Credo Technology: High Growth, Low PEG, Big Opportunity

I reaffirm my $105 price target by early 2026, urging investors to hold for 12 months to capture the long-term upside, not just short-term moves.

Investment Thesis

Credo Technology (CRDO) is about to report its fiscal Q4 2025 earnings on Monday, after hours.

This is one of my top stocks in my portfolio, so you should expect me to be biased in my assessment.

However, I've attempted to be frank and balanced about its prospects and its risks.

Basically, on the front of it, the stock looks expensive, particularly if its growth rates start to rapidly moderate, which is the big overhang on its stock.

But as you'll read, I've already considered this risk factor, and even in this light, I believe there's a lot to be bullish about CRDO right now.

Basically, although the stock looks expensive at 105x forward free cash flow, the business has a lot of levers to deliver investors a compelling risk-reward.

All in all, I reaffirm my price target of $105 by early 2026.

Important Context

I do not like to highlight stocks for subscribers to buy a week into earnings. The reason is that I don't want to draw out the wrong type of subscribers. I believe that outperformance is made by sitting on your hands and occasionally adjusting the portfolio.

And if I mention a stock headed into earnings, many subscribers will buy the stock headed into earnings, hoping for a quick pop and easy money, and then get disappointed when the stock doesn't move higher.

The stock then drops 20%, hits their stop loss, the subscribers are stopped out of their gains. And then, 30 days later, the stock resumes its climb back up, and the subscriber misses out on the stock regaining their value.

In short, I'm highlighting this stock, as I believe that a lot of negative news is already priced in, but that its prospects over the next year are not sufficiently considered.

I ask that the subscriber stick to my Inflection strategy of buying into the stock with the view of holding the stock for about 12 months, and capturing the bulk of the move higher. Not timing bottoms or timing tops, but the long part of the move, as investors start to better understand the company's prospects.

As you can see below, the stock has largely gone nowhere since I first recommended it to you.

The stock sold off significantly in February, March, and the start of April, only to rapidly recover since its trough. This reinforces my message, that anyone with a stop loss would have been stopped out at a lower price, and then, have to buy into the stock at a higher price. Buy high, sell low, buy high again. That's not the way to outperform the market.