Sell Veralto (VLTO); Note on Rivian (RIVN); AST Spacemobile (ASTS) Taking off
Shares of Veralto (VLTO), our pure-play water quality company that spun out from Danaher (DHR) last September, went into the company’s earnings report yesterday afternoon trading right around our entry point.
This morning, when a lot of stocks are trading higher, VLTO has been bouncing around between being up roughly 2% and down roughly 2%. This comes in the context of a stock whose upward trend has stalled over the last two weeks, which is partly due to the broad market’s advance taking a breather.
The bottom line is I didn’t hear enough on the Q3 report or see enough in the chart this morning to warrant holding VLTO through the election and November Fed meeting. So we’re going to let VLTO go today right around our break even, and I’ll keep an eye on it for inclusion in the future.
For the record, the company grew Q3 revenue by 4.7% to $1.3 billion (beating by 0.7%) and grew EPS by 18.7% to $0.89, beating by $0.04. The business is doing generally well, and M&A will continue to be a part of the story. Though the recently acquired TraceGains business is expected to be mildly dilutive in 2025.
I love spin-off stories since they’re often sleeper stocks that crank higher in a strong market, but at the moment we’re moving back to the sidelines in VLTO. SELL
Note on Rivian (RIVN)
By the way, shares of Tesla (TSLA) are trading nicely higher today after the company’s first beat in over two years. The move is also partly driven by news of lower vehicle costs per unit, and a better growth outlook from Musk. This is probably helping Rivian (RIVN) today, which is our only real dog of a stock, even though Rivian management disclosed in early October that production is being negatively impacted by a shortage of a key component featured in all its products. The company reports in two weeks, and I sure hope management has good news to share regarding this component’s availability. BUY
AST SpaceMobile (ASTS) Taking off
Shares of AST SpaceMobile (ASTS) are rallying this morning on news it has been selected by the Space Development Agency (SDA) for an Other Transaction (OT) agreement to compete for upcoming prototype demonstration projects under the Hybrid Acquisition for Proliferated Low-Earth Orbit (HALO) program. Wow, that’s a mouthful! The bottom line here is that this is a show of confidence in AST’s technology for a variety of government applications. The company is now in a position to compete directly as a prime contractor for specific prototype orders. We’re up over 150% as of this morning. HOLD HALF
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