Fifteen years after unveiling the $128,000 Roadster, Tesla has become one of the most talked about stocks on both Wall Street and Main Street. However, the 25% year-to-date loss means one of two things: 1) investors are throwing in the towel after a multi-year bull run and declaring the bull narrative over, or 2) investors are wrong in selling the stock and the sub-$200 per share price tag is a near-term trend that won’t last. 

Which one is it? As of now, the bear narrative has more validity to it. 

Despite surpassing Wall Street’s earnings estimates for 10 consecutive quarters, the company led by Elon Musk has fallen short in the last two quarters. Economic conditions and increased competition have led to Tesla lowering the prices for its cars to help spur demand. In the last quarter, BYD of China overtook Tesla as the world’s leading EV seller.  

As such, it shouldn’t surprise investors that Tesla’s stock is the sixth worst-performing Nasdaq-100 component member this year. But the case can be made that long-term investors who buy now could position themselves for significant multiyear gains. 

The Market Overreacted To The 2023 Q4 Update 

The 40% year-over-year drop in Tesla’s EPS in the fourth quarter of 2023 was not solely due to pricing issues. Higher expenses tied to factory upgrades, the Cybertruck launch, and R&D projects (including AI initiatives) all played a role in an earnings report that failed to restore investor confidence.  

Encouraging metrics, like a 20% year-over-year increase in Q4 deliveries and total deliveries of 1.8 million units in 2023 took a back seat to other takeaways. 

Another significant yet underappreciated aspect of Tesla is its Supercharger Network, the world’s largest fast-charging EV network. An increasing number of automakers, including Ford, GM, Volvo, Mercedes-Benz, and BMW, have committed to adopting the Supercharger standard by 2025.   

One would hope the Supercharger business will offset some of the weaknesses in EV sales over time.  

Profit Growth Is Expected To Accelerate In 2025 

Another factor contributing to the market’s negative sentiment towards Tesla is the expectation of continued slowdown this year. Management warned that vehicle volume growth would slow in 2024.  

Along with softer pricing, Wall Street is projecting 17% revenue growth this year, just one-third that of 2022. Discouraged investors have decided to get out, but there’s good reason to go along for the ride. 

Growth reinforcements are coming.   

Initially, Tesla’s Gigafactories 4 and 5 in Berlin and Austin, respectively, are set to increase rechargeable battery production to support new models, like the Cybertruck and the Semi commercial transport rig.  

Together with an expanded role for the Energy Storage business, this strategy is expected to drive an 18% increase in sales and profits by 2025. If earnings growth accelerates as expected — and better yet, Tesla gets back to its EPS-beating ways — investors are likely to flock back to the widely-followed stock. 

The coming year may serve as a reminder of the enduring narrative of EV adoption. Environmental benefits, cost efficiencies, and technological progress are increasingly convincing consumers to prefer EVs to traditional gas-powered vehicles.  

With escalating demand and the implementation of government mandates, it is projected that 25.2 million EVs will be operational on U.S. roads by 2030. Although competition from Chinese and domestic automakers is expected to intensify, Tesla’s brand reputation, technological innovation, and diverse business model position it to benefit significantly from the shift towards clean energy. 

Bottom Line 

Tesla shareholders may be selling, but Tesla car owners are still buying. By 2030, with EVs expected to constitute 50% of new U.S. vehicle sales, investors might view the current 50% discount on Tesla stock as a once-in-a-generation opportunity. 

Apple (NASDAQ:AAPL) has been disappointing investors so far in 2024 given its status as one of the ‘Magnificent Seven’. AAPL is supposed to be in an elite category of outperformers, but shares are down by 12% compared to a 10% gain in the Nasdaq Composite Index. In fact, Apple’s stock looks to be in trouble from a technical perspective as it is struggling to maintain the key support level established in October 2023.  

With no particular news to drive up the price in the near-term, the bottom may not be in yet. But, investors are banking on FUD (fear, uncertainty, doubt), not fundamentals, to help drive shares back higher.  

FUD frequently creates opportunities for long-term investors who know that the best opportunities frequently arise by ignoring near-term concerns at the expense of the longer-term outlook. To help you decide, here’s the bad and the good about Apple stock.  

It’s Been a Bad Month for Apple 

Apple has attracted negative attention with iPhone sales in China dropping 24% in the first six weeks of 2024, according to an industry report. Wedbush analyst Dan Ives, one of the Street’s top Apple pros, noted that while sentiment resembles “that of a horrow show right now” in China, the company will see “brighter days” ahead. 

The company is also abandoning its vehicle project after begining work on what it called “Project Titan” in 20214. Apple is also appealing a $2 billion antitrust ruling from the European Union over allegations that it severly restricted competition in the music streaming space due to restrictions on its App Store. The appeals process is likely to last years, but it’s still a headwind the company doesn’t need. 

These headwinds provide more than enough material for investors to continue holding their short position and betting against Apple stock. In fact, Apple is one of the most heavily shorted stocks by institutional investors and hedge funds.  

Can AI Save the Day? 

If you’re bullish on Apple’s stock, you’ll likely point to the company’s upcoming Worldwide Developer Conference (WWDC) in June. Historically, this has been the time when Apple makes major announcements.  

This year investors are expecting to hear about iOS 18, regarded as one of the biggest iOS updates in the company’s history. This anticipation is largely because iOS 18 will introduce features from Apple’s own proprietary large language model (LLM). In other words, the company is hoping to make a splash with its own generative AI model.  

The new features are expected to be compatible only with iPhone 11 models and newer. This could be a catatlyst as compelling new features will likely push millions of users of older phones to upgrade their devices.  

Two Things Can Be True 

Like many stocks, Apple is what investors believe it to be. Currently, analysts are of the opinion that Apple is diminishing in its role as a leading-edge disruptive innovator. If that’s true then the company’s valuation is problematic. After all, Apple is one of the most widely held stocks in the world. Bad news of any sort has an outsized effect on AAPL stock and the broader market.  

On the other hand, if Apple delivers on what investors hope is a blockbuster WWDC, the fortunes of the stock will quickly change, and you wouldn’t want to be on the wrong side of that trade.  

However, when evaluating through technical indicators, the stock appears to be oversold. As of midday trading on March 6, 2024, the relative strength indicator (RSI) for Apple is at 23.14. The RSI is a momentum indicator, and any reading below 30 suggests oversold conditions exist for a stock.  

This is a reminder that two things can be true of a stock at a given time. The short-term outlook for Apple is cloudy, but this is a stock that has consistently outperformed the market for over 15 years. Patient long-term investors might consider using FUD to their advantage and enhance their holdings. 

Millennial wealth is increasing at a rate beyond expectations, presenting potential opportunities for investors. 

A recent blog from the US Federal Reserve Bank of St. Louis reports that in 2022, the median wealth of US Millennials born between 1980 and 1989 reached $130,000. This represents a reading 37% above what was previously forecasted. The wealth of younger Millennials (born between 1990 and 1999) outperfomed at a larger rate. 

Although a significant recovery in the capital markets has played a role, the majority of this wealth increase stems from the appreciation of nonfinancial assets, such as homes and vehicles. Regardless of its source, the significant wealth increase among the nation’s largest generational group carries profound implications for investment strategies. 

More than 70 million Millennial Americans still have their prime earning years ahead of them. As their spending power continues to improve, companies that offer products and services that fit their unique demands will benefit. From travel and dining to fitness and social media, a wide range of industries could emerge winners.  

While mega-cap companies like Apple and Amazon are evident choices, numerous other opportunities exist. Smaller companies catering to Millennials’ preferences could experience substantial revenue growth. These ‘under-the-radar’ stocks could catch fire.  

Here are a few small cap Millennial consumer stocks that Wall Street predicts will see big gains over the next 12 months.  

Accolade (ACCD)  

Accolade manages a personalized healthcare services platform covering various categories. Millennial and Gen Z consumers are widely credited with transforming healthcare from the status quo to a business model that better meets their needs. Healthcare systems are responding by offering a more comprehensive list of services, prioritizing mental wellness, and using technology to improve quality and convenience. 

Focused on customized healthcare trends, Accolade is building out an ecosystem of in-house and partner services in categories that matter most to younger Americans. Through strategic acquisitions, Accolade has accumulated over 800 provider customers. In fiscal 2023, this translated to 17% revenue growth.  

Accolade is still operating at a net loss, but margins are improving. Along with the potential for AI technologies to enhance the consumer healthcare experience, this has analysts calling for 57% upside in Accolade stock. 

Angi (ANGI) 

Despite a near 90% collapse in share prices over the past five years, Wall Street anticipates that Angi could see notable upside from current levels. Six research firms have given the home projects marketplace provider a buy rating in 2024 while three are sitting on the sidelines and no firms suggest to sell the stock. The average price target is $4.08 which implies a 58% return over the next year.  

The Street’s mostly bullish sentiment stems from February’s Q4 earnings release and financial update. Angi reported earnings per share of $0.01, marking its first quarterly profit since Q3 of 2020. Revenue of $300.4 million fell $8.7 million short of expectations, but even when revenue slumped the company was able to achieve profitability.   

Should inflation and home equity rates moderate in 2024, we can expect an upturn in consumer demand for home renovation and improvement projects. A return to revenue and profit growth could restore interest in Angi stock. 

Cars Commerce (CARS) 

Unlike older generations, Millennials are notably more comfortable with online car shopping. They like the broader selection, transparency, and convenience relative to the traditional in-person experience. This makes Cars Commerce a stock to watch over the next few years as more and more auto transactions get done online.  

At the heart of its operations, Cars Commerce’s flagship marketplace, cars.com, provides digital services to consumers, dealers, and automakers. Aside from the diversification created by its four platform pillars, the company’s subscription-heavy revenue mix earns its high marks for financial strength.  

As younger Americans drive a shift to digital auto solutions, Cars Commerce should be a beneficiary. This secular growth story is probably a key reason behind the stock getting three buy ratings and a $25.00 average price target last month.   

Target (TGT) significantly exceeded fourth quarter earnings expectations when it reported results on Tuesday. 

On March 5th, the retailer announced that holiday period profits rose 58% year-over-year to $2.98 per share, handily exceeding Wall Street’s forecast of $2.41 per share. Target’s EPS also exceeded management’s guidance of a range of $1.90 to $2.60.  

Following the announcement and positive comments from management, Target’s stock surged by 12%, reaching $168.58 on Tuesday. Shares of Target hit an intra-day high of $170.47 which was slightly short of the 52-week high of $171.24.   

While Target’s stock remains within striking distance of its 52-week high, shares are still far removed from its November 2021 record peak of $250.98. For investors that like a good comeback story, this discount retailer may have more room to run.  

In addition to reporting better than expected Q4 financials, Target unveiled a series of initiatives designed to boost customer engagement and sales in 2024 and beyond. Battling challenges such as soft discretionary spending, rising labor costs, and inventory issues, the nation’s seventh-largest retailer is now showing signs of recovery.  

Let’s check out what drove the Q4 beat and what’s ‘in store’ for this year.  

Cost Controls Are The Real Star 

When a company reports 58% profit growth, this is often driven by strong sales growth. However, this was not the situation with Target.  

Although Target flashed some impressive sales metrics — including a 13.6% jump in same-day services — overall revenue grew just 1.7% compared to the fourth quarter of 2022. Comparable store sales fell 4.4%. Thus, despite the encouraging demand for convenient services like drive-up, in-store pickup, and Shipt delivery, the real success story of Q4 was Target’s enhanced operational efficiency.  

Target’s inventory problems have much improved as evidenced by lower markdowns and related expenses during the all-important holiday quarter. Additionally, there was a significant reduction in freight and supply chain expenses. Although theft continues to be a concern, smarter timing of inventory accruals contributed to a reduction in shrinkage costs compared to the previous year. 

The Target Shopper Experience Is Getting A Makeover 

In tandem with its Q4 financial results, Target announced plans to revamp its rewards program and in-house brands.   

First, the popular Target Circle program is expanding to include new membership options. On April 7th, Target will revamp its Circle loyalty program into a three-tier system offering free, 5% off card, and 360 premium membership options. With shoppers afforded more choice, expect Target’s 100 million membership base to reach new levels in the coming years. 

Next, Target’s $30 billion owned brand portfolio is about to get bigger. Target intends to introduce fresh and trendy products under its ‘up&up’, ‘dealworthy’, and ‘Gigglescape’ brands. These brands not only offer value on everyday essentials, beauty products, and toys, but typically come with higher margins. Should these brands be well-received by consumers, they are expected to boost future profit margins. 

More EPS Beats And Stock Gains May Lie Ahead 

While Target forecasts flat to 2% comparable sales growth this year, profit growth is expected to continue. Management’s 2024 EPS guidance of $8.60 to $9.60 is a wide range, but at the midpoint, implies 2% growth. Given that Target has surpassed consensus EPS estimates for five consecutive quarters, this guidance may be on the conservative side. 

Bottom Line 

Target is steering itself back on course at a crucial moment. Deflation and anticipated Fed interest rate cuts are likely to boost consumer spending on discretionary merchandise in the quarters ahead. The introduction of flexible membership options and an enhanced selection of in-house brands could drive stronger sales among the company’s loyal, cost-conscious customers.