The first half of the year is now in the books and what a first half it was! From record inflation to a regional banking crisis to what appears to be the return of a bull market. But that’s in the past now and it’s time to look ahead to the second half of 2023. With rate hikes on the horizon and a potential global recession, it sure seems like a strange time for stocks to be hitting all-time highs. Here are 2 stocks to watch for the second half of 2023:
SoFi Technologies (NASDAQ: SOFI)
SoFi is a polarizing stock on Wall Street and there are plenty of reasons why. One reason why it gets a bad reputation is that it went public via a SPAC merger. Over the past two years, SPAC stocks have fallen out of favour with investors and many of them are trading below $1.00. Bucking that trend is SoFi which has gained more than 85% year to date. On Friday, the Supreme Court struck down President Biden’s student loan forgiveness plan.
While this can be interpreted as bullish for SoFi’s stock, shares fell by 4.25% following the ruling. Wall Street analysts were quick to point out that the decision was expected and that the student loan re-financing moratorium being lifted later this summer will have a bigger impact on SoFi. Regardless, there are other reasons to be bullish on SoFi including a full suite of financial services. If there is a major surge in student loan refinancing, SoFi will benefit. But I believe SoFi has a bright future and is working its way toward profitability. Buy the rumour and sell the news. SoFi might not be a buy now after running higher by 85%, but it is certainly one to keep your eye on.
Robinhood (NASDAQ: HOOD)
Wait, isn’t Robinhood a meme stock? The single biggest hurdle Robinhood has to overcome is its bad reputation from the Wall Street Bets saga. Robinhood was alleged to be working with hedge funds because of its Payment for Order Flow system that allows users to pay no fees or commissions. Recently, Cathie Wood and Ark Invest have been buying Hood shares hand over fist, and while some of Cathie’s decisions can be criticized, I don’t mind this one.
Robinhood is trading at a fairly cheap valuation now as the stock sits at a price-to-sales ratio of just 6.01. It is also sitting on over $10 billion in cash, some of which it recently deployed to acquire credit card startup X1 for $95 million. Robinhood is also looking to cut costs with another round of layoffs and is also doing its best to keep its name out of the headlines. Do I think Robinhood will make you a millionaire? Probably not. But at its current stock price, there is a fairly asymmetrical risk/reward setup to the upside, especially as crypto and equities trading becomes more centralized. Keep an eye on Robinhood in the second half of 2023 because trading at below $10.00 could look like a nice discount in a few quarters.
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