Academy News TOP 3 stocks for June 2023

TOP 3 stocks for June 2023

Published: 12.07.2023

Stocks Tesla

Wondering where to look for volatility in the stock markets for speculation? Our regular roundup of the top 3 most traded stocks among Purple Trading clients for the month of June will give you a hint.

The first half of 2023 is over and the stock markets have shown unprecedented gains. The S&P 500 index has gained 16% and the Nasdaq technology index has even gained 40%, making the past 6 months the best first half of the year for the index ever. Equity investors are now eagerly awaiting the next wave of economic results, which are literally just around the corner, and we can expect increased volatility once again. Our article today may give you a clue as to where to look. In it, we summarized the 3 stocks our clients found most interesting in June 2023.

NIO - return to the limelight?

The year so far has not been a miraculous one for the Chinese carmaker NIO, with the shares rising by less than 4%. In the last 12 months, it has even weakened by more than 50%. However, June 2023 has been very positive for NIO, with the stock gaining 18%. This begs the question, is NIO poised for a return to the limelight? First, let's answer why NIO has not done so well this year.

NIO did not do well this year at first - why?

For example, the stock of competitor Tesla is up 150% since the beginning of the year. And when it comes to NIO’s failure, Tesla is to blame. The Californian carmaker's multiple price cuts have made its cars very attractive, and this has had an impact on demand for NIO cars. Moreover, a question mark hangs over the strength of the Chinese economy, which has not taken off in the way that was expected after the coronavirus. The industry has been limping along for several months in a row and demand is generally weaker than expected. This is not good news for premium car dealers.

_{NIO shares in the MT4 platform on the H1 timeframe along with the 50 and 100 day moving averages}

The first-quarter results were not miraculous, but the stock rose. NIO's quarter-on-quarter sales fell 33% and new car deliveries fell 22%. In addition, margins plunged horribly year-over-year from 14.6% to 1.5%.

June 2023 - the turning point

However, NIO shares were able to grow on the back of a year-on-year increase in sales and new car deliveries, as well as a smaller loss compared to the previous quarter. In addition, the company took inspiration from Tesla and last month announced a 6-9% price cut on all of its cars. In addition, NIO has launched 4 new models in recent months. These should be available not only in Asia but also in Europe. NIO is thus significantly increasing the number of cars delivered.

Moreover, the carmaker was noticed by an Abu Dhabi investment fund, which invested $740 million in NIO. Thus, the price bottom in NIO's shares may have already been established and it is possible that the stock is looking at a better tomorrow. However, the current situation in China, which also has the lowest inflation in the world, is still alarming. Year-on-year inflation for June even reached 0.0%. Further monetary easing in China may thus become a reality very soon. A possible higher interest rate cut could support Chinese demand and also NIO shares. On the positive side, the chapter around Ant Group, which has been prosecuted by Chinese regulators, should hopefully finally be closed. Ant Group was fined $1 billion, but after the announcement Chinese stocks reacted by rising.

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Tesla - is it due for a correction or a continuation of the bull run?

Tesla has long been one of the most popular stocks among Purple Trading clients, and June was no exception. The last 4 weeks have been good for Tesla again, with the stock adding 10%. Overall, Tesla stock is already up 150% this year, making it one of the best performing components of the S&P 500. Tesla has traditionally released the number of vehicles delivered and produced at the beginning of the quarter, and both numbers were a positive surprise. Tesla delivered just over 466k new cars, an 83% increase year-over-year. Production also increased significantly, rising from 254k to nearly 480k new cars year-over-year. Tesla has significantly expanded its production line in Texas and the price cuts also seem to be very effective. Production could expand even further in the future, with Tesla reportedly planning new factories in Mexico and India.

_{Tesla shares in the MT4 platform on the H4 timeframe along with the 50 and 100 day moving averages}

The number of cars delivered is the most closely watched number for Tesla shareholders, as it is the most important for estimating revenue for the quarter. Tesla will release its Q2 earnings on July 19 and Elon Musk has already predicted that Tesla is focused on creating long-term value for investors and is unable to influence any negative sentiment in the markets. So is Tesla in for a slight correction? Tesla shareholders need to be wary, as the automaker's margins are likely to drop significantly after the recent discounting. Moreover, the prospect of two more interest rate hikes in the US does not bode well for more premium cars. With interest rates above 5.5%, we can expect US consumers to be more cautious and unemployment to rise gradually. Tesla shares may thus be at risk after such a meteoric rise in the first half of the year.

Air France KLM - will it soar back to pre-coronavirus levels?

Not too surprisingly, Air France shares have been literally crushed by the coronavirus pandemic. However, since the beginning of this year they have done well, gaining 35%. However, they are still around two-thirds below their early 2020 levels. However, the results for the first quarter of the year have spoken mostly positively and Air France shares could bounce higher. The strong demand for travel was also reflected in the airline's customer numbers, which rose 35% to 19.7 million. Group revenues even rose 42% year-on-year to EUR 6.3 billion. Despite this, Air France KLM ended up with an operating loss of EUR 300 million, but this was an improved result year-on-year thanks to the increase in margin. Air France itself expects its passenger load factor to rise by the end of the year, despite the fact that overall passenger numbers in Europe are still 8% lower than they were before the coronavirus.

_{Shares of Air France KLM on the MT4 platform on the H4 timeframe along with the 50 and 100 day moving averages}

Since then, however, ticket prices have risen significantly and we do not expect a significant decline. As a result, Air France recorded virtually the same revenues in Q1 this year as in Q1 2019, despite having 3 million more passengers then. Given the positive outlook, Air France shares may appear undervalued; moreover, shares of some of its US peers are already virtually at pre-Coronavirus levels.

But Air France shares also carry risks. It is already virtually a penny stock, with the share having almost fallen below EUR 1 in the past year. Such shares are accompanied by high volatility and any negative news can have a significant impact on their value. In addition, interest rates are still set to rise significantly within the Eurozone, which may reduce demand for tourism. A possible economic recession would then have a significant impact on the entire sector, which can be described as highly cyclical.