Weekly Update: This Stock Is Going UP Right Now
Good evening, and welcome to this week’s edition of Stealth Trades!
A lot of investors are looking for stocks to buy on the cheap after the market pullback.
That’s good. That’s what they should be doing.
95% of the top-performing stocks of the last century started their big move after a bear market or correction. So, this is the perfect time to be shopping for stocks.
And one of the best indicators of a future top performer is divergence.
Divergence means the stock is doing something different than the rest of the market. In this case, that means going up while everything else is going down.
I’m not talking about defensive stocks. Names like TJ Maxx and Allstate insurance are only holding up because scared portfolio managers are flooding into companies they believe will be less affected by a recession.
No, what I’m talking about are growth stocks that are somehow surging in what has been one of the ugliest market environments.
One of those stocks is Celsius Holdings (CELH).
Celsius develops, markets, sells, and distributes functional beverages and liquid supplements, including post-workout energy drinks and protein bars.
Its main product is a line of energy drinks. The company now ranks as the #3 energy drink brand in the United States.
It now produces everything from canned drinks to powder additives and expanded into 6 new countries in 2024.
Like many growth stocks, CELH witnessed tremendous growth during the post-COVID bull market. The stock soared an astounding 3,900% from 2020 through the 2021 peak.
The biggest decline in the stock took place in May of 2024 where, after topping out, price fell 78% from its highs.
In its quarterly report, Celsius reported higher than expected revenue but lower earnings. The top line beat was not enough to keep the bull train chugging. Instead, the stock gapped down and immediately began to trend lower.
CELH bottomed in February, and the recovery seems to finally be underway. After chopping around near the lows for six months, CELH is now up over 80% in the last two months.
Interestingly, this powerful move has taken place while the rest of the stock market has cratered. The international trade war that has cast doubt and uncertainty on global markets is not affecting Celsius stock in the slightest.
With CELH now trading above the consolidation zone where it spent the last six months, there is a good chance that this will be the start of a new Stage 2 uptrend. And this is where the real gains are made.
The stock now trades above its 10, 21, and 50-day moving averages with all three trending higher. It has also reclaimed its 200-day moving average which is the proverbial line in the sand that separates a stock being in a long-term upward or downward trend.
Historically, the biggest gains have come following pullbacks and bear markets. Stocks showing clear divergence and rising against such downward pressure are often the biggest movers in the next bull market. And Celsius is showing all the signs of just such a future winner.
Here is how I would trade it…
Stock Trade: Buy Celsius Holdings (CELH) stock at the market, then place a sell stop order at $31.00 to risk 15% on the trade.
Option Trade: Buy the CELH Jul18 $40 call options (.CELH250718C40) which currently trade for around $300 per contract.
Best wishes for your trading,
