Q: What are your thoughts on amazon and influx? There has been a Lively conversation this morning about both companies/stocks.
A: I’ve long been bullish on $AMZN and $NFLX as two of the purest plays on the App Revolution. I often cringe when I see the $NFLX stock though, since I didn’t own it for this huge run over the last five years despite writing about it and citing it bullishly over and over. $AMZN I’ve owned in the past and will probably own again at some point.
Q: Here’s an emailed question: “I am invested in TWTR and appreciate your rating it a “9” in your list of equities to own. If you were buying long dated calls, what would you suggest? I followed your advice months ago buying GOOG Call, which you already sold, and I am contemplating selling in order to buy the TWTR Long dated LEAPS because even if the GOOG Calls end in-the-money, I’d need to borrow cash to buy the underlying stock. Thank you for your consistent, strong minded leadership!”
A: My theory is that $TWTR has a huge future ahead of it as a Big Data pureplay, a Wearables Streaming Video pureplay (via the Periscope app that Twitter owns), and the Twitter platform will continue to disrupt the mainstream news industry. I might add some longer-dated call options, maybe in the $40-45 strike price range at some point, but I’m not in a rush. Good luck!
Q: What are your thoughts on Disney? They seem to be firing on all cylinders. I heard at 90, 100 and now around 110 that they have gone to high. I have 2016 leaps that are all in the money. Do I stay the course?
A: $DIS is indeed hitting on all cylinders — here’s a sellside note explaining that: “We reiterate our Overweight rating on DIS as we expect the drivers of the stock’s multi-year outperformance will continue led by ongoing content releases across the Studio, Consumer Products, and the Parks. At the Media Networks we expect accelerated earnings from ESPN as rights step-ups are circled in F2016, as well as at broadcasting with retrans pacing ahead, improved ratings at ABC, and the upcoming presidential elections benefiting the O&O networks. We believe DIS can maintain an EPS growth rate profile in the mid teens looking ahead, supported by its leading content portfolio and unrivaled ability to monetize its IP globally across its businesses (in particular Consumer Products), in our view. Disney’s consistent ability to beat estimates, including six consecutive “beat and raise” reports, also adds to our confidence in the outlook. Longer-term we view Shanghai Disneyland as a meaningful next leg up in Parks earnings, as well as Avatar Land and added incorporation of Star Wars, Frozen and other properties. We also view Disney’s first retail store opening in China as yet another notable step forward as we expect the region to be a long-term growth driver.”
Q: What is your thought for YNDX?
A: Nothing new with $YNDX. Like I said last week, I sorta have a soft, mental stop loss below $17 but for now I’m riding it. Quite volatile lately.
A: I’m not a fan of selling covered calls or otherwise shorting options. I’d rather own call options on $AMBA than sell them. The quarterly earnings report last night was HUGE: “Revs came in $71MM (vs. the St $67.3MM). GMs 64.8% (vs. the St 63.3%). EPS 0.71 (vs. the St 0.59). For FQ2 they see revs $79-83MM (vs. the St $68./4MM) and GMs 63.5-65% (vs. the St 61.9%). ” EVERY single metric from topline to bottom line to margins was better than any analyst had modeled and so was the guidance.
Q: Why do you feel the markets have been sideways for nearly 7 months in a tight range? Is the market awaiting the first FED rate hike or other?
A: Seven months of mostly sideways action doesn’t seem out of the ordinary even in a very strong bull market. The markets are up 2-300% in the last six years; so some breath catching is probably bullish overall.
Q: Hi there, Cody. Feel better. When you say “longer dated call options: for TWTR, what’s your definition on that date?
A: When I say “Longer-dated options” I’m generally talking options that wouldn’t expire for at least a year, maybe closer to 18 months or even two years out if the market makers are offering them.
Q: And on AMBA, I held off on trimming anything before ER (based on your advice, I think) because I had only a, say, one-fourth, first tranche. Glad I did, of course, but my question is: since I still don’t want to trim any profits (not huge bucks), what kind of a dip would I look for to buy a second tranche? (Already got an opinion from Elad; this is a test!) So . . . re TWTR, with that kind of time frame (a year to 18 months on calls, if they exist), what makes you hesitate to get in there now? Premium on price?
A: Sometimes you have to pay up for your next tranche in a stock that’s just on fire and growing as fast as $AMBA is. I wouldn’t want to chase, but even on the next down day I might consider adding a second tranche if I didn’t own enough $AMBA. At some point in the next few weeks or months or years, I’m sure $AMBA will get hit 20% or more at some point and we’ll have to be ready to take advantage of such a pitch if/when it comes. No scientific answer for you on this one, but one of art. 🙂
Q: Apple has been basing around 130 for quite some time now. I view that as positive and would generally view that as a chance to get in again before another leg up. I have held Apple stock long term but do enjoy buying calls around pullbacks or consolidations. Do you feel this would be a good time to do just that with Apple? 130 seems to be a pretty good base.
A: Tough to game a near-term $AAPL move without a clear catalyst for the stock ahead or something. I do think $AAPL is headed to being the first trillion-dollar company, as I’ve been predicting since it was a $100BB company. At its current $700BB plus market cap, that’s only 30% more or so to get there. The timing is the question. We discussed earlier how the sideways consolidation in the broader stock markets is probably health and same with $AAPL consolidating near $130. But I’d rather just own the $AAPL common stock for now and not try to game the next move’s timing with call options.
Q: January ’17 calls on $40 TWTR, something under $7.00. I can risk a bit, but don’t want to be foolish. Whaddya say?
A: I can only tell you when I pull the trigger, I can’t advise you in such detail on whether a trade that I’m not making and haven’t done detailed homework on the costs, risks, potential rewards makes sense for you or not. I’m not buying any $TWTR calls yet and I might not be buying $TWTR call options, longer-dated or otherwise, anytime soon. 🙂
Q: WFM is down more than 15%. Why haven’t you considered on adding another tranche?
Q: although I know you still believe in WFM, as their competition grows (sections in Costco, etc., as you’ve commented on), why wouldn’t you consider adding on $WWAV or other supplier(s) to the organic retailers to the WFM position as an ” insurance” investment?
Q: What do you think about this IDTI reg more than doubling their market in the next 2 years?
A: I’ve highlighted $IDTI in some of my books and I like the company and it’s in a growth industry: “Integrated Device Technology, Inc. designs, develops, manufactures, and markets a range of semiconductor solutions for the communications, computing, and consumer industries worldwide.” Now that I’ve sold my $INTC I might take a fresh look at some of these other chip stocks. Let you know if and when I add a new name like $IDTI to my portfolio, of course.
A: The most important part of rates in relation to the stock market is probably the speed with which it moves, not the direction itself. If a major spike in rates hits, stocks will likely sell-off, at least in the near-term. But I do expect the markets themselves will make the cost of capital rise in the next few months and years and that rates will creep higher with or without the FED itself “raising rates.” And early in a slow moving higher rate environment would probably be very bullish for stocks.