George Merkt, Contributor

Welcome back everyone. In this week’s column I will be detailing and discussing three stock picks that I believe are strong fades or calls. As always, disclaimer, this is not financial advice, I am not a financial advisor (no matter how much I wish I was), do not take anything as financial advice and do your own research! Okay now that we got that out of the way let’s get to some rising or falling stocks.

Lets review how my picks from two weeks ago did. Since October 5th the S&P 500, which measures the stock performance of 500 large companies listed on the New York Stock Exchange, has gone down about 2.33% as a result of market volatility and overall uneasiness surrounding the Russia-Ukraine war as well as the results of midterm elections. 

To recap my stock picks from October 5th were: Taiwan Semiconductor Manufacturing Company ($TSM), Block ($SQ), and MercadoLibre ($MELI). $TSM: down 14.53%, $SQ down 15.22%, $MELI down 12.67%. Overall, not a strong performance from these picks however, the vast majority of these stocks are in the technology sector which was heavily impacted by the tightening of the stock market as we enter into a bear forecasted market. 

Stocks to watch:

ExxonMobil ($XOM) – up 12.28% this month following a strong rise in demand for crude oil due to heavy sanctions against Russia. However, as crude oil prices continue to fall as do energy stock prices. As the sell off of energy stocks continues a key player to keep an eye on is ExxonMobil. Their Q3 earnings call is scheduled for October 28th. There should be substantial year-to-year growth. Another reason to watch Exxon stock comes from their breakeven oil price. This is the price that the company can generate enough cash flow to fund capital expenditures and maintain its dividend payout. Last year alone Exxon slashed their breakeven oil price to $41 per barrel. They have adjusted this price to a forecasted price of $37 in 2022 and 2023. As of this article Bent crude is around $87 per barrel. A low breakeven price makes Exxon more resistant to the volatility of oil prices. Last year Exxon’s free cash flow (FCF) more than doubled in the first half of 2022 and this only looks to continue to rise to a record number as we move to the start of Q4 for Exxon.     

Roku ($ROKU) – down 25.29% this month following a steady decrease over the past 6 months following the end of the pandemic. Simply put, due to inflation, high growth stocks are a risky play right now but if you’re looking for an extremely high growth potential stock. Currently sitting at a value of $51.10 (more than 80% below its 52-week high) Roku is definitely being added to my portfolio. Roku has a massive market opportunity and is in a great position to dominate the emergence of smart TV’s into homes. Almost every streaming service is supported by the Roku framework and it serves as a backbone for many smart TV’s entering the market today. Additionally, Roku’s financials have finally improved, holding $2 billion in cash on its balance sheet. This is more than enough to support a continuing transition to the streaming market by viewers. Finally, the stock is trading at the lowest price-to-sales ratio in its history. Trading at a ratio of 2.6 trailing sales Roku finds itself in the arena with other very well-regarded value stocks.