Friday, 29 May 2020 | 16:36
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Oil & Gas Among Top Shorts Despite Market Rally

Friday, 22 May 2020 | 23:00

With the S&P 500 now only down just over 8% year-to-date, there are likely a number of people wondering when the next pullback will be, given the dire economic situations. The rally has been impressive, surging 32% since the March 23 lows. However, not all companies are going to survive the pandemic, and our deep learning Artificial Intelligence (“AI”) solutions have identified a number of shorts today, as well as their corresponding factor scores.

The first short is Velocity Financial Inc, a US based real estate finance company. With housing sales data dropping off a cliff today, as sales of existing home sales fell 17.8% month-over-month in April, it is not surprising to see this on the sell list today. The stock has lost over 75% since IPOing in January and is not looking any better when considering the factor scores of C in Technical, C in Growth, F in Momentum Volatility and D in Quality Value.

Another short today is Calix Inc CALX, after an extremely strong run. The stock is up 55% year-to-date alone. However, our AI system has identified this as a great place to start shorting the company, using alternative data like social sentiment and article sentiment, as well as fundamental and pricing data. The company provides broadband communication access systems and software, so it is in a strong sector, but the price simply looks to have gone too far to the upside here.

In the Oil & Gas Equipment & Services space, our AI system has identified a top short in MRC Global Inc. This company distributes pipes, valves, fittings, and other related products and services to the energy industry, one that is going through a major restructuring right now, especially with persistently lower prices. The stock is already down almost 62% on the year, but it has been analyzed as a candidate to continue the downtrend, especially in this macro environment. Take the recent rally of 49% since April 22 as an opportunity to get short the stock.

Marathon Oil Corp MRO was on our AI’s short list yesterday and remains there today. The stock has lost almost 56% this year but has had a significant rally off the lows that is worth taking advantage of on the short side. It’s factor scores come with a capital F, with a D in Technical, F in Growth, F in Momentum Volatility and F in Quality Value. The oil & gas space continues to be one of the least favored sectors right now, especially after a significant rally.

And finally, the last short for today comes from the new eSports genre, the Super League Gaming Inc company. This is an eSports community and content platform, but recently announced paltry earnings on May 14, missing expectations on both revenues and earnings. The stock is up over 28% year-to-date, but our AI systems thinks it does not deserve to be with factor scores of D in Momentum Volatility and C in Quality Value. There is simply too much competition in the space, and giants in the gaming sector have likely established themselves too far for this microcap to really succeed, at least according to our deep learning algorithms.
Source: Q.ai – Investing Reimagined

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