5 Stocks I'm Buying NOW August 2026 transcript

Investors made as much as a 142% on one group of AI stocks last year. Now, those same stocks have crashed 20% as election year politics get in the way. The big picture forces have not changed, and that sell-off is setting up for a second chance. Triple-digit returns coming back to this group in less than a few months. Hey, Bot Nation, Joseph Hogan with your weekly stock market update before the week starts with the stocks to watch and the stock market news you need to see.

I'm going to reveal those AI stocks I'm buying right now before the election, along with updates to shares of Reddit, RDDT, and Super Micro Computer, SMCI, up 43% in just the last month. But first, back to those stocks with rebound potential because one group of AI stocks was up as much as 142% last year, but it's now crashing as politics get in the way and could be ready to slingshot back in just 2 months. These used to be boring, slow-growth power stocks, and then AI changed everything.

Shares of Talen Energy, ticker TLN, jumped on its deal to provide power for Amazon data centers. The rest of the group followed with triple-digit returns last year. Talen up 142%, Vistra, VST, up 115%, NRG Energy, ticker NRG, up 96%, and Constellation Energy, ticker CEG, up 93% in just 6 months. That's because after more than a decade of almost no growth, US electricity demand is accelerating, driven increasingly by massive AI data centers.

S&P Global estimates electricity demand is growing three times faster than it was, with demand surging by 1,000 terawatt hours for the next decade. An increase that would power 90 million homes. But here's the problem, we cannot build that grid nearly fast enough. A data center can be planned and built in just a few years, but major transmission projects typically take 5 to 10 years, and it takes a decade or more to complete any major grid capacity.

Suddenly, those boring existing power plants become some some the most valuable assets in the AI boom, and you get stocks that double in less than a year. Then politicians start politicking though. With the midterms coming up, data centers have become an easy target for voters worried about electric bills, water, and the grid. And that backlash is coming from both sides of the aisle. In usually business-friendly Texas, a Republican Governor Abbott, not coincidentally up for re-election, ordered a freeze on new data center grid connections until almost 2,000 projects could be audited.

Now, there isn't even a firm timeline for completing that review. It's just a headline for the sake of headlines. In New York, Democratic Governor Hochul went even further, imposing the nation's first statewide moratorium on new hyperscale data centers. Different parties, same political pressure, and the narrative has flipped that data centers went from an economic development gold rush to to an election year liability.

Shares of Talen have managed to hold on down just 1.3% this year, but Vistra is down 7%, and both CEG and NRG have crashed 20% year-to-date. But nation, here's what politics cannot change. AI still needs that power, and that demand surge is a decades-long shortage. There is simply no way to meet this data center buildout without relying heavily on existing power plants and infrastructure. Constellation CEO Joe Dominguez put it bluntly, calling out existing power generation as the bedrock of this early phase in the data economy.

Pointing out that "We're not going to build this economy if the outcome is we've got to wait for new power plants to be built. If that's the case, we might as well hand over the keys to China." That ongoing shortage creates a potential slingshot for these stocks after the election, when the attention shifts back to those jobs and the construction that comes with the data centers. We've already seen how quickly sentiment can turn.

In May, when grid operator PJM accelerated an auction for power sales, Constellation and NRG jumped 8% with Talen shooting up almost 10% on a single day. Now, comparing these four stocks against each other, Constellation Energy CEG, Vistra VST, NRG ticker NRG, and Talen Energy, ticker TLN. Talen is still the undeniable growth leader with sales expected up 35% this year on that positive attention in nuclear energy. But then all four of them are growing significantly faster than longer-term averages.

CEG and Vistra have grown at about a 5% pace over the last 3 years, but are expected to post 13% plus sales growth this year. NRG has posted just 3% sales growth a year over the last three, but is expected to grow at 11% this year. On profitability, so how well these companies convert that revenue into earnings? We see that Talen's growth does come at a cost, spending heavily and only posting a 15% earnings margin. That means this company is only converting 15% of its sales into earnings.

CEG and VST seem to be targeting more efficient growth here, converting 25% of their sales into EBITDA earnings. But then it all has to come together here in valuations. And you know, I love looking past that traditional PE ratio, to an adjusted measure to find growth stocks at a reasonable price. Using the price to earnings to growth ratio, that PEG ratio. And again, that's price to earnings, the price of the shares divided by the earnings.

So, how many dollars are investors having to pay for every dollar in earnings reported? And then that divided by growth gives you an adjusted price to earnings growth ratio. Talen is the best deal here on its much faster earnings growth and trades for just 0.4 times on that PEG adjusted basis. Vistra isn't far behind though, trading at 0.46 times with its much higher profitability. I'd put this one on top of my list to buy.

Here we see NRG isn't too expensive, but just doesn't have the growth to go along with it. And CEG is still relatively pricey compared to the others, though I think it too has some rebound potential after the midterms. Now, against these old-school utilities, I'd also add some of these new AI-focused power stocks, which have continued to do well this year. Names like Bloom Energy, ticker BE, and Vertiv Holdings, VRT, are producing off-grid power solutions to data centers.

So, they're not getting caught up in that election year politics. BE is up 185% for the year and 10 times your money over the last 5 years. Coherent COHR is up 84% and Vertiv is up 81% year-to-date. Bloom has been one of our favorite stocks over the last 2 years and has by far the stronger growth with sales expected up 66% this year. Though Vertiv and Coherent shouldn't be ignored here posting 30% plus revenue growth.

On a strictly price-to-earnings valuation basis, none of these stocks are cheap because of that runaway growth with stock prices of 40 and 80 times earnings. That means you have to pay $40 for every $1 in earnings reported by the company. Expensive on any measure. Adjusted for growth makes them a little more attractive, but I wouldn't mind if these stocks came down a little before making any big purchases. Now, Bloom is trading at the least expensive here at 0.34 times on that adjusted PE basis.

Helped by the fact that it is going to triple its earnings this year. Vertiv's also attractive here at 0.58 times on that PEG basis. Now, looking at the stocks I'm watching this week, going to be a little bit slower week on earnings. Earnings are starting to slow down but have been amazing so far. Alibaba ticker BABA could be the big news of the week when the company reports earnings on Thursday and I don't want to overestimate this but I'm watching for a giant beat on its revenue here.

Forecasts are for sales up 8% for the quarter and earnings to 10.73 Chinese yuan per share. Both extremely low bars to me here. Now, I've been recommending the stock since it fell to $95 a share in June and have been following the story of Alibaba's open-source AI model Qwen. Now, we know companies around the world including in the US are looking to these Chinese models as a way to lower their AI costs and Alibaba has one of the best models around.

Shares are already up 30% since my June video. So, not quite the steal they were but I think revenue surprises on the upside over the next few quarters and takes this one higher still. The stock has jumped in two of the last four quarterly reports, up 12% in Q1 last year and up 8% last quarter. Though it has also dropped after those two two other reports. Analysts are still just as bullish though, with even the low target here among nine analysts at $172 per share.

Another 39% upside and a 50% upside to the average target of $185 per share. Shares of Reddit ticker RDDT popped another 11% Friday, now up 23% since recommending it just two weeks ago in a video on August 3rd and we'll still have those two major catalysts I talked about approaching. Friday's bump was on the news that the stock would be added to the S&P 500 index, sparking buying from those ETF providers in the index.

But as I pointed out in that video, the bigger news could still be coming with a settlement to the company's case against Anthropic and progress on its negotiations with Google to allow the search giant to train its models on Reddit content. I highlighted that upside two weeks ago and I recommended a call option spread on options expiring on October. We bought the $150 strike call options for $14.25 each and offset that by selling the $175 call options for $7.75 each.

A net cost of $6.50 per share for that spread. Now with the stock up over 20% past $175 each, that option investment is now worth $15.69 each. A return of 141% in the 14 days. Nation, it's up to you. You can close this out for that 141% if the stock does stay above $175 a share, it will be worth over 284% return by mid-October. Now I got to be clear, not all of these options investments work out this way and this fast, but if you're not using them, you are leaving a lot of returns and money on the table.

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So, look for that link, or just scan the QR code here. Neo cloud stocks, like CoreWeave, ticker CRWB, and Nebius, ticker NBIS, were some of the biggest winners last week as investors came back to that data center build-out theme. Nebius jumped by almost 50%, while CoreWeave was up as much as 28% at one point in the week. Now, I have avoided this group because I think the smaller companies like these are going to run into cash-flow problems eventually, but for now, momentum is definitely on their side.

Now, if you are up on these, you might consider hedging a little as the volatility is through the roof on this theme. It was only a few months ago in June that investors all but gave up on these, and the stocks lost half of their value in just a couple of months. So, I'd go back to the valuations at this point. Now, no profitability, no earnings make the P/E ratio, so that price-to-earnings ratio unusable, but we can look to these price-to-sales bases, with Nebius now trading for 48 times its sales.

CoreWeave is a little cheaper at 7.3 times sales, closer to the valuation on shares of Oracle, ticker ORCL, another one of those neo cloud providers at 6.6 times sales. But, don't overlook Amazon here. It might not be the pure play neo cloud that the others are, but its cloud services, AWS, is a big growth driver, and shares are a steal here at a comparison at 3.6 times sales. Super Micro Computer, ticker SMCI, another one I'm seeing a lot of requests for an update, with that stock up 43% in just the last month and the shorts running for the exit.

We've had to wait on this one a long time, but valuation is back driving it higher. Folks, at a $26 billion market cap, the total value of all the shares in the market, the stock trades for just 0.49 times the revenue expected this year. That's That is unheard of for a company growing at 36% a year. Now, I still think this one could return to $50 a share and even higher on that valuation. That said, we've been here before, right?

Management continually steps on its own toes, destroys that momentum with the stock crashing from from 50 back down to 20, back up to 50, and then down again. That volatility, though, makes it a perfect stock to sell call options against, especially after these big runs. As an example, I can use the January call options here, expiring just 5 months from now. Sell the $50 strike call options against my shares. And that means I collect $5.20 a share for giving another investor the right to buy these shares buy my shares from me for $50 each through mid-January.

Getting that $5.20 per share cash premium lowers the cost and the risk on SMCI to $34.61 a share right now, and means a further upside of 44% if the stock closes at $50 per share in January. Either way, though, even if it doesn't, by collecting that money, I've locked in a 13% cash return on my shares and have lowered the risk of another management blunder. Do not miss your $150 discount to our ultimate options course and the 14-day guarantee with the link in the description.

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