3 Grade “A” Stocks You Must Buy‼️

Here's a comprehensive summary of the YouTube video transcript:

Key Concepts

• Market Volatility: The market is experiencing increased volatility, moving away from consistent upward trends.
• Tax Loss Harvesting: A strategy where investors sell losing positions to offset capital gains, potentially driving down the prices of already weak stocks.
• Growth Stocks: Companies with high revenue and earnings growth potential, often commanding higher valuations.
• Valuation Metrics: Price-to-Earnings (P/E) ratio, forward P/E, and Price-to-Sales (P/S) ratio are used to assess stock value.
• Compound Annual Growth Rate (CAGR): The average annual growth rate of an investment over a specified period.
• Inflection Point: A point in a company's performance where growth trends change direction, often from deceleration to acceleration.
• AI Opportunity: The significant impact of Artificial Intelligence on the technology sector, particularly for companies like AMD and Nvidia.
• Cloud Computing: The growing market for cloud services, with AWS being a major player.
• Subscription Software (SaaS): Software delivered via subscription, a key business model for companies like Salesforce and Adobe.
• Diversification: The importance of holding a variety of assets to manage risk.

Market Overview and Volatility

The video begins by highlighting the current market's high public account balance, exceeding $4 million, and congratulating those in profitable positions, specifically mentioning AMD as a significant performer. The market experienced a strong opening, followed by a sharp reversal, illustrating high volatility. The VIX (Volatility Index) is noted to have spiked, indicating a return to a more unpredictable market environment, contrasting with the previous "brainless" upward trend. Stocks like Salesforce (CRM) are presented as examples of underperforming assets, down significantly over the past year despite broader market gains.

Section 1: Stocks to Avoid and the Impact of Tax Loss Harvesting

The speaker identifies a dynamic where stocks that have been performing poorly are at risk of further decline due to tax loss harvesting, a strategy employed at the end of the year (Q4, specifically November/December) to offset capital gains taxes.

• Mechanism: Investors sell stocks with unrealized losses to realize those losses, which can then be used to reduce their taxable income from capital gains.
• Impact: This selling pressure exacerbates the decline of already weak stocks, creating a "vicious effect."
• Examples of Stocks to Avoid (due to tax loss harvesting risk):
  • RH (Restoration Hardware): Down 46% over the past year, despite the S&P 500 being up. It's seen as a prime candidate for investors to sell to realize losses.
  • Bath & Body Works: Down 19% over the past year, likely holding significant losses for investors.
  • Cava: Down 52.6% over the past year. This stock was popular with growth investors, but its growth rates have decelerated, leading to substantial losses for many. The speaker predicts it could fall into the $40s if the market trends down.
  • Whirlpool: Down over 30% over the past year, also susceptible to further declines.
• Supporting Evidence: The speaker uses specific percentage declines over the past year for these stocks and contrasts them with the S&P 500's 14.5% gain, illustrating their underperformance. The hypothetical scenario of a 10% S&P 500 decline leading to much larger drops in these specific stocks (e.g., Cava to $40s, RH to $125 or below $100) is presented.

Section 2: Salesforce (CRM) - Analysis and Outlook

Salesforce is discussed as a stock that has been "thrown out," down 18% over the past year, and is also a potential candidate for tax loss harvesting.

• Speaker's Financial Models for CRM:
  • Bull Case: 14% annual revenue growth, 22% net income growth (2026-2029). A 29-34 P/E ratio suggests a stock price between $500 and $617 by 2029, yielding a CAGR of over 20%.
  • Base Case (Expected): 12% annual revenue growth, 20% net income growth (2026-2029). A 27-32 P/E ratio suggests a stock price between $433 and $500, yielding a CAGR of 20%.
  • Bare Case: 6% annual revenue growth, 10% net income growth (2026-2029). A 22-27 P/E ratio suggests a CAGR of 3-8%. Crucially, even in the bare case, the speaker does not expect to lose money.
• Argument for Buying CRM Now: The speaker emphasizes that a 20% CAGR is highly attractive and justifies buying the stock despite potential short-term price drops.
• Catalyst for Stock Price Increase: The key catalyst is the market's confidence in Agent Force, Salesforce's new product, as a significant growth driver.
• Evidence of Inflection: The speaker presents quarterly revenue growth data for Salesforce, showing a clear trend of deceleration followed by a recent re-acceleration to nearly 10% growth. This "inflection point" suggests fundamental improvement.
• Perspective on Wall Street: The speaker believes Wall Street is "behind the curve" and should be buying Salesforce aggressively now, rather than waiting for confirmed higher growth rates.
• Comparison to Palantir (PLTR): Salesforce is presented as having a lower risk profile and higher reward potential over the long term (4+ years) compared to Palantir. While Palantir might outperform in the short term, its high valuation (300 forward P/E, 200 2-year forward P/E) and risk of growth deceleration make it less attractive for long-term investors. The speaker suggests that Palantir might be a good buy again after a potential crash when its growth decelerates.

Section 3: Three "Grade A" Stocks to Own

The speaker identifies three "Grade A" stocks, all starting with the letter 'A', with strong fundamentals and growth prospects.

1. AMD (Advanced Micro Devices)

• Current Status: A "beast" and a "must-own stock," currently up over 113% in the public account, representing a significant position.
• Growth Prospects: The speaker believes current analyst estimates for AMD's revenue growth (e.g., 28% next year) are too low.
  • AI Opportunity: AMD is just entering the AI opportunity with its 355 and 400 series products.
  • Comparison to Nvidia: While Nvidia experienced massive growth (101%-265%), AMD is at the beginning of its AI cycle. The speaker believes AMD can achieve 50%+ revenue growth in upcoming quarters, potentially reaching Nvidia-like numbers (200%+) in the future, though not banking on it.
  • Analyst Underestimation: The speaker criticizes analysts for being "way, way too bearish" on AMD, citing a recent "Fast Money" segment where AMD was discussed negatively.
• Price Targets:
  • Next 24 months: $400 is considered achievable, with a 50/50 chance of exceeding $500.
  • Low Probability (10% odds): $1000+ in the next 24 months if AMD achieves 50%+ revenue growth.
• Key Argument: Wall Street has not yet recognized the "massive opportunity" in AMD, which is "right in front of them."

2. Amazon (AMZN)

• Personal Investment: A significant position in the public account, up $116,000, and the speaker is "actively buying" more.
• Investment Rationale:
  • "Give Back to Yourself": Owning Amazon stock is framed as a way to benefit from personal and business spending on its platforms (e-commerce, AWS, advertising).
  • Undervalued: The stock trades "way too cheap" with a forward P/E likely closer to 25-28 (not the reported 31), and a 2-year forward P/E around 22.
  • Consistent Earnings Beats: Amazon has consistently beaten EPS estimates by significant margins.
  • Growth Potential: Expected to grow revenues double-digit percentages annually, unlike Apple (which has lower growth expectations).
• Speaker's Financial Models for AMZN:
  • Bull Case: 14% revenue growth, 20% net income growth (2026-2029). With a 35-40 P/E, this implies a stock price of $500-$560 and a CAGR of 23-27%.
  • Base Case (Expected): 12% revenue growth, 18% net income growth (2026-2029). With a 33-38 P/E, this implies a stock price of $433-$500 and a CAGR of 20%.
  • Bare Case: 10% revenue growth, 15% net income growth (2026-2029). With a 30-35 P/E, this implies a CAGR of 13-18%. Even in the bare case, the speaker expects to not lose money and outperform the S&P 500.
• Revenue Milestones: Amazon is projected to reach over $1 trillion in revenue by 2028 or 2029.
• Long-Term Growth Drivers: Market share gains, inflation increasing prices, and the continued growth of e-commerce, AWS, and the advertising business.
• Key Statement: "Buy and don't stop buying Amazon stock."

3. Adobe (ADBE)

• Controversial Pick: Considered the most controversial of the three "Grade A" stocks, currently down 34% over the past year and a potential tax loss harvesting candidate.
• Business Performance: Despite the stock price, Adobe's business is described as "phenomenal," with 10% year-over-year revenue growth (constant currency) and 14% non-GAAP EPS increase in the latest quarter.
• Disruption Concerns: The primary worry is disruption from AI tools like ChatGPT and Google Gemini for image and video generation.
• Speaker's Counter-Argument: The speaker has tested these AI products and calls them "generic AI slob." He argues that for high-level creative work (webpage design, professional images/videos), human expertise is still essential, and current AI tools are insufficient.
• Speaker's Financial Models for ADBE:
  • Bull Case: 10% revenue growth, 12% net income growth. A 25-30 P/E suggests a CAGR well into the 20s.
  • Base Case (Expected): 8% revenue growth, 10% net income growth. A 23-28 P/E suggests a CAGR of 16-22%.
  • Bare Case: 2% revenue growth, 2% net income growth. This scenario would result in a slight loss over the next few years.
• "Perfection" in Numbers: The speaker highlights Adobe's "perfect" charts on 1000x.com, showing consistent revenue trends, strong gross and net margins, growing EPS, robust free cash flow and operating cash flow, and decreasing shares outstanding.
• Argument for Buying ADBE: Unless Adobe is "massively disrupted," its strong financial metrics make it a "perfect stock" and a buy, especially for diversification. If Adobe exceeds the base case growth rates, the CAGR could reach the 20s or 30s.

Conclusion and Call to Action

The speaker reiterates the importance of growing wealth every year, regardless of market conditions, and encourages viewers to prepare mentally for 2026. He promotes his private stock group, which will require a minimum net worth of $100,000 starting January 1, 2026, and offers lifetime access member cards. He urges those interested with less than $100,000 to join soon. The video concludes with a call to action to like the video and subscribe to the channel.