I'm Finding Opportunities in the Most Random of Places
In this over-valued market, you have to look all over for good trades, including in the gas industry, small biotechs and even big-name chip players.
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Markets have gotten off to somewhat of a meandering start in December, after a big rally during Thanksgiving week. The Federal Reserve is likely to cut rates again by a quarter-percentage point next week, but this reduction seems fully baked into the markets at this point.
As I noted in my column on Monday, the AI narrative that has driven most of the gains in the market over the past three years feels like it is getting long in the tooth. Equity valuations are also at extreme levels, when viewed through traditional valuation metrics. Whether this means the AI bubble implodes in the year ahead or just fizzles is a key question as we approach 2026. Every major technology-driven paradigm shift (railroads, electrification, automobiles, internet), however, has triggered a huge investment surge and a boom in the stock market. All of which have led to eventual busts. Given human nature remains stable, I see no reason for the AI revolution to follow a different path.
That doesn’t mean I've stopped searching far and wide for bargains within an overbought market. I still like the natural gas plays I highlighted recently. Natural gas futures hit a three-year high yesterday as a significant storm system looks like it will target the Midwest and Northeast in coming days.
Also, Marvell Technology (MRVL) , my covered-call trade idea from two months ago, reported blowout third-quarter results on robust AI data center demand after the bell on Tuesday. Marvell also confirmed it was acquiring Celestial AI. That should trigger a big rally today, but I would add to my holdings on any subsequent dip.
Then there's Dynavax Technologies Corporation (DVAX) , which has been stuck in a trading range between roughly $10 and $15 a share for over three years now. The stock has made for a wonderful rinse, wash, and repeat covered-call trade over that time. I clip a couple of low- to mid-teen returns on these trades every year.
As my late father liked to quip "If it ain’t broke, don’t fix it." With the stock down near the floor of the range and a good chunk of my current holding due to expire in the money later this month, I have executed some new covered-call holdings against the equity. Dynavax’s hepatitis B vaccine continues to take market share, and sales are growing at a nice clip. The company is also nicely profitable and has a robust balance sheet as well.
Finally, we have CorMedix Inc. (CRMD) , which is also offering a solid entry point after the stock has declined just over 20% from its highs in the first half of November. The rollout of its antimicrobial catheter lock product, DefenCath, continues to be impressive. The company crushed top- and bottom-line expectations with its third quarter results posted on Nov. 12. Management also raised guidance yet again. Recent analyst price targets range from the mid to high teens. The stock has drifted down below the ten bucks a share level.
At the time of publication, Jensen was long CRMD, DVAX, MRVL
