Cody Kiss & Tell: Time to trim?, markets at year-end, portfolio performers
Here’s the transcript to this week’s Live Q&A Chat. You can also find me most of time during the trading day in the Trading With Cody chat room.
Q. How is Amaris doing? Are you getting enough sleep to handle this market?
A. Amaris is doing better all the time, gaining weight, growing taller, getting responsive to tickles and kisses. I don’t get as much sleep as I probably should be — usually 3-4 hours of sleep on the nights I watch the baby and 5-6 hours of sleep most other nights with an 8 hour night of sleep mixed in there occasionally once a week or so two when I stay by myself or with Lyncoln at our ranch house. I’m not complaining though, because I get more sleep than my wife and her mother and father are getting and I have never needed more than 5-6 hours of sleep most nights to get by just fine. Thanks for asking!
Q. What you think the market will do into year-end? I’m betting it is going down in December with Fed rate hike and then rally into New Year.
A. I got increasingly bullish and long as the stock markets were selling off in panicky dislocations back in August and remained very bullish and got longer in September as stocks slowly climbed back higher. I still think the path of least resistance for the market is higher into year-end and I’ve seen many a short/bear get killed trying to game the Fed’s next rate hike, which I’ve long explained is likely a bullish event anyway. Stocks tend to climb when the Fed is in a tightening phase ala 1996-1999 and 2003-2008. Good luck my friend!
Q. We have a lot of stocks in the green and doing reasonably well after October gains. Do you feel it would be an appropriate time to trim across the board?
A. I don’t know about trimming “across the board” but as you’ve seen lately, I’m personally trimming back a lot of my own longs and reducing my short exposure a bit too after our huge wins in $Pand $VRX.
Q. The reason I’m less bullish on the market is that most consumers will be shocked to learn that their health premium will go up 20 to 50% next year. There is less money to go around this Christmas.
A. Health care costs are indeed through the roof for most people who don’t work at major corporations. I tend to think the continued growth and underlying strength in the corporate earnings economy and the slowly improving Main Street economy will more than make up for that though.
Q. Of all our stocks in the portfolio, which one you would think be the best performer in next 12 months? I’m thinking $AMZN.
A. Wow, $AMZN is up so much already in the last year, five years and fifteen years that I don’t know if I would bet on it being the “single best performing stock in our portfolio for the next twelve months.” It might very well be a beaten down name that rebounds instead, say maybe $WFMor $AMBA or it could be any of our names, really. That’s why we own more than just one stock! 🙂
Q. Do you buy at all into Scott Rothbart’s thesis on Chipotle $CMG–possibly oversold on the latest E-Coli crisis and recent poor performance due to Carnitas situation now resolved? “History has taught us that well managed companies bounce back from such food chain related prob- lems. Some such examples are: the 2003 Mad Cow scare for McDonald’s (MCD) and Yum Brand’s (YUM) Taco Bell multistate E. coli breakout in 2006. In the long run, those companies overcame the short term problems and went on to greater heights. In my opinion, CMG will do just the same. While the stock could decline closer to $600, I believe that this is a good place to start buying CMG. I would also add that CMG is reintroducing its pork Carnitas onto the menu after voluntarily pulling that popular product earlier this year due to its suppliers not meeting the company’s animal welfare standards. Pulling that product may have been a cause for the company’s recent same store sales declines. All told, CMG is closer to a bottom than a top.”
How do you feel about $CMG at this level. I have seen it hit near 600 three times in the past two years and each time it was a great buying opportunity that I passed on. Here we are again partly due to an eboli scare and earnings that were a little shy of estimates. Would you nibble?
Good question, one I am interested in too. I have been in $CMG in the past, but have been glad to be out lately. Your thoughts, Cody?
A. I’m not much of a bull on $CMGas I prefer real Mexican food and small local restaurants, but if I were a $CMGbull, I wouldn’t change that stance because of the recent e Coli scare at a few Chipotle restaurants. So yeah, I essentially agree with Scott on that analysis. Hmm, on a contrarian note, all these questions you guys are asking are bullish in their underlying nature and that’s probably bearish for the stock! 🙂
Q. Do you have a target in mind relative to WFM?
A. I don’t put a “target” on most of my stocks per se, as I want to be more flexible than that in my thinking and analysis. I do think we could get a double or triple out of $WFMover the next five years if the company delivers.
Q. Your most recent comments on $AMBA:”Ambarella (9) –I’m looking nibble some more AMBA soon and I might even add some longer-dated call options to get some more upside exposure. The stock is down 60% from its all-time highs set this summer. With a forward P/E of 14 and a forward enterprise value to earnings ratio of just $2.50 when you include the $7 per share net cash, the stock is very cheap for the kind of growth it might deliver. If it can deliver on those growth estimates.” Given this, do you think that $AMBAis worth any more of our hard earned capital at present, or stand pat?
A. I would look to nibble $AMBAback near $50where it was when I wrote that but I’m not in a rush to force more into the portfolio unless we get that discounted price
Q. Thoughts on Dycom Industries ($DY)?
A. I owned $DYfor a few years back a decade ago when I ran my hedge fund. The company’s growing nicely on the topline at 10-20% per year and EPS growing even faster. Stock isn’t cheap at 25x next year’s earnings, but it’s a good company so I’d rather be long it than short it but I have no position in it personally.
Q. Any thoughts on Disney ($DIS)?
A. $DIS feels a bit crowded on the long side to me. I’d rather wait til the next time it’s hated for some reason or when it gets trashed in a broader market sell-off before initiating any long on $DIS. Lots of Star Wars fans and momentum traders getting long $DISin front of the new Star Wars movie release this winter. It could be a set-up for a sell-the-news reaction when the movie finally hits theaters, even as it will be one of if not the single largest blockbuster of all time.
Q. $EMES just did a 50% reversal now up 20% on the day. I just sold my remaining shares here in $EMESfor some nice gains and plan to wait this one out. What are the primary headwinds you see in energy and for what duration? Your reluctance in energy is one factor that has me hesitant to initiate anything more in energy at this time. I am mostly cash here now.
A. I just wrote this earlier today: “So can you trust the next leg higher in gold or oil or any other commodity? Simply put, I don’t think it’s a good idea to worry about trusting the next move in oil or gold or any other commodity as I’ve been explaining all year. While most every other investor/pundit and trader has tried to nail a bottom in the energy sector and energy stocks, we’ve been riding our Revolution Investing strategy to new highs as a Trading With Cody subscriber reminded me yesterday.” https://twc.scutify.com/articl…
Q. Netflix is at $113. Is there an opportunity to add on and at what target price?
A. You can always get started on any single position with a small tranche trade of maybe 1/5th of a full position. $NFLXis on a tear of late and I wouldn’t just chase it right now other than in that kind of a tranche scale in approach.
Okay, I’m wrapping this Q&A Chat up now. See you guys in here for regular chat most any week day from now on.
