Locking in Big Gains and a New Rating on This AI Chip Holding
As we make this prudent move, we're gaming out what’s potentially next for two shopping list stocks.
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| Symbol | Transaction Type | # Shares Traded | Recent Price $ | Shares Owned After Trade | % Portfolio |
|---|---|---|---|---|---|
MRVL | Sell | 320 | 86.50 | 2,570 | 4.0 |
After you receive this Alert, we will sell 320 shares of Marvell Technology (MRVL) at or near $86.50. Following the trade, MRVL shares account for roughly 4.0% of the Pro Portfolio’s assets.
Shares of Marvell have gotten some renewed and positive attention across Wall Street over the last few days. Today, Stifel lifted its price target on MRVL to $95 from $80, and last week, Bank of America upped its target to $88 from $78, after Marvell upped its stock repurchase plan and authorized an accelerated repurchase plan.
Those items helped bring the total move in the shares to almost 40% off their early September low near $62. That aggregate move has also landed MRVL into an overbought condition and pushed the Pro Portfolio’s position size just over the 4.5% threshold.
That is leading us to make a prudent and very profitable move, one that will nudge the Pro Portfolio’s cash levels higher as we wait to see if the Trump administration's mass layoffs happen.
Are we still bullish on MRVL shares? The short answer is yes, and it ties back to rising AI chip demand, the ramp in its proprietary AI silicon business, and increasing network capacity issues that should drive incremental demand for its Enterprise Networking and Carrier Infrastructure segments. All we are doing here is taking advantage of a substantial move in the shares. Said another way, if our view on MRVL shares had changed, we would be opting to sell more shares.
That said, some of the factors that are leading us to ring the register are also leading us to downgrade MRVL to a Two rating. Granted, there is more than enough upside to keep a One rating, but we can’t overlook that overbought condition that will restrain us from putting capital to work. Hence, the move to a Two rating. If we see the shares pull back and exit that condition, we’ll revisit that Two rating.
As we make this move, we will lift our panic point on MRVL to $70 from $60.
Meanwhile, we’ve explained that if they do, the ensuing weight could bring about even nicer pick-up points for a few of our existing holdings, including Costco (COST) and the now oversold Dutch Bros (BROS) . If those potential mass layoffs do not occur and or the government shutdown comes to a quicker-than-expected end, we will have the cash on hand to make those moves.
(Please note that we are looking to execute these trades at or near the share price mentioned above. Once the trade is completed, subscribers can see the trade's executed price here. Be sure to toggle the chart to sort by Purchase Date.)
At the time of publication, TheStreet Pro Portfolio was MRVL, COST and BROS.
