With This Kind of Volatility, I'm Taking a Gamble
I've been focused on stock picking as the market's ups and downs creates opportunities.
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Investors on early on Thursday began second-guessing the positive response to the Federal Open Market Committee interest rate policy decision from the day prior. After a slow start, however, the buyers have emerged, and all the major indexes are in the green, with the Nasdaq 100 QQQ leading with a gain of 0.5%. The Magnificent Seven MAGS stocks are leading with a gain of 1.3%. Breadth is just slightly positive, and there are few pockets of strong momentum, but there is a little fear of missing out in the air that is helping to keep things positive.
I’ve been very focused on stock picking as the volatility in the indexes tends to create opportunities. One of the primary reasons that I focus heavily on small-cap stocks is that they are often very mispriced when there are big moves in the indexs. Part of that is due to the lack of institutional coverage, and part of it is due to illiquidity. If you understand the fundamentals of a stock and watch the charts carefully, you will find some exceptional opportunities.
One good example of this is Gambling.com GAMB. I discussed this stock on March 11, when it was trading around $12. It had fallen sharply after Cantor Fitzgerald had issued an overweight rating and a $20 target. The main reason it fell was because of overall market conditions. There were no changes in the fundamentals.
What was particularly interesting is that the company had not yet reported fourth-quarter earnings but had preannounced very solid revenues. In this case, there was minimal risk of holding into the report. The company reported on Thursday morning. Earnings per share was $0.35 vs. the estimate of $0.25. The company sees earnings before interest, taxes, depreciation, and amortization growing by more than 35%, but it sells at a trailing price to earnings of just 12.
Analysts should update their coverage in the next couple of days, but prior to the report the average price target was $19.20 with a low of $18. I expect some ‘buy’ reiterations and target increases.
The stock looks like a great value in a good niche, and I will continue to trade it very aggressively.
At the time of publication, DePorre was long GAMB.
