The Magnificent Seven stocks on Monday, led by Nvidia’s jump to all-time highs, were enjoying a rebound after a rough first week of 2024. Nvidia and the five others we own — Alphabet, Amazon, Apple, Meta Platforms, and Microsoft — were all big winners last year. While pleased to see our stocks go higher, we think last week’s caution remains warranted, considering the parabolic gains many of them made into year-end. As Jim Cramer discussed in his weekly column , the moves, spurred by the belief in a Federal Reserve pivot to lower interest rates in the near future, were not sustainable. That’s why we trimmed all of them first thing on Jan. 2. We’re still cautious on the Jim-anointed Magnificent Seven (the only one we don’t own is Tesla ) but wanted to dig in a bit more into the six we own to better quantify their moves and get a sense of how hot the stocks may be at the moment. To do this, we looked at how shares of these companies performed since their prior intraday lows in late October and how their forward price-to-earnings (P/E) multiples have changed over that same stretch. (It’s worth noting that both stock price action and Wall Street estimate revisions play into the change in valuation.) GOOGL 1Y mountain Alphabet 1 year Alphabet bottomed recently at $120.21 on Oct. 27, 2023 and subsequently rallied to a high of $142.68 (up 18.7%) on Dec. 26. Shares of the Google parent now trade around $137 (down 4% from the high but still up 14% from that prior low). Over that time, Alphabet’s forward P/E/ has expanded from 18.8 times to 20.5 times. That’s still a bit below the five-year historic average of 23.4 times. AMZN 1Y mountain Amazon 1 year Amazon stock most recently troughed at $118.35 on Oct. 26 and then rallied to a high of $155.63 (up 31.5%) on Dec. 20. It now trades at around $148 (down 4.9% from the high but still up 25.1% from that prior low). Since that low, Amazon’s forward P/E has expanded from 38.2 times to 39.9 times. That’s still cheap based on…
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