Market Assessment – As of Wednesday, April 20, 2022 at 11:20 a.m.:
Since our last Letter of March 26th, the DOW Jones Industrial Average paused and consolidated its gains, and yesterday it was strong and surprisingly moved up 495 points to rise above that consoli- dation. And today it is strong again – up 241 points to 35,152.34 at 11:20 a.m., and crossing above its 200 Day Moving Average (see red line)- a Bullish event…unexpected in the face of the current negative news and head-winds like: Rampant Inflation, Strongly Rising Interest Rates, the Covid and the War in Ukraine. Hard to figure. But as they say ”The Trend Is Your Friend”. .
Below we are featuring two “Speculative” stocks:
Joe Cotton
The first Stock Pick is Longeveron, Inc. (LGVN) – currently trading for $10.49 at 11.22 a.m. on 4/20/22. It closed at $10.18 Tuesday 4/19/22. It was one of the stock picks in our April 4th Market Letter at a price of $15.61. We bought it yesterday at $9.34…thought it was a bargain.
What makes it interesting is that it has an Alzheimer’s drug, Lomecel-B, which has completed a Phase 1 trial and was found to be safe, and also seemed to show improvement in some symptoms of Alzheimer’s.
In the study, each of the 33 patients received a single intravenous infusion of low- or high-dose Lomecel B, or a placebo. The findings from the study are being tested in a new larger Phase 2 study, which commenced in December 2021. The new trial is double-blinded, randomized, and placebo-controlled, and is designed to evaluate single versus multiple doses of Lovecel-B for mild Alzheimer’s disease.
The second Stock Pick is Upstart Holdings, Inc. (UPST)– currently trading at $80.84 at 11:26 AM on 4/20/22. Upstart is an artificial intelligence (AI) company that has built an algorithm to improve the process of consumer loans. Typically, when financial institutions assess potential borrowers, they consider their repayment history, income, assets, and current debts, which are metrics that are partly represented by a FICO score…and can take days or weeks. But when Upstart’s algorithm assesses a borrower, it looks are 1,600 data points to determine creditworthiness, and delivers an instant decision 70% of the time.
The company makes its money by lending the algorithm to its banking partners and receiving a fee each time it originates a loan. The company ventured into secured car loans in late 2020 and in 2021 it acquired software company Prodigy and combined their sales platform with its loan origination system to create a 2-in-1 software tool for car dealers, Upstart Auto Retail, which dealerships can now use to both sell cars to customers and offer them financing at the same time. Upstart views the automotive loan opportunity as seven times larger than the unsecured loan segment.
Upstart went public with an IPO in December 2020 at $20 per share. It then soared 2,000% to $400 in October of 2021 and then began its steep decline to about $75 in January of this year. We consider it to be a solid growth stock selling at a bargain price. Finance.yahoo.com shows it earned $1.43 per share and has a PE Ratio of 55.69. They show 84.65 million shares outstanding and a float of 72.15 Million. Shares sold short are 13.82 million, which is 18.87% of the float…a bullish factor if the stocks begins to move up again. Even though we consider it at a bargain price level, we would only invest 50% of our allocated funds now and would hold the rest in reserve to buy again if it drops down to $50.
Joe Cotton has won three National Stock Picking Contests with yearly percentage gains in excess of 96%. His 2020 Wall Street’s Best stock contest winner was Inovio Pharmaceuticals (Symbol INO) with a 742% 1-Year return.
This article is not investment advice, nor is it in any way to be construed as investment advice. For Investment Advice consult a Registered Investment Advisor or a Certified Financial Planner. Joe Cotton’s website is www.cottonstocks.net. NKY’s Joseph W. Cotton is publisher of the market newsletter, Cotton’s Technically Speaking. He is a graduate of Xavier University, a former bank manager and credit analyst, and a former Fidelity Investments registered investment representative. Contact him at cottonstocks@hotmail.com
