The Best Stocks in the Market Update

As we celebrate the Kentucky Derby this weekend, let’s take a moment to look at some stock updates that are making waves. Last week, Casey’s General Stores (CASY) was admitted into the S&P 500 index, effective April 9, taking the place of Hologic. We predicted this change back on March 19, speculating that rising gas prices would boost earnings and cash flow. Well, we were right. In their most recent quarter, CASY’s diluted EPS skyrocketed to $3.49, nearly a 50% increase from the previous year, with EBITDA following suit at $309 million—up 27.5%. Clearly, this inclusion has highlighted its success.

You might find it surprising, but Zoom Communications, Inc. (ZM) has surprisingly stood out as the last software stock on our list of top market picks. Just six months ago, this wasn’t the case. It’s a reminder that we prioritize technology over merely compelling narratives. Recently, something interesting came to light regarding Zoom: in May 2023, they invested $51 million in Anthropic, a move initially tucked away in SEC filings. Analysts at Baird now estimate Anthropic’s value could be between $2 billion and $4 billion. The buzz surrounding it has grown—Anthropic is reportedly being evaluated up to $900 billion, positioning it as a leading player in the AI sector. Zoom also boasts about $7.8 billion in liquid assets, making it quite appealing.

Meanwhile, eBay, Inc. (EBAY) was already on a good trajectory this year when last Friday, news broke from The Wall Street Journal about GameStop preparing a bid for eBay. CEO Ryan Cohen has been quietly amassing shares in anticipation of a formal offer at $125 per share. It’s worth noting that GameStop’s market capitalization stands around $11.8 billion, while eBay’s is about $46 billion. Should eBay’s board dismiss the offer, Cohen might take his proposal directly to shareholders. Sure, he may lack the necessary capital to finalize this deal, but his interest might draw larger suitors into the mix. It also adds some weight to eBay’s investment case, given its history of stable profitability despite slower growth.

As for Casey’s, it’s seen some significant movement. On March 19, I noted its performance surged by 26% after the announcement of its S&P inclusion. Studies suggest that while stock prices often benefit from entering a new index, the returns have slackened in recent years. Still, CASY managed to raise another 7% post-announcement. With around 2,900 convenience stores, it stands firm as a major contender, not just in retail but in pizza sales as well.

Now, about the stock’s current positioning: despite high RSI levels indicating potential overextension, it’s still attracting buyers consistently. If you’re trading, keep an eye on that 50-day moving average. Falling below, say around $720, could jeopardize its upward trajectory. But long-term holders? There’s no need for drastic moves if it keeps hitting new lows.

Turning back to Zoom, it has had a challenging beginning to the year. At one point, it was down by 24% from its peak, and it was even removed from our list when it fell below the 200-day average in February. While using momentum strategies helps mitigate risks during downturns, it also means you might miss the initial recovery. However, after a rebound, Zoom is once again showing promise, closing with a new 52-week high recently.

Now, the stock has finally broken above the $100 mark, creating excitement. Yet, given its erratic past, it remains uncertain whether this jump is a sustainable trend or just a brief spike influenced by underlying narratives.

eBay, meanwhile, has had its own share of excitement. I mentioned it had risen quickly since early April, landing top rankings. The recent news about a potential GameStop acquisition sent the stock soaring, further feeding into its investor narrative. The backstory of Cohen accumulating shares only adds another layer. eBay has been performing quite well recently, reflecting an impressive annualized return over the past three years and optimistic quarterly earnings.

As we watch these developments, understanding the underlying metrics is key—especially for traders monitoring critical price levels. For anyone considering investing, there’s much to digest here. eBay’s rising stock price, juxtaposed with recent acquisition news, paints a compelling story. All said, navigating investments requires a careful balance of information, strategy, and timing.