Top Pick of the Week: Trade What You Know

Sometimes your biggest trading edge comes from knowing the same stocks better.

Every week, I look through hundreds of charts.

I scan sectors, compare valuations, study breakouts, and search for companies trading below what I believe they’re worth.

Naturally, I’m always looking for something new.

A new ticker, a new setup, and a new opportunity.

However, after years of trading, I’ve learned something: The best opportunity isn’t always a new stock.

Sometimes it’s one you’ve already done the work on.

• One you’ve owned.

• One you’ve traded.

• One you’ve watched long enough to know when something about the setup has changed.

→That’s where familiarity starts to matter.

When you follow the same companies over time, you learn their personality.

You know what normal volatility looks like. You recognize how aggressively the stock tends to move.

You’ve seen what happens around earnings. You know when a pullback looks ordinary—and when something deserves a closer look.

None of that lets you predict what happens next, but it gives you context and when you’re putting real money at risk, context matters.

That’s exactly what brought me back to this week’s pick.

I didn’t discover a new company.

I returned to one I already know.

→ A company that’s already in my portfolio and stock I’ve watched through big rallies, sharp pullbacks, changing expectations, plenty of volatility, and after its recent decline, the business, valuation, and setup caught my attention again.

This week’s Top Pick of the Week is Reddit Inc. RDDT 0.00%↑

Here’s the setup →

Why Reddit Is Back On My Radar

I’m not interested in RDDT because it’s familiar.

That alone would be a terrible reason to buy anything.

The business still has to earn the trade and RDDT’s latest results gave me a reason to look again.

In Q2 2026, RDDT generated approximately $805 million in revenue, up 61% year over year. It marked the company’s eighth consecutive quarter of revenue growth above 60%.

RDDT also reported approximately $253 million in net income, a 31% net margin, while adjusted EBITDA reached roughly $343 million with a 43% margin. Operating cash flow increased 135% to approximately $262 million.

That’s what caught my attention.

RDDT isn’t simply growing its user base and asking investors to wait around for profitability later.

→ The company is already showing that rapid growth can translate into profits and cash flow.

Then the stock pulled back and that’s where the story became interesting again because sometimes the business keeps improving while the stock price tells a much uglier story.

That doesn’t automatically make the stock a buy, but it absolutely earns another look, especially when it’s a company I’ve already spent years getting to know.

---

The Business Keeps Getting Better

RDDT’s growth isn’t coming from one place.

→ The platform is attracting more users, expanding internationally, and getting better at turning that attention into revenue.

Daily Active Uniques reached approximately 130 million, up 18% year over year, while Weekly Active Uniques climbed 24% to approximately 515 million.

More than half a billion people (500,000,000 people) are now visiting RDDT every week, but the number that really caught my attention was international growth.

International Daily Active Uniques increased approximately 28%, considerably faster than U.S. growth.

→ That’s important because RDDT’s international audience remains less monetized than its U.S. audience.

The opportunity isn’t necessarily about finding millions of new users.

It’s about getting better at monetizing the enormous audience RDDT already has and that’s where advertising comes in.

→ Advertising revenue reached approximately $762 million in Q2, up roughly 64% year over year.

Also, RDDT has something advertisers care deeply about:

→ Intent.

Think about how people actually use RDDT.

• Which laptop should I buy?

• Is this hotel actually worth the money?

• What’s the best running shoe?

• Has anyone tried this product?

• What do people think about this stock?

Those aren’t passive scrolling questions.

→ They’re often questions people ask while researching a decision.

RDDT sits on millions of communities where people openly discuss what they’re considering buying, what problems they’re trying to solve, and what they actually think about products and services.

That’s valuable to advertisers.

As RDDT gets better at monetizing those conversations, especially outside the United States, I think there’s still considerable runway ahead.

---

RDDT’s AI Paradox

Then there’s the part of the RDDT thesis I find even more interesting →

Artificial intelligence could make RDDT more valuable and more vulnerable at the same time.

AI companies need enormous amounts of data, but RDDT’s value isn’t simply the volume of content sitting on its servers.

It’s the kind of content.

• Questions.

• Arguments.

• Recommendations.

• Personal experiences.

• Niche expertise.

• People explaining why they loved something, hated something, bought something, fixed something, or changed their minds about something.

In other words:

→ Human conversation.

RDDT already has data-licensing relationships with major AI companies, including Google GOOGL 0.00%↑ and OpenAI, allowing certain uses of RDDT content for AI-related purposes.

I don’t need data licensing to become RDDT’s primary business for the investment thesis to work.

→ Advertising is already doing the heavy lifting.

→ AI gives RDDT another way to potentially monetize something it has spent years accumulating.

There’s also a bigger idea here.

As more online content is created by machines, authentic human conversation could become increasingly scarce, and increasingly valuable.

RDDT has a hell of a lot of it, but AI creates a risk too.

Historically, someone searching Google for an answer might click a RDDT result to see what real people had to say.

Now an AI-generated answer can potentially summarize that information directly on the search page.

The user gets the answer. RDDT may not get the visit.

→ That’s the paradox.

AI can increase the value of RDDT’s data while simultaneously making it easier to consume some of that information without ever visiting RDDT.

So I’m watching both sides.

1. Can RDDT turn its enormous archive of human conversation into another meaningful source of value?

2. Can it continue building direct relationships with users if traditional search sends less traffic its way?

I don’t know the answer yet, but that’s why AI belongs in the RDDT thesis as both an opportunity and a risk, not a buzzword slapped onto the bull case.

---

Why I’m Interested Now

A strong business doesn’t automatically make a stock a good buy at any price.

→ Price matters. 👑

RDDT delivered another quarter of rapid growth.

• Revenue increased 61%.

• Advertising grew more than 60%.

• Profitability improved.

• Cash flow surged.

• Weekly users crossed half a billion.

• And then the stock pulled back sharply.

• Price is trading undervalued here.

Investors focused on softer U.S. daily-user growth and disappointment around the pace of additional AI licensing agreements.

That’s when I started paying closer attention because the question isn’t simply:

Did the stock fall?

It’s:

→ Did the business change enough to justify the decline?

So far, I don’t see the fundamental story deteriorating in the same way the stock price did.

---

Undervalued? Maybe. Cheap? Nope.

There’s an important distinction here.

According to the Morningstar valuation I’m using, RDDT is trading approximately 22% below estimated fair value.

That makes RDDT interesting to me.

But let’s be clear: This isn’t a cheap stock.

RDDT still trades at premium earnings and revenue multiples compared with the broader market. Investors are paying for substantial future growth and RDDT has to deliver it.

So when I call RDDT undervalued, I’m not saying its multiples are low.

I’m saying:

I believe the long-term earnings power of the business may be worth more than what the market is currently pricing.

That’s a very different argument and it comes with expectations.

→ RDDT needs to keep growing its audience, improve monetization, international revenue needs to catch up with international user growth, and all of that growth needs to continue turning into profits and cash flow.

If those things stop happening, the valuation argument changes.

---

RDDT chart markup →

The Technical Setup & Trade Breakdown

This is where the opportunity gets more interesting, but also where I need to stay disciplined.

→ RDDT is currently trading approximately 22% below the fair-value estimate I’m using and has moved into an accumulation zone on my chart.

That gets my attention, but price is also trading below its 200-day simple moving average, which I consider bearish.

So I have two different signals in front of me:

1. The valuation and accumulation zone say pay attention.

2. The 200-day SMA says don’t get ahead of yourself.

And I’m okay with that.

I don’t need every indicator flashing green before I become interested in a stock. I need to understand what the chart is telling me and size my risk accordingly.

For me, this isn’t about blindly buying RDDT because it’s down from its highs.

I’m watching how price behaves inside this accumulation zone and whether buyers begin stepping in.

A move back above the 200-day SMA would give me stronger technical confirmation that the longer-term trend is improving.

→ Until then, RDDT may be an opportunity, but it’s still a bearish technical setup that needs to prove itself.

That’s an important distinction.

1. Fundamentals tell me why I want to own RDDT.

2. The chart tells me whether now is the right time to add.

• Current Price: $153.95

• Sector: Communication Services XLC 0.00%↑

• Sub-sector: Internet

• Fair Value: $200 (22% discount here)

• Entry Zone: $152

• Stop Loss Zone: $135-142

In other words:

→ this is an amazing buy & hold opportunity to pick up shares of RDDT, an undervalued / discounted AI / growth stock to hold for the long-term, if not forever.

→ we can also position trade RDDT back to true value and beyond and make massive gains.

→ we can take a 2x leveraged swing trade in RDTL for quicker price movements, cheaper share prices, smaller position sizes, and amplified gains (and, losses).

→ if you’re an experienced, astute trader, you can write option contracts on RDDT and do what you do and make exponential gains.

Link to RDDT chart

---

What Could Go Wrong?

There are real risks here.

RDDT still carries a premium valuation, which means disappointing growth can get punished quickly.

Advertising is brutally competitive. Meta, Alphabet, TikTok, Amazon, and plenty of others want the same marketing dollars.

→ User growth matters.

→ International monetization needs to improve.

And AI cuts both ways: RDDT’s human-generated content could become increasingly valuable while AI-powered search could reduce some of the traffic that historically reached RDDT through traditional search.

Then there’s the stock itself.

→ RDDT is volatile.

I’ve watched that volatility work in both directions, and knowing the stock doesn’t make me immune to it.

That’s why “trade what you know” should never become “fall in love with what you know.”

If the fundamentals deteriorate or the technical setup breaks, familiarity doesn’t get a vote.

The thesis always outranks the ticker.

---

My Investment Thesis

RDDT earned my Top Pick of the Week because I’m seeing something I like to look for:

→ A growing business, a discounted valuation, and a stock entering an area where I’m interested in accumulating.

• The business continues to grow rapidly.

• Advertising is expanding.

• More than half a billion people visit RDDT weekly.

• International growth provides another potential runway for monetization.

AI could make RDDT’s gigantic archive of human conversation even more valuable over time, but I’m not ignoring the chart to make the bull case prettier.

RDDT remains below its 200-day SMA. That’s bearish.

So this isn’t a thesis built on everything lining up perfectly.

→ It’s a thesis built on knowing what I like, knowing what I don’t, and knowing what I need to see next.

1. The fundamentals make me want to own RDDT.

2. The valuation makes me pay attention.

3. The accumulation zone creates an opportunity.

4. The 200-day SMA keeps me disciplined.

5. This is a company I already own, follow, and understand, I don’t have to start my research from zero when the opportunity changes.

I already know what I’m looking for.

---

Final Thoughts: Trade What You Know

One of the biggest lessons I’ve learned from trading is that more isn’t always better.

You don’t necessarily need more indicators, more strategies, more screens, or another 50 stocks on your watchlist.

Sometimes you need more time with the same companies.

• Watch them.

• Study them.

• Learn what normal volatility looks like.

• Know what drives the business.

• Know what would change your thesis.

• And recognize when price gives you another reason to pay attention.

That doesn’t mean a familiar stock owes you the same behavior it showed last time.

Markets change, companies change, and patterns fail.

→ Familiarity doesn’t guarantee the trade. It gives you context for the trade.

That’s the distinction.

I didn’t choose RDDT because I discovered something new this week.

I chose it because something familiar started looking interesting again.

→ The market will always give us another ticker to chase.

You don’t have to know every stock. You need to know your stocks.

Trade what you know and know why you own it and when the market gives you another opportunity in a company you’ve already done the work on?

→ Be ready to recognize it.

Know the Big Picture. Focus on the Edge. 👑

Following a systematic approach, reading market structure, and staying disciplined compounds over time.

Let me know what you’re watching and thank you so much for reading! 🙌

-Nurse Jess 🤝

---

Previous Articles & Live Episodes

---

Scan the QR code below to subscribe to Nurse in the Market→

---

📌 Bookmark this post. Track these setups through the week and see how they play out. This is how you develop an edge—by studying real-time trade ideas and learning what works.

---

Financial Disclaimer: This is not financial advice. All trades carry risk. Biotech stocks are highly volatile and speculative. Always do your own due diligence and consult with a financial advisor before making investment decisions.

---