Doubling Down On A Magnificent 7 Name

If the current rotation out of Mag-7 stocks proves short-lived, this should do well. If not, not.

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Doubling Down On An Earnings Trade

Earlier this month, we placed a bullish bet on a Magnificent 7 stock.

In that post, we wrote:

Today’s trade is another post-earnings trade. Like SalesForce, this is a stock that dropped post-earnings, but unlike SalesForce, this one beat on both earnings as well as revenues. Like SalesForce, this growth tech stock now has a Chartmill Valuation Rating of 6 (on a scale from 0 to 10). Some other ratings it currently has:

• Profitably: 8

• Health: 7

• Growth: 7

• Technical: 10

• Piotroski F-Score (on a scale of 0 to 9): 8

I placed a limit order on this one a couple of weeks ago, and it just filled today. This is a bet that the stock will climb about 3% from here over the next few weeks. If it does, we’ll be able to exit for about a 200% gain.

After today’s drop in the stock, as part of what looks like a heavy rotation out of Mag-7 names, we’ll need about an 11% move from here to get the maximum return on today’s trade, but that is well within the expected move for this name post-earnings.

If the current rotation out of Mag-7 stocks reverses before this stock releases earnings in a couple of weeks, we could make a ~220% gain on this trade; if not, we could lose 100%.

Details below.

Today’s Bullish Mag-7 Bet