Categories: Alpha Algorithm HotlinesStock Market News

Back into a Top Technology Momentum Play — and Locking in a 176% Option Gain

This week’s Alpha Algorithm revisits NVIDIA Corporation (NVDA), the emerging tech giant at the forefront of the virtual reality boom.

You’ve already booked double-digit-percentage gains in this stock on two different occasions over the past 12 months.

Founded in 1993 and headquartered in Santa Clara, California, NVIDIA Corporation (NVDA) is a visual computing company. It offers processors for PC gaming, design professionals working in computer-aided design, video editing, special effects, deep learning, accelerated computing and general purpose computing. NVIDIA sells its products primarily to original equipment manufacturers, original design manufacturers, system builders, motherboard manufacturers, add-in board manufacturers and retailers/distributors.

NVIDIA Corporation (NVDA) vs. the S&P 500 year to date.

10 Top Investment Strategies Betting on NVIDIA Corp. (NVDA)

1. Large-Cap Growth

The stock is among the top 50 large-capitalization U.S. growth stocks generated through a rigorous 10-factor fundamental screening process.

2. Large-Cap Alpha Growth

NVIDIA has been chosen as part of an alpha-seeking index that selects and weights growth stocks from the S&P 500 Growth Index. The proprietary methodology uses price appreciation — among more traditional factors — and weights the constituents based on their respective growth scores.

3. Large-Cap Alpha Core

The stock is one of a tiered, equal-weighted index of large-cap stocks selected from the S&P 500 expected to outperform the broader large-cap space based on an intricate methodology of ranking stocks according to their recent performance.

4. Pure Growth

The company is part of a strategy that selects companies from the S&P 500 Index, based on three growth factors: current internal growth rate, historical earnings per share (EPS) growth and historical sales/share growth.

5. Momentum Factor

The stock is one of the top 120 large- and mid-cap U.S. stocks exhibiting relatively higher price momentum, as measured by a specific factor which has historically driven a significant part of companies’ risk and return.

6. Momentum Model

The stock is among the top approximately 100 U.S.-listed companies to demonstrate powerful strength characteristics relative to the 3,000 largest U.S.-listed companies.

7. Large-Cap Momentum

The stock is part of a major hedge fund’s systematic strategy that invests in large- and mid-cap U.S. companies with positive momentum and that rank in the top third of total return over the prior 12 months, excluding the last month.

8. Exponential Technologies

The stock is part of a strategy that invests in nine different fields deemed to be vast growth “exponential technologies”: big data and analytics, nanotechnology, medicine, networks, energy and environmental systems, robotics, 3-D printing, bioinformatics and financial services.

9. High-Quality Stock

The stock exhibits positive fundamentals, including high return on equity, stable year-over-year earnings growth and low financial leverage.

10. IBD Top Fifty

NVIDIA is a Top 50 stock based on Investor’s Business Daily’s proprietary trading formula to identify 50 stocks that meet one of seven different catalysts. The “CAN SLIM” strategy identifies companies with either fundamental (improving earnings or new product) or technical (upward stock move on strong volume) catalysts.

Recommendation

Buy NVIDIA Corporation (NVDA) at market today. Place your initial stop at $138.50.

With the stock locked in a trading range over the past month, I am holding off on recommending any related options for now.

Portfolio Update

Gilead Sciences (GILD) soared 10.16% this past week on news of its $12 billion acquisition of Kite Pharmaceuticals on Monday. Kite is one of the key developers of CAR-T, a cancer treatment that uses a patient’s own immune system to fight tumors. Kite’s drug, Axi-cel, is expected to win regulatory approval this coming fall.

After such a sharp move, options tend to be overvalued. So, I am recommending that you sell you GILD November $72.50 calls, which last traded at $9.60, for a quick 176% gain

Raise your stop in Gilead Sciences (GILD) to $80.40 to lock in at least a 10% gain in the stock.

Also, raise your stop in Paypal Holdings Inc. (PYPL) to $59.65 to lock in a 10% gain.

Sincerely,

Nicholas A. Vardy

Nicholas Vardy

Nicholas Vardy has a unique background that has proven his knack for making money in different markets around the world. He was the Editor of The Global Guru, a free weekly e-newsletter, and also edited the trading services Momentum Trader Alert, which focused on making short-term profits in the hottest markets in the world, and The Alpha Algorithm, which was designed specifically to deliver big, fast triple-digit winners, month after month. He was also the editor of Smart Money Masters, a monthly service focused on longer term investments recommended by the brightest minds in the business. Mr. Vardy has been a regular commentator on CNN International and the Fox Business Network. He has also published articles in The New Republic, The World and I, and The Baker & McKenzie Legal Review. The Global Guru/Nicholas Vardy has been cited in The Wall Street Journal, Newsweek, Fox Business News, CBS MarketWatch, Yahoo! Finance, and MSN Money Central. Mr. Vardy graduated from Stanford with a B.A. — with honors and distinction — in both Economics and History, and he also earned an M.A in Modern European Intellectual History. After winning a Fulbright Scholarship, he earned a J.D. degree at Harvard Law School where he was an editor of the Harvard International Law Journal. When not uncovering investment opportunities for his subscribers and investors, Mr. Vardy is a keep-fit enthusiast and an avid student of classical music.