TOP 3 stocks in November 2023

Is Apple's valuation excessive?

Apple stock has been one of the drivers of this year's rally in tech stocks, up over 50% since the beginning of the year, which translates to a hard-to-believe $1 trillion (currently more than the entire value of Meta). So currently the company's capitalization is once again approaching the magic $3 trillion mark. But is such a high valuation justified? After all, Apple has been plagued in recent months by something investors don't like to see - the absence of growth, and for 4 quarters in a row.

The previous quarter's results were mixed at best. While Apple beat market expectations for profit and revenue, nothing grew except iPhone sales and service revenue. Conversely, hardware such as Mac computers and iPads saw big declines. Overall sales were less than in the same quarter a year ago. Expectations were high for the outlook for the current quarter, which is traditionally Apple's most important due to the holidays. Although the company did not provide an official outlook, according to the CFO, sales will be about the same as a year ago. The market was expecting 5% growth.
 

_{Apple shares on D1 chart, MT4}

But Apple may surprise us during the rest of the year. US consumers in particular are still going strong, as demonstrated by Black Friday, which saw record sales. Most important, of course, are sales of iPhones. According to Tim Cook, the new version, the iPhone 15, is reportedly doing better than the previous one in the same period. The drop in Mac sales could be related to the high expectations for the new M3 chip. On the other hand, many computers are currently sold out. Apple may also be helped by the weakening US dollar - with the prospect of interest rate cuts in the US, the dollar is weakening, which is positive for overseas sales. In addition, Apple can rely on a steadily growing services division and a huge amount of funding, which amounted to $162 billion at the end of the last quarter.

However, the negative is the situation in China, where consumers are extremely cautious. At the moment, China is facing a prolonged period of deflation, developers are still in big trouble, and a new variant of coronavirus may be spreading. Apple is still a colossus and a cornerstone of US indices, but given the lack of growth, its current valuations may look too high. So for investors and speculators alike, the key will be the economic results for the current quarter. Apple may continue to thrive next year thanks to falling interest rates in the US. Sales growth may then be provided by possible price increases or the new Vision Pro glasses. However, there are currently more interesting titles on the market that may offer more growth.

Will Citigroup rise from the dead?

The stocks of the big banks were somewhat forgotten in the second half of the year. Yet they are the ones that offer a relatively stable business and, moreover, high dividends. This March in particular was crucial for the banks, as they came under enormous pressure following the problems at Credit Suisse and several smaller US banks. As a result, insurance against the failure of the larger banks became extremely expensive, and in some places we saw similar levels to those seen around 2008. The next shock to the banking market came in May, and since then it has been more or less quiet.

However, bank stocks have not reflected much of the overall market, which has had some great moments. So could there be interesting opportunities now? One of them may be Citigroup, one of the world's largest banks. Its shares have fallen 2% since the start of the year, despite adding 15% over the past month. Citigroup shares are still nearly 50% below their June 2021 level and currently offer a dividend yield of nearly 5%. So is this an interesting portfolio component?
 

_{Citigroup shares on D1 chart, MT4}

In addition to the generally positive market sentiment, the upward movement in stocks over the past month was driven by Citigroup's strong results. Revenues and profits rose 9% and 2%, respectively, and the bank is expected to cut costs next year. Citigroup is splitting into five sections, it is also showing signs of divesting some assets in foreign markets. In particular, it is selling some operations in China and Indonesia. Next year may be interesting for banks in general, thanks to the fall in interest rates in the main economies.

While high-interest rates are a risk-free way for banks to generate profits, they have a negative impact on lending, which is a core business for banks. As a result, banks may benefit from higher lending volumes next year as well as an expected increase in merger and acquisition activity. Along with a very attractive dividend yield, Citigroup stock may act as an attractive component to a long-term portfolio. However, more substantial growth may be prevented by the ongoing restructuring, so this investment may be a long shot.

Is Nvidia aiming for $700?

The year 2023 was literally revolutionary for Nvidia. The chipmaker has experienced an incredible resurgence thanks to the development of artificial intelligence, and sales and profits are growing at a meteoric pace. The stock itself has also experienced incredible growth so far this year, rising more than 230%. But how will Nvidia fare in the coming months? And how far can the stock grow? The answer may be found in the just announced Q3 earnings.

Let's first take a look at the incredible numbers Nvidia reported. Revenue grew more than 200% year-over-year to $18.12 billion, beating already high market expectations by nearly $2 billion. Then the profit development is literally extreme - up from $680 million year-on-year to $9.24 billion. No company in the megacaps offers such growth. Traditionally, data centers have taken care of most of the revenue - $14.5 billion, Nvidia is benefiting from the growth of the cloud market here. Approximately half of the revenue thus came from cloud providers such as Amazon. Sales from the gaming section also surprised, rising 80% year-on-year and beating market expectations.
 

_{Nvidia shares on D1 chart, MT4}

As you can see, Nvidia offered incredible numbers, yet the stock fell more than $20 after the results, still, the market is generally positive. What caused this? Nvidia may be a bit of a victim of its own success. Even before the results, the stock was already at an all-time high and part of the market was therefore taking profits. Some investors may have been a little spooked by the company's expectation that sales in China would drop significantly. But here Nvidia is a victim of the US embargo, which banned the export of state-of-the-art chips to China. However, the company is not slowing down and is preparing a special chip for the Chinese market that should comply with the regulation.

In the medium term, Nvidia should do well as a result. For the current quarter, the company expects sales of around $20 billion, which would again be a year-on-year increase of more than 200%. Moreover, the use of artificial intelligence and clouds is only likely to grow next year. Higher demand for cryptocurrency mining hardware could add to that. With interest rates falling and ETFs expected, bitcoin could also thrive, which could get more people mining again. Major US banks also reacted positively to the results, with JP Morgan and Goldman Sachs both raising their expected price on Nvidia. Some banks even expect a target price of around $700 per share. So despite the current level, Nvidia stock seems to have further tailwinds and could look even higher.

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