💼 Inside the Portfolio: Updates from our Swing Trading Desk

10 Oct2024 - Insights, adjustments, and forecasts about our latest swing trades 💹

The US stock market faced early turbulence today as unexpected inflation data shook investor confidence. The core Consumer Price Index (CPI) rose 0.4% month-on-month in September, surpassing the anticipated 0.3% increase. This surprise in core inflation has significant implications for Federal Reserve monetary policy and market expectations.

Major stock market indexes have shown resilience despite the initial setback, gradually recovering throughout the trading session. Our investment strategy has focused on careful portfolio management and risk adjustment in response to these volatile market conditions.

In light of these market conditions, our portfolio has been particularly active today, with several adjustments made to manage risk and capitalize on opportunities. Here's a summary of our recent moves:

1. EVGO (EVgo Inc., Nasdaq): We reduced our position size by 30% on the gap up this morning following an analyst upgrade. After that, writing the article, we were stopped out on the rest B/E.

2. CRK (Comstock Resources Inc., NYSE): We added the final batch to our CRK position during today's dip. This completion of our planned position reflects our confidence in the company's prospects despite the overall market uncertainty.

3. CART (Maplebear Inc., NYSE) and HOOD (Robinhood Markets, Inc., Nasdaq): We've implemented breakeven (B/E) stops for both of these positions. This strategy aims to protect our gains while allowing for potential further upside if the market continues its recovery.

4. New Position: In line with our strategy of continual portfolio optimization, we've added a new position to our portfolio. While we're maintaining a cautious stance given the market conditions, this new addition represents a calculated risk based on our analysis.

It's worth noting that we've decided to stay relatively cautious today given the red market conditions. Our adjustments reflect a balanced approach to protecting gains, managing risk, and selectively pursuing new opportunities.

1. EVgo Inc (EVGO)

EVgo, Inc. owns and operates a direct current fast charging network in the United States. The company offers various services including public charging, fleet and rideshare public charging, and charging as a service. It also provides ancillary services such as digital application customization, charging data integration, and maintenance services. The company was founded in 2010 and is based in Los Angeles, California.

Technical Analysis and Investment Rationale

Financial Performance:

EVgo has demonstrated impressive financial progress in recent quarters. The company reported record revenues of over $66 million for Q2 2024, with charging network revenues growing 2.4 times compared to the previous year. This substantial growth showcases the company's increasing market traction and operational efficiency.

The company's operational stalls grew by 37% compared to last year, and they are on track to add 800-900 new owned-and-operated stalls this year. This expansion demonstrates EVgo's commitment to growing its infrastructure and capturing market share in the competitive EV charging space.

EVgo has raised its expectations for future performance, projecting to reach adjusted EBITDA breakeven in 2025 based on strong unit economics and operating leverage. The company envisions having around 7,000 stalls generating over $40,000 in annual cash flow per stall within 3-5 years, indicating significant potential for future revenue growth and profitability.

A major boost to the company's prospects came with the recent news on October 3rd, 2023. The United States government offered EVGO a conditional loan guarantee of up to $1.05 billion to expand public electric vehicle-charging infrastructure across the country, including in marginalized urban communities. This substantial financial backing validates EVgo's technology and market potential and provides a significant runway for expansion and growth.

Analyst Estimates

• Revenue Estimates:

  • 2024: $256.29M

  • 2025: $354.03M

  • 2026: $457.64M

• EPS Estimates:

  • 2024: -$0.43

  • 2025: -$0.33

  • 2026: -$0.19

Technical Analysis:

From a technical perspective, EVGO has shown promising signs. The stock recently broke out of a small consolidation pattern after a significant run-up, which is a bullish indicator suggesting potential for continued upward momentum. However, it's crucial to note that EVGO is highly volatile, necessitating a more conservative approach to position sizing and risk management.

Given the stock's volatility, investors should consider using wider stop-loss orders than usual to accommodate price swings. As per the provided strategy, a stop-loss order at the midpoint of the day's trading range has been implemented for the newly initiated position.

Entry Day: 09 October

Price: $6.90