup and potential for rotation if other tech stocks show weakness, with a breakout zone between $222 and $224.
PayPal is chosen as the top stock pick for October due to its extended basing period, transitioning from decline to long-term consolidation. It's building higher lows and is positioned for a potentially explosive move, with the highest potential for a 200-300% gain, akin to Intel's past performance. The catalysts for PayPal's growth are its cost-cutting measures, an ongoing reinvention with AI, and future tech-driven news. Key levels to watch are a stop-loss at $66 and immediate targets of $80, $100, $120, and potentially $185 by 2026. This prediction is compared to Alibaba's previous undervaluation and subsequent breakout. The technical confirmation for PayPal involves clearing $72 and $76.
PayPal's beatdown began when it lost momentum and its competitive moat was questioned. This spurred leadership to restructure, cutting costs to demonstrate profitability. While Wall Street demands a clear future for a higher multiple, PayPal's valuation metrics suggest significant undervaluation. Its trailing P/E of 15 is starkly lower than Palantir's 600, indicating low market confidence. However, compared to peers like Visa and Mastercard, PayPal's forward P/E of 12 is significantly lower than their 24 and 34, respectively. This undervaluation, coupled with its tech edge and potential for AI integration, positions PayPal for substantial growth. The chart's pattern of higher lows reinforces its bullish outlook.