Every investor is well aware of the volatility sweeping the markets over the past few weeks. The same investors are trying to understand whether a market meltdown or massive opportunity is ahead. While no one knows with 100% accuracy there are several stocks investors should watch to get a better grasp of the future market direction.
These stocks represent certain narratives and overarching trends moving the markets. Certain classes and categories of stocks will perform better during this period of volatility. Investors can better position themselves by understanding those broad movements and their repercussions.
Whether the current period is a market meltdown or a massive opportunity remains to be seen. As I write this the S&P 500 is up by nearly 2.5% on the day. It fell by nearly as much the day before. Recession fears, employment data, Federal Reserve rate cut expectations and more are making the market exceptionally volatile. Current volatility is an extension of overall volatility that has increased in the modern era. With that said, let’s make sense of current volatility through the lens of seven stocks to watch.
Nvidia (NVDA)
Plan on continued volatility in Nvidia (NASDAQ:NVDA) stock. The company – arguably the world’s most important – is set to release earnings on August 28. In 2024 Nvidia’s shares have appreciated by as much as 185%. They’ve corrected over the last month, falling by nearly 20% as fears around artificial intelligence reach a fever pitch. Year-to-date gains now stand at approximately 110%.
The central theme of upcoming volatility over the next few weeks will be the release of Nvidia’s upcoming Blackwell chips. There’s a lot of controversy around that delay. When the news was released some analysts reacted negatively while others claimed Nvidia’s dominance made any delay a non-event. Days after the rumor began to spread, Nvidia flat-out denied any such issues.
Nvidia instead noted that sampling of the chips has begun and an H2 production ramp-up is on track. The conflicting claims set up a period of market intrigue over the next few weeks in the lead-up to earnings on August 28. Nvidia looks likely to continue to rebound given its claims about Blackwell production and the fact that many analysts are bullish should any delays occur.
Wolfspeed (WOLF)
Small-cap stocks including Wolfspeed (NASDAQ:WOLF) deserve investor attention at the moment. The upcoming Fed pivot in September should catalyze small-cap stocks higher again as it did in July.
Wolfspeed is a small-cap firm that didn’t particularly benefit from the July rotation into small caps and away from large-cap tech. However, due to likely September rate cuts and its unique business, Wolfspeed is a stock to consider buying.
Wolfspeed is a leader in the high-tech growth industry. The company is a leader in the silicon carbide (SiC) market. SiC is a material with superior properties relative to the silicon commonly used throughout the semiconductor industry. Silicon carbide has higher thermal conductivity and can operate at higher voltages and temperatures than traditional silicon.
That has led many to believe that Wolf Speed is a massive emerging opportunity with a first-mover advantage through its leadership position in the material. Silicon carbide chips have applications in growth markets including EVs, 5G, IoT and more. While it’s easy to see Wolfspeed’s appeal given those facts, losses are growing at the firm. It’ll benefit greatly from cheaper lending soon so for bold investors Wolfspeed could be a huge opportunity.
Coca-Cola (KO)
Unsurprisingly, Coca-Cola’s (NYSE:KO) stock has thrived over the last month as fears over a market meltdown increased. The company has become one of the most well-known defensive positions and a bastion of safety during market turbulence. The earnings machine seems to weather any storm long or short.
The most recent storm over the last month has seen KO shares rise by 9%. Despite the strong performance investors have reason to believe KO shares won’t rise much further. I say that because a technical indicator, the relative strength index, indicates that KO shares are overbought at the moment. The so-called RSI Is considered to indicate overbought territory at a level of 70 or higher. Coca-Cola’s shares currently have an RSI above 97.
That’s a reasonable indication that the markets will soon move away from Coca-Cola or at least fewer will move into Coca-Cola. Although KO stock has a little bit of room to go until it reaches the consensus target price, suggesting upside, those who wait for prices to fall will benefit from higher dividend yields. The current RSI suggests that may be a better option.
Apple (AAPL)
Apple (NASDAQ:AAPL) is going to continue to be one of the most interesting trades in the stock market as it commercializes AI. Shares have performed very well since the June 10 introduction of its AI, called Apple Intelligence. That was, up until the last few weeks as the broader AI play lost steam.
While Apple was late to the game and its timing arguably unfortunate, there’s a lot to like about AAPL in the $210s. First of all, the consensus price for the stock is nearly $240 with some analysts believing it could reach $300.
All of that upside is predicated upon the successful launch of Apple Intelligence. Apple intelligence will require iOS 18 set to launch in September. However, Apple intelligence will not be available at the launch of iOS 18. Instead, it will be available with later updates of iOS 18.
Users will need an iPhone 15 Pro or better to access those AI features. Apple is likely to charge $20 for access to its most advanced AI features.
The point here for investors is that Apple is likely to receive a spike in revenues due to iPhone upgrades, Apple Intelligence subscriptions, and a boost to consumer spending as rate cuts are enacted.
UFP Technologies (UFPT)
UFP Technologies (NASDAQ:UFPT) is another small-cap stock to watch. As noted earlier in this article, there is an ongoing rotation into small-cap stocks. My colleague Joel Baglole noted that the rotation lost momentum since the beginning of August but that UFP Technologies Is one of the more interesting small-cap plays.
The stock is up nearly 650% over the past five years and more than 82% in 2024 alone. The company recently released earnings that once again bested expectations. Revenues and earnings per share both came in much better than expected.
The medical devices firm is very well positioned to grow rapidly. UFP Technologies has been on an acquisition spree of late Acquiring three companies in July ending with the July 16 acquisition of Marble Medical.
Those acquisitions – combined with lower lending rates – could catalyze the company into another level of growth spiking prices in the process, making it one of the stocks to watch.
Palantir (PLTR)
Palantir (NYSE:PLTR) will continue to be one of the most interesting firms to watch as the following weeks in the stock market unfold.
Investors are already aware of how quickly Palantir has evolved into a profitable firm and one that is squarely entrenched in the enterprise AI opportunity. A lot has been said about that but the thrust of it is that Palantir continues to prove its doubters wrong.
The company has been profitable for over a year and continues to be. It is also quickly emerging as a commercially oriented AI firm providing an in-demand AI platform to the private sector. Beyond that, Palantir is a well-known public side firm with deep ties to the government. Those ties are getting stronger as the company just announced a partnership with Microsoft (NASDAQ:MSFT) to bring AI to government agencies.
That sent Palantir stock surging higher by 10% during intraday trading. It’s highly likely that Palantir will continue to grow among stocks to watch given its strengthening ties in the public side and rapid growth commercially.
Pinterest (PINS)
Investors should avoid Pinterest (NASDAQ:PINS) over the coming weeks and months. The reasoning for that assertion is relatively straightforward and is related to recent Q2 earnings results.
Results themselves were actually strong with pinterests revenues coming in 1% higher than anticipated. However, the markets are always forward looking. Unfortunately, Pinterest projects Q3 growth in the range of 16 to 18%. Analysts were looking for 19% at the consensus level.
So, it’s clear that Pinterest will have a lot of work to do this quarter in trying to assuage fears of slowing growth. That is not the only issue confronting the firm nor is it the only reason to believe the stock will trade sideways or worse.
Pinterest shares are more expensive than all but 8% of the competition based on its P/E ratio. That P/E ratio is currently at the 10-year median level. However, Pinterest doesn’t look particularly strong at the moment so I see no reason to assume investors will want to buy it at these prices.
On the date of publication, Alex Sirois did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
On the date of publication, the responsible editor did not have (either directly or
indirectly) any positions in the securities mentioned in this article.