Who watches the watch list?
Back on Thanksgiving we made our Trade of the Year selection and, to get to our final selection (YETI), we had to eliminate the other 6,000+ publicly traded stocks. Most of them were easy – as they were too expensive or had too much debt or no clear path to growth but the last few hundred were all worthy stocks and we ended up with 60 finalists.
On top of that, we purged another 50 stocks from our Member Portfolios, not because there was anything wrong with them, but because we had already made nice profits and didn’t want to risk the positions into a downturn (which we’re in at the moment).
Still, we are very happy to add most of those stocks back in if they get cheaper so let’s do a quick review so we have a ready list to refer to, whenever we’re in the mood to add a stock to one of our Portfolios going forward. Generally, we’re going to focus on whoever is on sale at any given time. Some are already up quite a bit from November but we’re not buying now – just making a list we can check twice later:
AKAM – $83.50 is $13Bn and 15x earnings and cloud services is a growing space.
ALL – $136 is $36Bn and 15x and topping in a range they will likely break over. Higher rates are good for insurance companies, who are forced to park their reserves in “safe” assets.
APD – $312 is $69Bn and 26x so not cheap but explosive growth in a very niche specialty gases company so we’d love a shot at another dip.
APO – $63.40 is $36Bn and not even 10x earnings. Nice little Wealth Management firm that should grow nicely as Investors seek help in a troubled market.
AVGO – One of my all-time favorite stocks. $553 is $231Bn and 13x and hopefully the chip sector stays choppy and they go back on sale around $400.
BA – $190 is $113Bn and 83x as they lost $5.5Bn last year and only expect to make about $1.1Bn in 2023 so no rush to buy them but they used to make $8-10Bn a year, which would make $113Bn crazy cheap as they move from the investing cycle to the sales cycle with 7 years worth of back-orders at full production.
BCS – $7.81 is $30Bn and only 5x their $5Bn earnings but $47Bn in debt is a bit scary with rates rising. On the other hand, $1.7Tn in assets with rates rising is a nice plus too. This is one where we are very interested in seeing how the Earnings Reports look going forward.
BIG – $15 is $432M and they are expecting to lose $200M in 2023 and another $20M next year before things turn around so it’s risky and they have $400M in debt – which is the entire market cap and just $62M in cash – so they’ll have to dilute to borrow more or pay crazy rates. They usually make $200M so all will be forgiven if they execute but no hurry at all on this one.
BKNG – $2,000 is $78Bn and 16.5x and they were a stronger contender in October at $1,600 but they took off into Thanksgiving and fell out of the running over price issue only. There is still the threat that Covid could once again impact travel.
BLK – $703 is $106Bn and 20x so not particularly cheap but no debt (net) and good growth makes them well worth watching for another dip to $550, where they are a definite buy.
BGFV – Just the cutest little retailer (sporting goods) at $9, which is $200M and only 6.5 times earnings. $25M in cash net of debt means any expansion is going to move the needle for them so a nice little Retail investment.
BNTX – $160 is $39Bn and 9x but a lot of that is Covid vaccine money that is winding down. Still, they have $13Bn in cash net of debt and a proven model so, like MRNA – I like them for the long-term.
BRK.B – To me, this is like playing SPY but with a better mix – hand-selected by Warren Buffett. $305 is $678Bn but, unfortunately, 20.6x so not cheap and these days they have $84Bn in debt, which is smart as they borrowed cheap and made acquisitions that have driven revenues up 30% during Covid so we’d love to buy them again – IF they go on sale around $260 (18x).
BXMT – They just got so cheap we got interested. $22.25 is $3.8Bn and that’s 7.7x and I guess traders are bailing because they don’t believe Blackstone knows how to manage a changing rate environment? In 2007 this was a $500 stock but fell to $12 in 2009 and never regained it’s former glory. But they make $500M a year!
BYD – Small casinos. This is how we like to play sports betting too – indirectly. $55 is $5.75Bn and 10x earnings.
C – One of the better banks being treated like one of the worst for some reason. $44.40 is $86Bn at 7x earnings so ridiculously cheap and probably because $208Bn in debt is scary but that’s balanced out by $2.35Tn in Assets under Management.
CAKE – $31.50 is $1.6Bn and 10.5x. I can’t understand why they are so unloved.
CAT – Whenever they are down we sing! They are like the Boeing of construction equipment – backlogged for years. $243 is $126Bn and 16x so not where we want to buy them but $160 would be a gift if we get a nice drop.
COF – Banks with coffee shops and no tellers – what could go wrong? $91 is $35Bn and that’s only 5.7x so SOMEONE thinks it’s a bad idea but these guys are killing it.
CIM – One of our favorite RIETs. Again, people have no faith but $6.20 is $1.44Bn and that’s 6.2x and these guys didn’t even lose money in 2020.
CLF – $16.20 is $8.4Bn at 11x reduced expectations. If there’s no Recession, they will fly higher and they only took a small loss in 2020 so nice to have for the long run.
CMCSA – This is NBC/Universal and Xfinity and Sky in Europe. $35.28 is $150Bn and 9.2x earnings while DIS gets 19x earnings – even with all the screw-ups.
CVX – Not many oil companies I like. They make 70% of their profits refining and have strong ties in Venezuela, which is opening up. $178 is $342Bn and 10.6x and only $8.2Bn in debt – very nice!
DAL – Well, now we know why I don’t love LUV. DAL cancelled less than 20% of their flights last week. $32.50 is $20Bn and that’s just 6x earnings but we already have them (maybe we’ll buy more).
DIS – $88 is $154Bn and 19x. Iger is back and he might kitchen-sink the quarter but, after this report I’m likely to be interested in getting back in.
DKS – $117 is $9.5Bn and that’s 9.5x, so I guess they must be making $1Bn?
DOW – Another one that’s too cheap anticipating a Recession. $50.65 is $35Bn and that’s 11.4x but they lost $1.3Bn in 2019 so not a stock you want if there is a Recession – though we do have some in our portfolios and will be happy to DD on weakness.
EBAY – $41.47 is $22.5Bn at that’s less then 10x. Not a lot of growth but I’m very happy with stocks that simply make 10% per year on my money.
ERJ – $10.93 is only $2Bn and earnings are still erratic as they make very expensive planes and a single delivery shoved forward or back can make or break a quarter but they are making $400M this year and should do more like $700M next year, which would be 3x. I very much like that they are going after the VTOL market too.
ET – $11.87 is $36.6Bn which is only 8.3x but this one is all about the $1.06 (8.9%) dividends which we can jack up with short puts and calls. One of my favorite dividend stocks.
EXPE – $87.60 is $13.67Bn and that’s just 9.4x for a great travel stock.
FDX – $173.20 is $43.7Bn and that’s 11.2x.
F – Why did FDX go before F? That’s not how the alphabet works… Anyway, $11.63 is $46.7Bn and that’s 6.7x, which is ridiculous.
FF – $8.13 is just $355M and they made $88M in 2019 but only break-even so far this year but last Q was $15.8M so, if this Q is good – we need to get on the train before it leaves the station.
FL – $37.79 is $3.5Bn and that’s 8.9x for one of my favorite retailers. $26,034 per employee is great for the space.
FRO – $12.14 is $2.7Bn and that’s just 4.7x.
GE – They are suspended pending figuring out what’s left after the spin-off.
GILD – $86 is $110Bn and 13x and that’s AFTER taking off huge since November. We have lots in our portfolios.
GLW – $36 is $30Bn and 16x. Also took off recently.
GNRC – Still way too cheap at 107, which is $6.4Bn and 14x for a nice growth stock.
GOOGL – 92.18% – that is their 2022 market share for search. $90 is $1.1Tn and that’s only 17x, which is silly. ‘
HAL – Almost should be off the list as it popped from $25 to $40 but $40 is $36Bn and that’s 13.7x so still not too high but it ain’t $25, which was below 10x.
HON – $212 is $141Bn and 23x and 212 is also the area code my Dad lived in when he consulted for Honeywell 45 years ago. Blasted up from $180 in November but always a good stock to own when they are cheap if you like long-term reliability.
IBM – $145 is $130Bn and 15x and right on track for our positions.
IEP – At $53, $18Bn seems OK as it’s up 10% from $11.5Bn in 2018, when they made $515M. They pay a nice 15% dividend if it lasts so I was interested if $50 shows to be a clear bottom as a fun dividend play.
IP – $37.40 is $13Bn is 12x and I see it as a Carbon play of sorts and, of course, paper packaging is being pushed vs plastic.
ISRG – Way up from under $200 and $269 is $95.5Bn is 50x, so back to being a problem for me on the price though I love the company. I think they’ll make $3Bn next year but that’s still 30x – would have been 20x before the rally and THAT I can endorse.
IVZ – $19.60 is $8.7Bn is 11.3x and it’s yet another investment management firm not getting enough respect.
JACK – Expanding back to the East Coast, where they used to be in the 70s but there was some food poisoning thing and they retreated and never came back. They had another on in the 90s that was much worse on the West Coast so, on the bright side – I’d say they have figured out food safety by now. $72 is $1.5Bn is 12.5x – love it!
JETS – I generally don’t like ETFs but this is a nice, general bet on the recovery of air travel without exposure to one airline (LUV)’s screw up. You have to analyze each component but it’s a good blended price.
JWN – Back in 2008/9, my nieces or my kids and their friends would come home from the mall with bags and I’d say “How the Recession going?” and they’d say “What Recession?” Ah, good times! Invest where the Top 10% shop because, if they stop shopping – the World is ending anyway, so what’s the difference? $16.50 is $2.7Bn is a ridiculous 7x earnings.
JXN – Yet another underpriced financial planner. They specialize in annuities. $35 is $3Bn is 2x (yes, not a typo) so, if you like free money – this might be for you. Oh yes, and they have $2.6Bn cash net of debt!
KHC – $42.50 is up from $34 when we picked them but it’s still only $52Bn which is 15x. Again, simple questions to ask in a Recession: “Will I stop buying ketchup?” If no – then buy KHC.
LABU – Another ETF. Biotech. Seems too cheap to me.
LEVI – In a Recession, will you stop wearing jeans? If no, buy LEVI. $16.80 is $6.5Bn is 12x. They made it through two World Wars, the Great Depression and the San Francisco Earthquake – I think they’ll make it to 2025…
LOGI – I thought LEVI’s chart was stuck. $67 is 10.5Bn is 16.7x.
LOVE – Sactional Furniture. $26.60 is $402M and 11x. Love them long-term.
LYB – $92 is $29Bn is 9.4x and I LOVE specialty chemicals because they are such a small part of the overall costs but they are also usually vital.
LVS – Macau is opening and that’s huge for them. They punched way higher from when we were looking and $52.50 is $39Bn is 48x but they can easily make $2Bn in 2024 so $50 isn’t really that bad.
MET – $72 is $58Bn is 9x and insurance companies have massive reserves they have to invest conservatively so higher rates are great for them.
META – We already bought a lot of this. Too cheap at $130, which is $345Bn, which is 16.4x but that’s because they are plowing 1/3 of their earnings into building the Metaverse. All they have to do is stop and they are back to 12x or, if they make $10Bn on the Metaverse…
MGM – $38 is $14Bn is 62x but, like META, they are building and building although MGM is building real casinos – like the one in Massachusetts. They can easily go back to making over $2Bn a year so 7x down the road.
MIDD – Newton’s law of thermodynamics states that, even in a Recession, you need heat to cook food. $144 is $7.6Bn is 15x.
MRNA – Still not getting any respect for vaccine sales in 2023 but they project $8Bn and a $1.7Bn profit and $185 is 70Bn so 40x but they have $7Bn in the bank and huge prospects so I consider them a well-funded startup with incredible potential and an already proven (and FDA-approved) process for dealing with the World’s worst pathogens. I’d rather play them than any random Biotech.
MT – Buildings gotta get built sometime. $29 is $23Bn is 9x.
MU – Do we have too many chips this week or not enough? Well, we are priced for too many at $56, which is $62Bn and MU is losing $2Bn this year but usually they make about $6Bn, which would be 10x so it’s an investment.
NFLX – $342.50 is $152Bn and that’s about 30x earnings now. Was $200 when we liked it and took off.
NKE – $126 is $196Bn and that’s 34x as they also took off since we liked them.
NRG – Now this one got cheaper! $32 is $7.4Bn and only 6.2x but x is erratic to say the least. They pay a nice $1.40 dividend too. Down because they are spending $2.8Bn on a Smart Home company (VVNT all cash) and they don’t make any money and NRG already had $7.7Bn in debt – so it’s all very concerning.
NLY – Speaking of dividends: $3.52 is 15.4%! $22.75 is $10.6Bn and that’s only 6.5x – love these guys!
OMI – $20.70 is $1.5Bn and that’s 9x. $2.4Bn in debt concerns me with just $190M in profits and the growth isn’t that exciting so I’d stay conservative.
OLN – $56.40 is $7.7Bn and 9x. I always love my specialty chemical companies.
PACW – $24.70 is $3Bn and only 6.5x.
PHM – $50.70 is $11.5Bn and 7x. $2.7Bn is not too much debt for a home-builder.
PARA – Still unloved at $20.30, which is $13Bn, which is 15.7x but that’s in a rebuilding year. I believe they will be bought at $30 in the 2nd half.
PBR – $11.50 is $75Bn and 2x. Now that the turmoil is over in Brazil, this is a nice pick.
PM – $102 is $158Bn is 17.8x. I like big and steady.
PRU – $99 is $36Bn is 8.4x.
QSR – Took off. $67 is $20.5bn and that’s now 22x.
RAIL – $3.38 is $58M and they should make their first $4M this year with great growth.
RH – One of my favorite stocks so cheap at $300, which is $7.2Bn and 17x.
RIG – Flew up to $6 recently, which is $4.3Bn and they haven’t made money since 2016 but they do have $6.2Bn in debt so there’s no way I’d chase them. We liked them at $3.
RIO – Also flew up to $78, which is $124Bn and 10.5x. What a bargain it was before!
SKT – Another favorite, now $18.33, which is $1.9Bn and 24.2x. At 20x I’d start accumulating ($15).
SLB – Another one that took off. $57.35 is $81.4Bn and 19x.
SONY – $89 is $109Bn and 15x
SPG – Another favorite. $124 is $40Bn is 20x.
SPWR – Stock of the Decade is currently unloved at $16.33, which is $2.8Bn and 30x. Next year earnings should double so a nice play for the patient.
STLA – $15 is $49Bn is 3.3x.
SWK – $86 is $13Bn is 20x.
SYF – $35.40 is $16Bn is 7.4x. Not much growth but steady profits.
T – After 100 years, still gets no respect. $19.23 is $137Bn and 7.5x.
TGT – $162 is $75Bn and 17x but it’s a rough year and back under 10x at this price next year.
THC – $51.50 is $5.5Bn is 9x. Silly.
TNDM – $42.70 is $2.75Bn and they don’t actually make money but fast-growing diabetes care with $250M in CASH!!! is very interesting to me.
TM – $146 is $198Bn and 9x. Silly.
TMUS – $145 is $180M and 22x.
TROX – Was cheaper. $16.50 is $2.5Bn and still less than 9x.
TRVG – $1.66 is $600M is 7.6x.
TSLA – $133 is $421Bn is 31x but there’s enough growth there that we just jumped in when they touched $100.
TTE – $64 is $160Bn is 5.4x. So silly… And that’s AFTER gaining 50% from the October lows!
TUP – $4.18 is $186M is 4.7x.
TWO – $17.78 is $1.5Bn is 7.5x.
UHS – Blasted higher on us. Now $150 is $10.6Bn and 13.8x.
V – $225 is $555Bn is 26x.
VALE – Yet another one that’s up 50% since we picked them. $18 is $82Bn is 7.2x still.
VMC – $179 is $24Bn is 27x.
WBA – $36 is $31Bn is 7.7x.
WHR – $150 is $8Bn is 9x
WMT – $140 is $380Bn is 21.6x
WSM – $124 is $8.2Bn is 8.7x
WY – $32 is $23.5Bn is 30x.
X – $28 is $6.6Bn is 13.4x
XRX – $17 is $2.65Bn is 9x
YETI – $43 is $3.7Bn is 15x
ZS – $117 is $17Bn is 81.5x but they just stated making profits with great growth and still $685M in the bank.
Good morning, everyone. Here is the link to today’s webinar. The last webinar of 2022. We wish you all a very happy, healthy and prosperous New Year.
I don’t know why /NG just dropped 10% but I’m looking. It is the new contract (/NGG23) but it was $4.90 most of yesterday and now $4.58. /NGF23 is down to $4.71 from $5.10 with 2 days left.
$85 was rejected on Brent.
It’s not the Dollar.
NG/ Phil CME website says today is the last trading day on the January contract.
Traders are panicking out of their positions on all expiries. They have a 10% limit down circuit breaker but it is dynamic with a 60min timeframe. So nothing to stop us going down
That is a perfect price to get in!
March at $4.10 is also very tempting.
I like those! Still cold in Europe.
Good call missed this post blasted up after you called it.
Meanwhile, it’s going to take me all week to finish that Watch List with charts and comments!
4 stocks to watch on Wednesday: Apple, Pfizer and more
Dec. 28, 2022 8:33 AM ET
After a mixed performance to start a holiday-shortened week, stocks look poised for a higher open on Wednesday. Volume is likely to remain sparse with many participants still on vacation and a general lack of catalysts. Here are some stocks to watch on Wednesday:
I told you that would happen – the Government can’t allow higher rates with their massive debt load.
TSLA/ Phil yesterdays post all ready caused 317 Jan25 $50 puts to trade. This price is $2 cheaper but you can still but the call spread for $34
So yes, people do read your posts
“buy” the call spread
I bought the call spread for $34 but trying to get $8.50 for the put 😉
I agree with that strategy, it’s a bit oversold. There was also a crazy spike higher yesterday.
That’s nice to know.
Pending Home Sales down 4% vs up 1% expected by Economorons.
Richmond Fed Prices Paid weakest since April 2021.
Phil, any rush to roll the LOVE Jan 20 2023 25.0 Puts from the Earnings Portfolio or do I need to be a patient grasshopper? 🤔
Well it does look like we’ll have to roll them but we’re doing it when we have to on expiration week. If they go higher, we win and if they go lower, then the puts we’re rolling to get more expensive too.
3,840 failed. 😥
I know I seem overly cautious but this is why:
Milan Reports 50% of Passengers on China Flights Have Covid
no herd immunity? maybe DeSantis was right after all
Lady on CNBC is currently saying there’s too much negativity out there.
phil / hedging
200 SQQQ 30 Jan 2024 (18.06) now 31.25
-400 SQQQ 80 Jan 2024 (17.04) now 16.37
When I sold 200 SQQQ 30 for $40, I added the following per your suggestion
500 SQQQ 40 Jan 2025 (21.25) now 30.87
500 SQQQ 90 Jan 2025 (29.15) now 21.70
I recently had an opportunity to buy back SQQQ 30 Jan 2024 for 18.5, I couldn’t get the fill and now it’s back up.
What should I do now?
Opportunities come and go so basically just don’t blow it next time though I’m not sure what you mean – do you mean BUY AGAIN 200 of the 2024 $30s? Were they really just $18.50?
I think your mix is fine unless the margin is a problem. You have 700 longs and those short calls are way out of the money. If anything, I would roll 100-200 of the short 2024 $80 calls at $16.37 to the short May $70 calls at $9.70. Those will expire faster and you can then resell more calls or be balanced – depending on how you feel in May. If the Nas falls, you can always re-roll them to 2024 as well.
Good talks about transitioning from Watch List to Short Puts and spreads in the Portfolios during the Webinar.
TSLA put sale update
2025 $50 puts volume is up to 857 and the $60 put volume is over 1000 ( $11.30 )
you never know , but the pricing leans to being sold
Well, this is about where I am ready to put my foot down.
Can Musk really screw up the company that badly?
phil, i am a little confused. tsla market cap is still 400B$. you don’t think it can trade for less than the enterprise value of toyota? or that since its a growthier company it should trade for a premium to toyota? you think its earnings are stable now?
ET I like the stock for the dividend and doing covered calls for another 10% but…
I noticed a trader sold 1800 July 2024 $17 puts for $6.10 . The pricing shows 6.10 bid, 6.20 mid and 6.30 ask
correction June 2024 – not July
ET results in a K2? Arent those onerous at tax time? Or not so bad….
It means you have to pay tax on money you make. Better than not making money to me. I guess if you do your own taxes it might be a hassle but if you have an accountant – it’s just another form you give him.
Yuch! Finishing at the lows.