Big market move has STARTED‼️
Summary
Jeremy provides an analysis of the current market environment, noting that corporate debt has become significantly more expensive and 30-year Treasury yields are hitting new highs. Jeremy argues that the "Magnificent Seven" stocks are currently problematic because companies like Meta, Amazon, and Microsoft are spending heavily on AI infrastructure (capex) without a clear, immediate return on investment, which is negatively impacting their free cash flow and earnings per share. Jeremy describes this as a "messy" period for the top of the market that could last one to two years, comparing the situation to a party where everyone has overindulged and the cleanup is just beginning.
Despite the broader market concerns, Jeremy highlights several specific stocks that Jeremy believes are exceptionally well-positioned:
Mentioned Stocks
Reasoning: Jeremy believes Celsius is heavily discounted in the $20s. Jeremy suggests the company should sell the Rockstar brand to its former CEO to remove corporate distractions and use the resulting cash for share buybacks.
Reasoning: Jeremy states that Meta is in a 'hurricane' caused by a massive child privacy lawsuit and declining free cash flow due to high capital expenditures. Jeremy expects earnings per share to shrink over the next few years and views the stock as range-bound 'dead money' in the short term. Jeremy would only consider buying more shares if the price fell into the $300s.
Reasoning: Jeremy notes that the previous messiness involving tariffs and acquisition integrations is now resolved. Jeremy sees significant upside and predicts the stock will finish the year at a price between $100 and $140.
Reasoning: Jeremy labels Cheesecake Factory the 'king' due to its recent 80% growth over three months. Jeremy is particularly excited about the Flowerchild brand, which posted 13% comparable sales growth, drawing parallels to Chipotle's early success. Jeremy believes this brand alone provides a massive growth runway toward 700 locations.
Reasoning: Jeremy expresses caution because Nvidia's 5-year credit default swap spreads have more than doubled. Jeremy refers to 'circular financing' concerns and suggests that even though the company is high quality, the credit market is flashing warning signals that sophisticated investors are monitoring.
Reasoning: Jeremy highlights the company's $100 million cash pile and lack of debt. Jeremy argues that the stock is well-positioned regardless of the market because it sells essential items like diapers and beauty products that consumers buy regardless of economic conditions.
Reasoning: Jeremy describes Oracle's financial situation as a disaster, noting that its 5-year credit default swap spreads have quintupled. Jeremy points to a 16% probability of default and states that the company's free cash flow has dropped so significantly it effectively broke Jeremy's charting software.
Reasoning: Jeremy argues that Netflix is a clean, undervalued story with a forward P/E in the low 20s. Jeremy believes that as other tech giants struggle with ROI on AI spending, Netflix remains a reliable choice for big money investors due to its clear subscriber and ad-revenue growth paths.