The Midcap Momentum Market

Investor confidence is high. There is a belief that the inflation problem is behind us for time being. The US market continues to march higher. After a long time, you can build stories around stocks and sectors. The stock-specific bull market is for real and lots of stocks are making real big moves. Here are the stocks and trades that look interesting in the midcap space.

I like SOFI

Sofi is a fintech company that came out with a brilliant earnings report and the stock did a massive Gap up, but then came the news of a large investor Softbank selling stake in the company. This caused the stock to pull back but that does not change the fundamentals of the stock/company. The stock continues to be an excellent buy. Having said that, there is always a market risk and hence a stop should be placed below 7.

Inflation Reduction Act/Climate Bill Plays

There are two clear beneficiaries of the act: 1. Solar Stocks. I have recommended a lot of names like FSLR, and NOVA. Both these stocks have done extremely well. The second group of beneficiaries is the EV ecosystem [Batteries and Charging Stations]. No wonder stocks like CHPT, EVGO, and Volta are on fire.

Under the Manchin-brokered tax-spending-and-climate bill, electric vehicles would need an increasing share of battery materials to be processed in North America to qualify for federal EV credits.

I would add EVG/Volta as a charging plays. Both the companies came out with earnings reports and hence there is no event risk.

Battery Plays – SLDP (recommended few days back) and ENVX Enovix Corp

I like the way ENVX stock has gapped up and continued with its upmove. Enovix is the leader in advanced silicon-anode lithium-ion battery development and production. The company’s proprietary 3D cell architecture increases energy density and maintains high cycle life. Enovix is building an advanced silicon-anode lithium-ion battery production facility in the U.S. for volume production. The Bill incentivizes companies that make batteries in the US and hence these stocks look like winners. I will buy at the current market price.

Will MP finally takes off?

MP Materials smashed second-quarter earnings and sales estimates. The company is the sole U.S.-based supplier of rare earth materials and is benefiting from higher pricing for rare earth oxide. As EV adoption increases, this company will benefit enormously. The stock is a buy.

The Big Question: Should one book profit in Silvergate SI?

This is one stock I am not inclined to sell. I just love this company. I am sitting on big profits and wondering what to do 🙁

Disclaimer – The state of the market notes is Deepak’s perspective on the market. The column is purely for educational purposes. Nothing contained herein is a solicitation to trade or a recommendation of a specific trade. By reading this publication you agree to make no trade relying in whole or in part on the comments of the writers