This week’s Alpha Algorithm revisits NVIDIA Corporation (NVDA), the emerging tech giant at the forefront of the virtual reality boom.
NVIDIA has been part of your Alpha Algorithm portfolio on several occasions. You’ve already booked double-digit-percentage gains in this stock on four different occasions over the past 18 months.
Founded in 1993 and headquartered in Santa Clara, California, 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. The company qualifies for recommendation based on 10 key investment strategies.
10 Top Investment Strategies Betting on NVIDIA Corporation (NVDA)
- 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.
- Large-Cap Alpha Core
The stock is one of a tiered equal-weighted index of large-cap stocks selected from the S&P 500 and expected to outperform the broader large-cap space, based on an intricate methodology of ranking stocks according to their recent performance.
- 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.
- 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 historically has driven a significant part of the companies’ risk and return.
- 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.
- 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.
- High-Quality Stock
The stock exhibits positive fundamentals, including high return on equity, stable year-over-year earnings growth and low financial leverage.
- 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.
- Goldman Sachs’ Active Beta
The stock is selected according to four factors — value, quality, momentum and low volatility. These, in turn, are based on criteria including book value, sales and cash flow scaled by share price, profit/assets or return on equity (ROE), risk-adjusted returns and daily standard deviation of returns.
- Value Tilt
Selected using a multi-factor modeling approach, the company is a value stock designed to enhance portfolio risk/return characteristics.
Recommendation
Buy NVIDIA Corporation (NVDA) at market today. Place your initial stop at $184.00.
If you want to play the options, buy the NVDA March $210 calls (NVDA180316C00210000), which last traded at $16 and expire on March 16.
Portfolio Update
Sincerely,
Nicholas A. Vardy