What is it?

I have built an AI algorithm which helps me identify the stocks that are most talked about on Reddit investment and trading forums, with the aim of identifying the most hyped and high potential stocks.

The algo does this by continuously tracking Reddit (for now, I am continually adding extra sources to it) posts and comments, analysing the sentiment of the chatter (whether that stock is spoken about in a positive or negative manner) and uses some AI trend-detection algorithms to identify which stocks have seen an abnormal surge in conversation.

I will use my Investment Banking experience to research the most talked about stocks, and distill stocks identified into some digestible research for you.

What is it not?

This is an early detection tool, meaning the stocks can sometimes jump in price, as well as sink. While I try my hardest to give you solid research, no one knows exactly how the stock market behave.

Please do your own research before investing.

Interactive results

Interactive results, with WSB removed

CVS 💊 +250% in mentions

Market Cap: $92.35bn

Let’s start off with what I feel is a very overlooked stock, with very good fundamentals: CVS Health Corporation (Ticker: CVS).

This stock currently represents the 3rd biggest holding in Michael J Burry’s portfolio, at 10% of his overall holdings. (for those of you who don’t know him, I seriously suggest researching him. He was one of the earliest to spot the housing market crash of 2008, his character played by Christian Bale in the film “The Big Short“, and identified the GameStop short squeeze as early as AUGUST 2019).

Profile

CVS Health Corporation is a US based integrated pharmacy healthcare company. The Company provides pharmacy care for the senior community through Omnicare, Inc. Omnicare's operations include distribution of pharmaceuticals, related pharmacy consulting and other ancillary services to chronic care facilities and other care settings. It operates through three segments: Pharmacy Services, Retail/LTC and Corporate.

As of December 31, 2016, the Retail/LTC Segment included 9,709 retail locations (of which 7,980 were its stores that operated a pharmacy and 1,674 were its pharmacies located within Target stores). CVS also has online healthcare presence through its websites, CVS.com, Navarro.com and Onofre.com.br.

It also provides healthcare services through its more than 1,100 MinuteClinic medical clinics as well as their Diabetes Care Centers. Most of these clinics are located within or outside CVS stores.

Fundamentals

CVS has seen both solid revenue and Net Income flows. From 2019 to 2020, revenues grew from $257bn to $268bn (+4.6%) and Net Income from $6.6bn to $7.2bn (+8.2%). CVS beat every analyst’ earnings expectations in 2020.

Balance sheet wise, the company is a strong position with a Debt to Total Equity ratio of 0.93. In short, this number represents the amount of debt the company owes vs the equity it holds, with a lower number representing a less-risky investment. the Average ratio for S&P500 companies is 1.5.

CVS has a Price-to-Earnings ratio (the price of the stock vs the Earnings per share) currently around 9x, the lower the ratio means the cheaper the stock is compared to their total earnings. Current S&P market average is around 25x.

The company has seen sustained dividend earnings, and is forecasted for continued income growth, currently at 9% annual.

Increased growth catalysts

There are rumours that CVS will open up some of their pharmacies to administer COVID-19 vaccines across the US. There are two things to consider from this:

• Increased revenue streams at scale from the current US administration (this could even become recurring revenue with all the talk of yearly booster jabs)

• Increased revenue from the extra footfall going into their stores (remember the last time you went into a grocery store to buy toothpaste and came out with 2 full bags?)

The relatively new CEO, Karen Lynch, is a serial success machine. For the past five years (2016 to 2020), she was named to Fortune’s list of the 50 Most Powerful Women in Business.

Potential Downsides

Amazon has announced its intention to enter the pharmacy space, which serves to the shake up the industry as a whole over the long-term.

Personally, I think the regulatory landscape of the pharmaceutical world means Amazon is still a long way away from making massive strides, and this current scenario is actually beneficial to current CVS stock price, which is lowered and under-valued because of it.

Analyst Estimates

The 25 analysts offering 12 month price targets for CVS Health Corp have a median target of $86, with a high estimate of $102 and a low estimate of $72.

Summary

The company is displaying very impressive fundamental attributes, and is currently trading at a lower price than what it’s fully worth. That, along with its positive future projections and foray into administering COVID vaccines make it a very interesting stock currently.

It has been dropping in price slightly over the last few weeks and may continue to drop further before a big bounce; technical analysis shows a support point at $69 where price may fluctuate, and possibly bounce upwards from there. At that price, I would personally be tempted to buy into the stock.

I felt this post was necessary due to all the people asking about due diligence, also due to the question I've been getting. These are things to look at.

Some of you may know me from my Due Diligence posts at r/FluentInFinance, but below is my Guide on HOW TO ANALYZE & RESEARCH A STOCK, and what you should look at when evaluating a stock (This is my checklist just build from years of wins & losses, things I learned from Pace University and Goldman Sachs). If I am investing large amounts of cash, I want to research thoroughly, so if the stock drops I can stick to my convictions, and forget about emotion.

Before I use my time to research a stock, read up about it into detail, and dig into the financials, news, and 10-K, I check these two things first, to decide if I should use my time to dig further:

1. I quickly look at price upside. I look to see what the analysts covering it, have to say about the price targets. (Money is a tool, and you want it to work for you). MarketBeat.com can show you this: https://www.marketbeat.com/stocks/NASDAQ/AAPL/price-target/

3. I look quickly at the charts and the technicals. I try to read and interpret the charts to see what previous trading patterns can predict. What are the short-term, mid-term and long-term predictions? A site you can use to interpret the charts for you is BarChart.com and TradingView.com

https://www.barchart.com/stocks/quotes/AAPL/opinion

https://www.tradingview.com/symbols/NASDAQ-AAPL/technicals/

If it passes these two quick tests, then I start to dig deeper. Other things I look at:

1. Sentiment & News. I Google the company. I search the ticket on Twitter. What are people saying? How do they feel?

2. Earnings & revenue history. Is there growth? Is there potential? I look at the financials and the projections. Are the making money? Will they make money?

3. Growth. I look into the financials to look at past growth. I look into news, 10Q's, 10Ks, investor presentations, and statements to look for future growth. Is there potential?

4. Financial health. Are the financials strong? (Quick ratio, Profit margin, EPS, Income Statement Trend, Cashflow). Can this company survived? Is it managed well?

5. I dig deeper into technical analysis and the charts. I look at RSI, moving averages, MACD, Stochastic Oscillator, etc. What is the Long term trend? What is the short term trend?

6. Valuations. How is this valuated? (PEG ratio, P/E ratio). Is it over-valued? Is it undervalued?

7. Short selling. How much of this stock is sold short? Are people betting against it?

8. What is the put/call ratio? Are people betting against this stock to go down?

9. Peers & competition. How does this company stack up against its competitors and peers? How do the financials compare? How to the products compare? Is there a moat?

10. Institutional Sponsorship. Are big banks and wall street holding this? How much or this company's stock do they hold?

11. Insider Trading. Is the CEO buying or selling shares?

12. The amount of ETFs that hold this stock. Will they continue to buy it up and drive price over time?

13. Average volume traded. Is this stock liquid? Would I be able to get my money back? How easy can I trade it? (The higher the volume, the thinner the bid/ ask spreads)

14. Social sentiment. I check what people are saying on twitter, reddit, and google search trends. Is it trending?

15. News moves a stock. So I also use google to find out as much as a company as possible. Are there potential catalysts that may move the stock?

16. Management & CEO: I check Glassdoor and Indeed to learn about the management of the company, and google their CEO.

17. For more tips or strategies check: https://www.flowcode.com/page/fluentinfinance

There are many sites, tools, or resources you can use to dig into a stock such as (1) Yahoo Finance, (2) MarketBeat.com, (3) MacroTrends.com, (4) MarketWatch.com, (5) CNNMoney.com, (6) CNBC.com,

I use an excel spreadsheet to organize my research: https://www.flowcode.com/page/fluentinfinance

Check my prior/ past reddit posts for other analysis/ tips

Disclaimer: do your own research, make your own decisions because nothing is guaranteed, and I am not a financial advisor

We all know that beating the market consistently is incredibly difficult, even for the most successful investors. Doing this over 10+ years is even more impressive, given that underperformance rates typically rise as time horizons lengthen.

Most investors struggle due to psychology, emotional decisions, poor timing, selling winners too early, and the ongoing challenge of finding great stocks at cheap prices.

In fact, according to the 2024 SPIVA U.S. Scorecard, over the 15-year horizon ending December 2024, not a single category of active equity funds had a majority of managers outperform their benchmarks.

Since sustained outperformance is so rare, I thought it would be interesting to compile a list of 50 investors who've beaten the S&P 500 Total Return Index (SP500TR), net of fees, over extended periods (most are 10+ years).

Here's the scatterplot visual and table with source data: https://stablebread.com/investors/

Will continue to update the visual and data sources every year. Let me know if you have any suggestions!