One thing I hate is putting labels on the moves I make in the stock market.
Do I look for growth? Yes… so I guess that makes me a growth investor. But I also look for value, so I’m a value investor, too, right?
One of my best trades of 2020 came when I found a company with both great growth AND value. And it’s in everyone’s favorite sector, tech: Nvidia Corp. (Nasdaq: NVDA).
I recommended Nvidia this past January because it was undervalued and growing fast. I also recommended selling Nvidia rival Intel Corp. (Nasdaq: INTC) because it was barely growing at all while carrying a high price tag.
Since my recommendations, Nvidia rose 105% while Intel fell 25%.
So, Jeff, after you’re done patting yourself on the back, what’s next for shares of Nvidia?
Heading into 2021, there’s nothing wrong at all with Nvidia and owning shares of the company’s stock. It still makes the best graphics cards on the market. The company should earn at least $6.62 a share in profits in 2021, rising to $8.73 in 2022 and a staggering $10.13 a share by 2023.
It’s hard to argue with that kind of growth.
But at this point, investors are paying a high price to own a slice of that extraordinary profit growth. If you’re new to investing, this can sometimes be a hard concept to grasp. Nvidia’s a great company and everyone wants to use its chips.
That’s the story, case closed…
But make sure you don’t miss the other half of this story: value.
I can demonstrate value with a simple metric: Nvidia’s P/E ratio, or price-to-earnings ratio. You take a company’s stock price, divide it by its earnings per share and you get the P/E ratio, or price multiple, as it’s sometimes referred to.
So what does Nvidia’s P/E ratio tell us about where the stock ranks as far as buy, sell or hold?
Check out my short video and let’s discuss Nvidia’s P/E ratio further to see whether this stock is still worth adding to your portfolio. Then share your thoughts in the comments below.
The year 2020 can be summed up in one simple word: “chaos.”
Buying and holding wasn’t the safest play as the historic year led to historic volatility — and gains.
But those gains don’t need to stop as we enter 2021. That’s why trading experts Roger Scott and James West have been working hard on getting their third annual Turning Point event ready for you.
With this strategy, they’ll show you how to rotate your positions for maximum gains every two weeks.