As This Bearish Hedge Fund Manager Sees Reasons to Be Bullish, Here Are Three Stocks to Buy

Doug Kass: Noted Bear Turns… Bullish?

I know. I know. Just last week, I told you how bearish Doug Kass is. And, the thing is, he’s not turning bullish yet. But he’s starting to look for reasons to be bullish. That’s what a great trader like Kass does.

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You see, core to Doug Kass’ investing philosophy is the idea that “being short protects capital and being long creates capital.” In other words, when risks are really high, you should consider ways to hedge your portfolio. Last week, we discussed Chris Versace’s addition of the ProShares Short S&P 500 ETF (SH) to TheStreet Pro’s Portfolio. It’s a small hedge, but Chris believes that it, along with raising cash, will help protect the gains he’s made since taking the reins of Portfolio.

This week, Kass told us that “With Fear Rising, I Could Soon Return to the ‘Land of the Living.’” He recounted his many reasons to be bearish, which include economic stagnation combined with inflation, valuations that border on pornographic, rising interest rates, and high levels of U.S. debt from a government that won’t limit spending.

However, Kass notes the following factors that are convincing him to become more bullish:

2. Valuation:

   1. The median S&P 500 (SPX) stock is down 18% from its highThe S&P 500 is 5% below its January all-time-highThe Mag 7 stocks are all lower year-to-date, with the ETF (MAGS) down by 10%

   2. The S&P financials are off by 12% in 2026. This is the greatest quarterly decline for those stocks since 2020. Private credit equities are faring even worse, down by 30%.

3. Technicals

   1. Investors have been selling. Outflows are strong.

   2. Breadth has gotten so bad, it’s nearing a turning point.

   3. S&P 500 is nearing oversold levels based on several technical indicators

Kass prepared for this by raising cash earlier in the year. He didn’t do this in isolation. He shared that information in TheStreet Pro’s Doug’s Daily Diary, and subscribers had the opportunity to follow Doug. Even more important, subscribers could interact with Doug and openly discuss the moves in our community.

Learn more about joining TheStreet Pro’s community here and take advantage of our sale.

However, Doug isn’t bullish yet. He believes that markets may continue lower and that better values are likely to emerge. Even in the best of times, Kass’ hedge fund portfolio may contain both bullish and bearish bets. While Kass was net short last week, he’s now moving to a small net long (bullish) stance. If valuations, technicals, and the economy improve, Kass will expand his longs. He expects that this will take weeks or even months.

So, how can you take advantage of improving opportunities? This week, I’d like to discuss three trading ideas from two of TheStreet Pro’s top analysts, Stephen “Sarge” Guilfoyle and Ed Ponsi.

Sarge Thinks Rocket Lab Can Achieve Orbit

Rocket Lab (RKLB) is one of those companies that you probably won’t find down at your local mall. According to TipRanks, the company provides launch services and space systems solutions for the space and defense industries. They also design and manufacture rockets and small launch vehicles.

2026 has been a rocky one for Rocket Labs. Shares began the year with the afterburners at full thrust, topping out near $100 before falling back to Earth. Since then, shares have been trading between the mid $60s and $70s, before breaking out today.

At the end of February, Rocket Lab announced earnings that were actually pretty good. Earnings beat expectations and revenues showed 35% growth over the prior year. Unfortunately, the company announced a delay in debuting its new “Neutron” rocket and shares tumbled by 5%.

That decline only provided opportunity for sharp-eyed traders, like Sarge, because of several positive contracts that will bring in significant revenue.

2. An $816 million contract with the Space Development Agency

3. Building rockets to support NASA’s ESCAPADE Mars mission

4. Selected by the Missile Defense Agency for the Scalable Homeland Innovative Enterprise Layered Defense (SHIELD) program

5. Launched three missions for Hypersonic Accelerator Suborbital Test Electron (HASTE) which will support the Department of Defense’s “Golden Dome” initiative

Those events all made Sarge feel optimistic. After all, this is one of his personal holdings. However, he’s become even more optimistic now, because of bullish chart action.

In February, RKLB appeared to be tracing out a bearish Head and Shoulders top pattern. But the stock never broke down. So, the neckline of that pattern becomes support in the $63-$66 area.

On Tuesday, shares soared, likely because of the war in Iran. This could be the breakout that Sarge is looking for, although it was tempered by the company’s announcement of a $1 billion share offering, which took the stock down after market close.

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Either way, Sarge has a price target of $98 on Rocket Lab. He won’t panic, either, until shares drop below the 200-day SMA, at around $55.

According to TipRanks, the analysts are with Sarge. The consensus is looking for nearly $90, with the most optimistic analyst looking for $120.

Can This Autonomous Vehicle Play Can Drive Itself Higher by 26%?

Sarge is also a fan of Uber Technologies (UBER) following their partnership with NVIDIA (NVDA) for autonomous driving. Unlike Rocket Labs products, most of us have probably hitched a ride with an Uber. In fact, like Google (GOOGL), the company’s app has come to define an entire business segment. Some of us say that we are going to “Uber” even when we’re taking a taxi or Lyft (LYFT). Arguably, the most talked-about part of the Uber experience is the driver, and Uber has been quite clear about its eventual plans to remove the driver from the car. The company’s future seems to be pinned on autonomous driving.

So, Tuesday’s news from NVIDIA was a positive for Uber. NVIDIA announced that they are working with several major car manufacturers, including Nissan, BYD (BYDDF), Geely, and Isuzu, to develop level 4 autonomy. That’s the level where the car can drive itself within a virtually fenced area. That’s what Waymo is doing. In addition to those car manufacturers, NVIDIA announced that it will be partnering with Uber, too.

Uber plans to have 28 unmanned vehicles running around LA and San Francisco beginning next year.

Sarge tells us that 15 of 39 analysts have reduced their estimates for the quarter that will be reported on in early April.

Still, the consensus argues that Uber shares will hit $105 this year. Sarge isn’t that bullish. But he does like that Tuesday’s gap put shares above their 50-day SMA, which will encourage some portfolio managers to up their exposure to the stock. Additionally, the Cup and Handle pattern that Uber’s price chart just completed is bullish. While he doesn’t own shares, he’s willing to put a $98 target out there. That’s still a 26% gain.

Dollar Tree Shares Are on Sale

Dollar Tree (DLTR) is one of those specialty retailers that sells low-margin, inexpensive goods. In fact, if you’ve got $1.25 in your pocket, you can buy the candy, health and personal care, and other consumable and everyday goods that they sell. Unlike Rocket Lab, but like Uber, you may even be a Dollar Tree customer already.

Similarly to most of what Dollar Tree stocks, the company’s shares are currently on super sale, according to TheStreet Pro’s Ed Ponsi. The stock hit a 52-week high of $141 back in January, and then began a bumpy descent to its recent low around $106.

Ed is bullish on DLTR following the company’s most recent earnings report, which he says wasn’t impressive. The results were in-line with analyst expectations. But the shares jumped on Monday because the company’s business plan shows signs of igniting growth.

For one thing, the company plans to open another 400 stores in 2026. More stores should equal more sales. But they’re also converting stores to the new Dollar Tree 3.0 format, which offers a different pricing strategy with higher-margin items priced up to $7.

The company is also shedding Family Dollar stores. This was a failed acquisition, and Dollar Tree management sold Family Dollar for a $7 billion loss, but it can begin to focus on its core business, which is good.

Ed’s bullish case relies on the 200-day SMA, which is upward-sloping and indicates that DLTR shares remain in a long-term uptrend. Even better, last week, shares closed just below the 200-day and rebounded on Monday. Last time DLTR flirted with the 200-day like this, shares subsequently rallied by 65%.

Will we see another 65% gain? Possibly. But Ed’s target price is a more reasonable $141, about 11% above the analyst consensus of $127. If you buy Dollar Tree, Ed suggests keeping a tight stop and selling the shares if it closes below Friday’s closing price, around $106.

Final Thoughts

Doug Kass warns us to be careful. This isn’t a bull market. If you’re a trader or have plenty of cash on hand, it might be a good time to consider building positions in stocks that you think have strong upside. Our team thinks Rocket Lab, Uber, and Dollar Tree are great options. But remember, our team always has a plan to sell if they’re wrong. We hope you’ll join us over at TheStreet Pro for more great trading and investment ideas.

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