It’s cool-off time for the hottest trade on the planet.
Last year, artificial intelligence (AI) was the trade.
Names like Nvidia (NVDA) and Super Micro Computer (SMCI) delivered massive gains within a matter of months.
I expect AI stocks to be the biggest winners over the next few years. But I think they’ll take a backseat to other industries for the next few months.
In other words, I expect money to rotate out of red-hot AI stocks in the near term into other areas, including energy and basic materials.
That brings me to my latest Trade of the Week: Nucor Corp. (NUE).
Nucor is America’s largest steel producer and the largest publicly traded steel stock. It has a current market value of $46 billion.
We’re picking up shares of NUE today to capitalize on the coming rotation into basic materials. NUE also has an incredible chart.
You can see what I mean below. NUE has been trending higher since the fall, and it’s on the verge of a major breakout:
Source: StockCharts
I suggest picking up a half position in NUE today. I believe it can hit $250 within the next 12 months.
Exit your position if NUE closes below $179. That gives us a risk/reward ratio of 4:1 on this trade.
Action to take: Buy NUE at current market prices.
Risk management: Exit your position if NUE closes below $179.
Justin Spittler
Chief Trader, RiskHedge
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