1 Stock to Buy, 1 Stock to Sell This Week: Nvidia, Kohl’s
Investment Insights: Nvidia as a Buy and Kohl’s as a Sell – June 2025
Investment Insights: Nvidia as a Buy and Kohl’s as a Sell – June 2025
Executive Summary:
This report provides a detailed analysis of two prominent stocks in the current market: Nvidia Corporation (NVDA), recommended as a buy due to its robust growth trajectory, strong earnings quality, and leadership in AI and semiconductor markets; and Kohl’s Corporation (KSS), recommended as a sell given its ongoing operational challenges, margin pressures, and uncertain turnaround prospects. The analysis includes recent financial data, business model assessments, and growth outlooks to support these investment recommendations.
Nvidia Corporation (NVDA) – Stock to Buy
Company Overview
Nvidia is a global leader in graphics processing units (GPUs), AI computing, and data center solutions. The company has successfully expanded beyond gaming GPUs into AI, autonomous vehicles, and cloud computing, positioning itself at the forefront of the AI revolution. Nvidia’s recent acquisition of Mellanox and its strategic investments in AI software and hardware have further strengthened its competitive moat.
Latest Financial Highlights (Fiscal Years 2022-2024)
| Fiscal Year | Revenue (Billion USD) | Net Income (Billion USD) | EBITDA (Billion USD) | Gross Margin (%) | Operating Margin (%) | EPS (Diluted) |
|---|---|---|---|---|---|---|
| 2022 | 26.97 | 9.75 | 11.2 | 65.0% | 40.0% | 4.35 |
| 2023 | 33.96 | 13.51 | 15.0 | 66.5% | 42.3% | 6.12 |
| 2024 (Est.) | 43.00 | 17.20 | 19.0 | 67.0% | 43.5% | 7.85 |
Business Model and Growth Drivers
Nvidia’s core revenue streams include:
- Gaming GPUs: High-performance graphics cards for PC gaming and consoles.
- Data Center: AI and cloud computing hardware and software solutions.
- Professional Visualization: Workstation GPUs for design and content creation.
- Automotive: AI platforms for autonomous driving and infotainment.
The company’s scalable business model benefits from high gross margins (~66-67%) and recurring revenue from software and AI services. Nvidia’s leadership in AI chipsets and software frameworks (CUDA, AI SDKs) creates strong competitive advantages and high switching costs for customers.
Quality of Earnings and Financial Health
Nvidia’s earnings quality is strong, supported by consistent revenue growth, expanding margins, and robust cash flow generation. Adjustments for non-recurring items such as acquisition-related expenses and stock-based compensation have been made to calculate normalized EBITDA, which shows steady improvement. The company maintains a healthy balance sheet with low debt and strong liquidity.
Growth Trajectory and Market Position
Driven by AI adoption, cloud computing expansion, and gaming demand, Nvidia’s revenue CAGR over the past three years is approximately 25%. The company’s investments in AI infrastructure and software ecosystems position it well for sustained growth. Industry peers such as AMD and Intel lag behind Nvidia in AI-specific hardware innovation, giving Nvidia a competitive edge.
Kohl’s Corporation (KSS) – Stock to Sell
Company Overview
Kohl’s is a mid-tier department store chain operating primarily in the United States. The company has faced significant headwinds from changing consumer preferences, e-commerce competition, and supply chain disruptions. Despite efforts to revamp its store experience and digital presence, Kohl’s continues to struggle with declining sales and margin compression.
Latest Financial Highlights (Fiscal Years 2022-2024)
| Fiscal Year | Revenue (Billion USD) | Net Income (Million USD) | EBITDA (Million USD) | Gross Margin (%) | Operating Margin (%) | EPS (Diluted) |
|---|---|---|---|---|---|---|
| 2022 | 18.10 | 350 | 700 | 37.5% | 5.0% | 2.10 |
| 2023 | 17.50 | 280 | 600 | 36.0% | 3.5% | 1.65 |
| 2024 (Est.) | 17.00 | 200 | 500 | 35.5% | 2.5% | 1.20 |
Business Model and Challenges
Kohl’s revenue primarily comes from:
- In-store retail sales of apparel, footwear, and home goods.
- Online sales through its e-commerce platform.
Key cost drivers include inventory management, store operations, and marketing. The company’s business model is under pressure due to:
- Intense competition from online retailers like Amazon and discount chains.
- Shifting consumer preferences towards digital and experiential shopping.
- High fixed costs from physical store footprint.
Quality of Earnings and Financial Health
Kohl’s earnings quality is deteriorating, with declining margins and shrinking net income. Non-recurring charges related to store closures and restructuring have impacted reported earnings. The company’s cash flow generation is weakening, and inventory levels have increased, indicating potential markdown risks. Debt levels remain moderate but could become a concern if operational performance does not improve.
Growth Trajectory and Market Position
Kohl’s has experienced a negative revenue CAGR of approximately -3% over the past three years. The company’s turnaround efforts have yet to yield sustainable results. Compared to peers like TJX Companies and Macy’s, Kohl’s lags in digital transformation and customer engagement. The outlook remains cautious with significant execution risks.
Summary Table: Key Financial Metrics Comparison
| Metric | Nvidia (2024 Est.) | Kohl’s (2024 Est.) |
|---|---|---|
| Revenue (B |