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In 1676, German mathematician Gottfried Wilhelm Leibniz made the first known notation of the chain rule, a part of calculus that’s found in everything from modern engineering to every high schooler’s bad dreams. (I still get nightmares about stochastic calc.)
But even Leibniz – a genius of his day – could have never imagined how critical his discovery would become. Not only is the chain rule used in engineering. It also now underpins the essence of machine learning.
That’s because artificial intelligence models “learn” from mistakes using a modified version of the chain rule known as backpropagation. It’s where you take prediction errors and feed them back into a neural network, teaching the system how to make better predictions. Eventually, some models become so good that they can even sound sentient.
The same methods now underpin most stock-picking systems, such as InvestorPlace.com’s own MarketMaster AI, a set of neural networks designed to beat the market over long periods.
For investors seeking an even higher win rate over shorter time horizons, Luke Lango and his team have now unveiled Project Prometheus, an AI system designed to be predictive about which stocks will greatly outperform the market over the following four weeks. This week, his system identifies five top stocks that analysts at InvestorPlace.com — our free news site — have also highlighted. And if you’d like to learn more about the stocks that Prometheus and Luke himself favor, click here.
5 Blue-Chip Growth Stocks to Buy: Uber (UBER)
This week at InvestorPlace.com, Larry Ramer writes about Uber Technologies (NYSE:UBER), a company with a sizable head start in autonomous driving technologies. Even though Uber sold its in-house unit three years ago, the firm has kept key robo-taxi partnerships that will prove to be tremendously profitable. Here’s more from Ramer:
Uber is partnering with Motional on driverless taxis and testing Aurora Innovation’s system that enables driverless trucks. Moreover, Uber has started utilizing Alphabet’s driverless cars in Phoenix…
As a result of these points, it’s clear that widely deploying robotaxis would cause Uber’s top and bottom line to skyrocket.
Project Prometheus believes that now is an excellent entry point for Uber. The ride-hailing firm scores a “90” in the system, which has historically corresponded to a 16.96% average return over the next month.
Uber also has become profitable, positing its first-ever operating profit last quarter. With rival Lyft (NASDAQ:LYFT) in retreat, it’s clear that Uber, as a stock, will benefit.
2. Tesla (TSLA)
All eyes were on Ford Motor (NYSE:F), General Motors (NYSE:GM) and Chrysler parent Stellantis (NYSE:STLA) this week after the Big 3 auto firms failed to reach a labor deal with the United Auto Workers union.
The one American carmaker not on display? Tesla (NASDAQ:TSLA).
The Austin-based electric vehicle firm employs a non-union workforce, giving it significant cost advantages to its legacy rivals. According to Payscale, the average hourly wage at Tesla is 16% lower than at Ford. UAW negotiations at Tesla’s rivals could widen that gap.
Tesla’s Cybertruck launch also provides a potential catalyst for TSLA shares, as InvestorPlace.com writer Ian Cooper notes. He writes how Tesla’s 1.9 million vehicle backlog points to an incredible amount of pent-up demand.
Project Prometheus agrees. This week, the system awards Tesla a score of “86,” suggesting that shares could rise 10% to 16% over the next 30 days. Though Tesla trades at a significant premium to its justified value, history tells us that strong momentum can send stocks even higher in the short run.
3. U.S. Bancorp (USB)
In March, the fate of U.S. Bancorp (NYSE:USB) seemed in question. Rival First Republic Bank was teetering on insolvency, and it wasn’t clear how far the contagion could spread.
Fast forward to today, and it’s become apparent that U.S. Bancorp will succeed. In July, USB announced earnings that met topline estimates and beat on earnings per share (EPS), sending the stock up 6%. This week at InvestorPlace.com, Rich Duprey also notes that capital ratios are on the rise:
U.S. Bancorp’s CET1 ratio dropped from 9.7% before the acquisition [of Union Bank] to 8.4% afterwards. It was poor timing considering the bank failures that followed. At the end of the most recent quarter, however, the CET1 capital ratio was back to 9.1%.
But U.S. Bancorp gained 1.2 million new customers from the acquisition. It also got 190,000 small business customers, $58 billion in loans and $90 billion in deposits. Net interest income rise 29% as well.
These catalysts could send shares up almost 10% over the next 30 days, according to Project Prometheus. The system awards U.S. Bank a score of “78,” one of the highest figures for any major bank.
Long-term investors will also have plenty to like. U.S. Bancorp consistently earns over 13% return on equity, placing it well above most large banks. Shares also trade at the same levels as they did in March – a bizarre undervaluation, considering the rapid improvement in USB’s capital ratios since then.
4. Cisco (CSCO)
Shares of networking giant Cisco Systems (NASDAQ:CSCO) have quietly risen 18.5% since January. The firm is a leader in artificial intelligence, and earnings are expected to rise another 8% this year as a result.
This week, Louis Navellier and his staff take a deeper dive into other catalysts that could send Cisco surging.
First, there could be a sooner-than-expected demand rebound in tech… The latest economic indicators point to increased chances of an economic soft landing. This could mean stronger-than-expected quarterly numbers for CSCO, resulting in shares adding to their 2023 gains during the rest of the calendar year, and into 2024.
[Second], CSCO trades for 14 times forward earnings. This represents a low valuation, relative to other large top Nasdaq 100 index components… with many avenues to a re-acceleration of earnings growth, Cisco’s valuation could pop back up.
Luke’s system agrees. The tech firm scores a “80” by Project Prometheus, which has historically corresponded with double-digit returns within 30 days. Though Cisco’s demand is coming down from record 2022 levels, a cheap price and a potential V-shaped recovery gives this blue-chip company plenty of potential upside.
5. Schlumberger (SLB)
Finally, you might have noticed prices going up at the pump.
It’s not your imagination. National gas prices are now bordering on $4, a level not seen since last summer’s spike. In August, more than half of American inflation was due to rising gasoline.
That’s because oil prices are on the rise. This month, prices of the West Texas Intermediary (WTI) benchmark hit $90, driven by OPEC+ cuts and a lack of new North American wells to make up the difference.
Here’s where an investment in Schlumberger (NYSE:SLB) comes in. The Texas-based firm, also known as SLB, pioneered fracking technologies in the 1980s and remains the world’s largest offshore drilling company. Rising oil prices naturally increases demand for SLB’s services, and InvestorPlace.com writer Alex Sirois calls the firm a blue-chip stock that smart investors should be loading up on.
Further increases in oil prices will keep pushing SLB higher. And Project Prometheus has picked up on that fact. This week, the system awards Schlumberger a score of “93,” which suggests returns of up to 16% over the next 30 days. Though it’s impossible to predict exactly where oil prices will land, the broad shortage of the commodity will likely keep sending shares of oil companies higher.
The Power of AI Investing
Researchers have long known that stocks’ movements eventually mirror a company’s financial performance. High-earning companies tend to see their values go up over time, while underperforming ones go down.
You don’t need a doctorate in finance to know that.
But how can you predict stock prices over shorter time frames? Even a company as stable as SLB will see shares change price by 3%… 5%… even 10% in a week on seemingly no news.
That’s where AI comes in. These systems are capable of ingesting millions of datapoints to find patterns that humans can’t see. Perhaps it’s an earnings beat in a completely unrelated company. Or rising trade volumes in a cyclical sector. These are the patterns that AI systems can quickly identify.
That’s why, just this past Tuesday night, Luke finally unveiled Prometheus for the first time ever, after his team worked on it for close to three years.
This system, as we’ve been discussing, is trained to predict the moment a stock is about to jump double digits or more in four weeks.
And during his event on Tuesday, he asked his Prometheus AI to predict what the future holds for three of the most popular stocks in the world today…
Watch this now to see this AI in action and learn how to get his latest recommendations.
As of this writing, Tom Yeung held a LONG position in GM and UBER. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.