GE Vernova and IonQ are two hot watchlist stocks in a bull market that's shown flashes of similarities to the dot-com era run-up in the late 1990s. But Leos Mikulka, a trader whose portfolio surged more than 900% in the first 11 months of 2024, says not every stock will win all the time.
Market rotation is showing a different picture week by week. Speculative growth stocks dominated in November, but so far in December the money is notably shifting toward megacap tech stocks.
"My wish is that we get some new fancy abbreviation, like Mag7 or FANG," Mikulka, a leading participant in the 2024 U.S. Investing Championship, told Investor's Business Daily's "Investing with IBD" podcast. "Maybe we get some new leaders coming up, and next year we'll be talking about a new group that nobody's heard of."
In his hunt for the next crop of leading stocks, Mikula is focusing on two technology themes: quantum computing and generative AI.
Audio Version Of Podcast
Quantum Computing's Future Promise
Quantum computing could usher in a new group of top growth stocks, Mikulka says. He points to IonQ, a company focused on developing quantum computing. IonQ stock has been on a tear over the last few months, with a gain of more than 140% in November alone.
While it sounds like easy money on the surface, Mikulka says it could be difficult for traders to stay onboard the highflying stock for its entire uptrend. He points to IonQ's volatility as it recently undercut its short-term moving averages in a three-day drop of 21% earlier this week. On Dec. 11, Google parent Alphabet announced new developments in quantum computing.
"I'd be carefully watching, going through a new year," he said. "I don't think there will be any actionable pivot anytime soon, but fundamentally I'm a big believer in quantum computing."
GE Vernova Stock Gets AI Boost
The shift to artificial intelligence is leading to a rise in AI-adjacent plays, like companies that are seen as suppliers of power generation for AI data centers. Take GE Vernova.
"Traditionally it's coming from wind turbines and all this wind energy, but part of the subsidiary is nuclear," said Mikulka. He says GE Vernova stock is recently attracting attention for its nuclear power units, as well as being a key player in energy as generative artificial intelligence grows. "You need to get the power from somewhere," he said.
GE Vernova is one of three spinoffs from the former conglomerate General Electric. Since its market debut this spring, GE Vernova stock is up nearly 153% year to date.
The stock is ranked No. 1 in the Energy-Alternative group of stocks, according to IBD Research. GE Vernova has an IBD Composite Rating of 87.
Mikulka is looking for a potential new setup in GE Vernova stock, which is consolidating below recent highs around 357. "It still needs now some sideways action, but I think it has ... very good potential to continue."
Tap here to learn how to identify themes that power up your portfolio with Leos Mikulka.
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