Last week, during the first ever Market Rebellion Stock Draft, each of the analysts gave their take on the Top 3 stocks to run with heading into Q2. Pete Najarian went first, and he came with two big tech titans and consumer discretionary sleeper pick.
Additionally, Pete gave an options trade expiring in June that he thinks is a surefire winner for traders in the midst of big bank volatility. First, Pete’s Top 3 stock picks, and a bit about why he chose them.
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1. META — Low P/E, Cost-Cuts, and an AI-Driven Future
META YTD Chart. Source: Google.
Pete Najarian’s number one stock pick right now is Meta. Here’s what Pete Najarian had to say about why Meta is a “stone cold winner” going into Q2.
“Meta’s still inexpensive, it still has incredible opportunities in front of it, we know what they guided for, we know all the numbers they’ve already put up across the board. I think they are unbelievable. And look, even after this move (referring to META’s most recent earnings report which saw shares rocket higher), do you know what the P/E is on this company? We’re talking about somewhere in the 20’s. I think this is an easy pick for my number one stock pick.”
Following Pete’s explanation, Jon Najarian added,
“They have so many levers to pull. They have 2 billion reels per day. You can only imagine the ads that they’re running against that. And they have already cut — I believe — 60,000 jobs. Multiply 60,000 guys by like $120,000 dollars, and you get an idea of how much they’ve cut out of expenses. And they probably haven’t missed a single bit of revenue while they’ve been cutting that. They were just so overextended. From a stability standpoint, the fact that they’ve cut billions of dollars in overhead, and the application of AI, I think Meta is a stone-cold winner.”
META wasn’t Pete’s only big tech pick.
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MSFT — Gross Margins, Cloud, and AI-Leadership.
MSFT YTD Chart. Source: Google.
Pete Najarian cited the strength of the CEO, the strength of the quarter, the gross margins (which jumped to 72%), and big increases in cloud revenue. And of course, you can’t talk about Microsoft without talking about their game changing investment in ChatGPT — the service that essentially changed the world within the first few months of its existence. Microsoft recently partnered with AMD to help drive its AI efforts forward. Pete thinks these factors will continue to power Microsoft forward throughout any macro volatility we experience.
Pete’s third pick was a little different — a sleeper pick in CROX.
CROX — “They Sandbagged,” Buy on Earnings Weakness
CROX YTD Chart. Source: Google.
Crocs, very much like LULU, is a stock that nobody believed in. Everybody hated LULU, “Oh it’s yoga pants, nobody gives a crap about it.” With Crocs, when they look at those numbers that they put up, it’s impressive.
They bought HeyDude just over a year ago. Those revenue are up over 120% in that period. On the Crocs side, the company continues to grow. Despite CROX recent earnings, where the stock fell on weakened guidance, Pete thinks this is an opportunity to go long.
“They put out some hokey numbers. I think they sandbagged. I think it’s the opportunity, because this thing is going to go a whole lot higher. This is my new LULU. I will be buying this personally very soon.”
Pete also offered up his take on an option trade expiring in June based on some huge UOA that he’s been seeing ever since the beginning of the banking panic:
At-the-Money June GLD Call Options
GLD YTD Chart. Source: Google.
Goldbugs rejoice, GLD is seeing massive unusual options activity inflows lately. Pete noted thousands upon thousands of calls in GLD building up, and it makes sense why. With concerns of bank failure rising day by day, asset classes outside the dollar are rallying. Bitcoin has soared month after month, and so too has gold.
Before entering positions in any of these picks, be sure to exercise discipline. That means have a plan before you enter a trade, and always know when you plan to exit. Both, in the best case scenario and in the worst case scenario.
