20,000 points!
The Nasdaq closed above that level for the first time on Wednesday.
And it’s got some of us wondering if a Santa Claus Rally is kicking off early this year.
Tech stocks have driven this bull market that kicked off back in October 2022. Since then, the Nasdaq has risen more than 80%!
Of course, much of that growth is attributed to the so-called Magnificent Seven, the biggest of Big Tech companies such as Nvidia (NVDA) and Microsoft (MSFT).
Now, with the Federal Reserve eyeing its third interest rate cut since September next week, investors are turning their attention to smaller companies that can turn cheaper financing into monster growth.
It’s an excellent sign for the bull market, as investors take profits on Mag 7 stocks, pour money into smaller stocks, and broaden the market’s rally.
And if you’re looking for a new tech stock to buy, Green Zone Power Ratings is here to help.
Narrow Your Focus
When I’m researching potential investing ideas, setting some parameters helps me make sense of it all. There’s nothing worse than staring down a list of tickers without a plan.
For this week, I have four criteria to kick off my research:
- The stock must trade on the Nasdaq exchange.
- It has to be a small- or mid-cap stock (Market cap of less than $10 billion).
- The company must be based in the U.S.
- It’s got to be a company that I’ve heard of.
Narrowing my focus cuts hundreds (if not thousands) of tickers. Now, it’s just a matter of picking a few tickers and running them through our proprietary Green Zone Power Ratings to see how they stack up.
Nasdaq Stocks: Naughty or Nice?
The first stock that caught my eye on my screen was Dropbox Inc. (Nasdaq: DBX).
In its early days, this company’s primary focus was cloud storage. It offered a place for individuals and businesses to store and share files securely on the internet. My buddies and I shared a ton of files over Dropbox for our Dungeons and Dragons campaign back in the day.
Now, Dropbox has branched out to offer a full suite of productivity, security and AI-based tools.
Cloud storage is a highly competitive industry, so let’s see how DBX stacks up in Green Zone Power Ratings.
Drobox stock rates a “Neutral” 54 out of 100. That means this stock should track the broader market over the next 12 months. If the S&P 500 gains 10%, DBX should do roughly the same. Typically, Neutral stocks are ones we want to watch to see if ratings improve or decline.
Right off the bat, I’m wary of DBX’s Momentum and Volatility. The stock has gained 9% over the last month during the post-election “Trump bump.” However, after a massive crash in February, the stock is up only 5% year to date.
While DBX’s Quality and Growth ratings are solid, I’m sticking this stock firmly on my watchlist as Green Zone Power Ratings says we should. We’ll see if its recent momentum continues…
For the second stock, I tapped into my inner hipster to check out Urban Outfitters Inc. (Nasdaq: URBN). This retail conglomerate has a portfolio of stores that offer an eclectic mix of clothing and other products that are aimed at younger consumers.
They sell everything from flannels and essential oils to midcentury modern furniture and vinyl records across their portfolio of retailers, which includes stores like Anthropologie, Urban Outfitters and Terrain.
A quick look at Green Zone Power Ratings shows a stock with potential for 2025:
URBN rates a “Bullish” 79 out of 100 in our system. Bullish stocks are set to outperform the broader market by 2X over the next 12 months.
Those fundamental factor ratings tell us that URBN is trading at a reasonable value, the underlying business is solid, and, best of all, it’s growing!
While URBN’s price-based factors aren’t at the same level due to a somewhat rocky year, its recent momentum has been incredible. That score should
The stock is up 41% over the last year, which is nothing to scoff at. What’s even better is that URBN is up 32% over the last month.
Investors are targeting this stock, and Green Zone Power Ratings shows you why.
Until next time,
Chad Stone
Managing Editor, Money & Markets