NVDA CPB: Why I’m Short The One You’re Long And Long The One You Don’t Care About
Two stocks report earnings next week that couldn’t be more different: Nvidia (NVDA) and Campbell Soup (CPB). While the vast majority are long NVDA and don’t care about CPB, I’m long CPB and short NVDA. Why?
Everybody knows that if you want to do AI you need NVDA’s chips. The stock has been the hottest one in the market for at least a year now. People talk about NVDA the way they used to talk about AAPL. The problem is that with everyone long the stock, there is no value in it. NVDA trades for ~50x my current year estimate of EPS ($2,525). In addition, I think we’re talking about unsustainable earnings as the rush to build out AI is a frenzy right now that may not last just like the demand for Cisco’s networking equipment didn’t last in 2000. As a a result, I have a sizable short position in NVDA which reports Wednesday afternoon.
CPB – on the other hand – is one of the most boring stocks in the market. Most investors have no interest in this kind of value, slow money, play. But it’s worked well for me. CPB has a market cap of $15 billion compared to NVDA’s of over $3 trillion – and a forward P/E less than a third. In addition, CPB is defensive and pays a 2.91% dividend. It’s not just soup; CPB has great snack brands like Pepperidge Farm cookies, Goldfish and Kettle potato chips. I have a small long position in CPB which reports Thursday morning.
