Don’t game tax-loss selling, Where will Tesla be next Xmas, Virgin Galactic taking off and more

Hohoho, happy holidays! Before we get into it, here are a couple of Christmas picture of my daughters guaranteed to make you smile. If you ask Lyncoln what she wants for Christmas, she’ll sing the tooth front teeth song to you. She really wants presents though and she’s quite proud of her missing two front teeth.

And here’s the transcript from this week’s Live Q&A Chat, where we hit on a wide range of topics including where I’d buy more TSLA, how year-end tax-loss selling can affect our stocks and I also analyze the individual stocks you all asked me about — including X, TREE and OPRA.

Q. Hey, Cody – – all the best to you for a merry Christmas with the family, and of course for a great happy and 2020 in all ways! I have a simple, sort-of general, question for you. The subject is year-end selling (or perhaps buying) by the big boys, and how possibly we wrap our own activities around that. In this year’s crazy market – – ultimately crazy up – – and looking at at least a couple of our key stocks that have experienced “incidents” this year – – TSLA and BA – – is there any indicated pattern you might expect some of the funds to follow to lock in their position before year’s end for tax purposes? And what can/should we do about it. Or is it for us and what can/should we do about it. Or is it foolish for us to try to game things in that way? Thanks.

A. Some stocks that are down 30-50% or more from their highs (think CGC or other pot stocks or WORK and other IPOs for example), people/funds might sell some of those stocks down to lock in some losses against some of their recognized gains from their stock portfolios this year. Nibbling a little bit of some of your favorite names that are down big from their highs late in the year can sometimes work out well if/when the tax-loss selling pressure finally lets off into the new year. I’ve nibbled some WORK recently for example. But ultimately, as always, the fundamentals will need to justify any improvements in the stock into the new year and longer-term from there, and trying to game tax-loss selling is not something I really recommend.

Q. Hi Cody, what’s your feeling on the market for the next 3-6-9-12 months? What scenario do you see in 2020? Thanks in advance and I take this opportunity wish you and your family a happy Xmas and a 2020 full of health (to all other subscribers too).

A. Thanks and happy holidays backatcha. 3 months from now, I expect the markets will be about at these same levels after having seen a big rally or two and a big pullback or two. 6 months, I could see the markets up 3-5%. In nine months, maybe still around 5-8% up from these levels. And a year from now, the markets might be up 12-15%. Or they could fall 10-15% over any of those time frames if something messes up the financial system or if a war breaks out etc. Best to stick with stock picking, not market timing, IMHO.

Q. Merry TSLAmas to all!

A. Hohoho and to all a good Cybertruck!

Q. Cody – like you, we’re fans of Tesla. Although we have yet to pull the trigger and buy one as our ICE cars are running just fine. With China potentially becoming part of the Tesla story I’ve been digging to see if Tesla is insulated there. Low and behold there is a company called NIO (they seem to be the co that the the government has deed the winner, i.e. the one it invested in). I went to their website and the cars look great. Goldman and Credit Suisse cover them (see attached) but I’m always weary of Asia based analysts. Any thoughts? Is NIO a threat to Tesla in China? Is NIO a buy at $1.75….although if they need an equity raise the potential market reaction to dilution is not comforting. But it was at $10 back in March. Wishing you and the family a happy holiday season!

A. I know NIO, I think it’s a $0 unless the Chinese government bails it out.

Q. Hi Cody. I have a question: TSLA was my largest position with the run up and I’ve sold 1/2 of it over the last week or so. (Thank you for this big win!) Now TSLA is a medium sized position for me. What price would you consider adding TSLA? Not everything can go up in a straight line, I don’t think and I suspect there will be a time to buy more! Thanks.

A. I sold a lot less than 1/2 of my TSLA, but man, with the stock up 100%+ from its lows six months ago, I can see the logic in taking a chunk off here. I might look to buy more TSLA back near $350 or so. Mostly I suggest sitting tight on our TSLA shares here for the long-term.

Q. TSLA where is it at Christmas next year?

A. Maybe close to $500. Or maybe close to $350. Or somewhere in between. Really, the TSLA stock price pretty much all depends on how many Model 3s they sell around the world in the next 300 days. I’m obviously pretty confident that they can keep ramping up sales or I’d sell the stock.

Q. Hi Cody. I am trying to find your referral code to purchase a Tesla.

A. Sure, here you go. https://ts.la/cody39884. I’m still mad at two or three of my Trading With Cody subscribers who bought a Tesla without bothering to use the code! We both get cool stuff and free supercharging when people use the referral code. On the other hand, Tesla’s margins are a tiny bit higher if people don’t use the referral code, so there’s that. LOL

Q. Merry Christmas Cody and thanks for the Tesla Model 3 I just ordered. I promised some of my friends that if TSLA doubled, I would buy a Model 3. Merry Christmas and Happy Tesla new year to all.

A. That’s great and congrats! Several people have told me they basically bought their Tesla car with profits from TSLA stock.

Q. Congratulations on the SPCE recommendation! I’ve held it for a little over month and it is up 45% in that short time. With if trading around $11.25 this morning, is it still at an entry point for additional shares or do you think its better to wait for a potential pull back?

A. If Virgin Galactic is going to deliver on some of the visions the sellsiders are outlining, including freight transport at much faster and cheaper levels than traditional airplane fleets can do it — the stock can keep going much higher. It’s a small cap stock so it can be very volatile. I might suggest nibbling a little more here if you want to own more but leave yourself room to do another tranche in a few weeks in hopes it comes down a little bit for you.

Q. With SPCE, do you anticipate it will need to raise capital via selling additional shares in the future? Would you buy more if they do?

A. Probably. As for whether I’d participate in that secondary, I will have to see where the company is, what the valuation is, etc when/if that happens.

Q. Can FB and AMZN take out their all time highs this year or have they gotten too big/ full?

A. I think FB and AMZN might be ready to play catch up with AAPL, NVDA and GOOG. I like FB a lot below $200 and $AMZN near $1700. So the answer to your question is that yes, I think FB and AMZN can take out their all-time highs this year.

Q. Here is an interesting list of beaten down stocks that could rebound well in 2020. I am thinking DuPont might be a good company to put some money into.

A. Thanks, I think Dupont (DD) looks like the most attractive name in there too.

Q. TMUS has mostly stood still for several months awaiting the feds’ ruling in late Feb. Would you advise continuing to accumulate at these levels?

A. I’m a bit tired of holding T-Mobile because it hasn’t moved much, but you’re right that it’s probably because the markets want to make sure the Sprint merger gets approved. I’m pretty damn sure that the Republican Democrat Regime is going to do whatever their sponsors (in this case the giant wireless carriers), ask them to do, which is to approve this merger. That said, there’s no guarantee that the stock will go up after the deal gets approved. I continue to hold a small-to-medium sized position in TMUS.

Q. Prior to selling Dell in the portfolio, you showed some interest in VMW. It seems to have solid support around 150 and is below both the 50 and 200 day moving averages. Do you still have eyes on it?

A. Yes, I have eyes on VMW, but can’t get comfortable with their positioning for the next five years, so I stay sidelined on the name for now.

Q. I get that there is a lot affecting the metals but whats the deal with steel? and X specifically?

A. Steel is pretty much a commodity with little differentiation between company’s and country’s products. I don’t usually invest in commodity companies and usually I’d rather short steel companies than buy them. Tarriffs and the games with exemptions and all the crap that goes on makes steel a tough sector to invest in always.

Q. What do you think of Lendingtree- TREE. Thanks for all your insights.

A. TREE is an interesting company. 95% gross margins, growing double digits for many years and the stock is up 100x from its levels at the bottom in 2008. Trading at almost 30x next year earnings right now, it’s not cheap, but if you believe in the company, it’s not terribly overvalued either.

Q. Thoughts on Innovative Industrial Properties- IIPR?

A. “Innovative Industrial Properties, Inc. is a self-advised Maryland corporation focused on the acquisition, ownership and management of specialized properties leased to experienced, state-licensed operators for their regulated medical-use cannabis facilities.” Interesting to play the cannabis sector using real estate. 99% gross margins and growing the topline 150% per year…looks a little fishy to me, I have to say. IIPR is a small cap stock and I would also have to meet the management to believe in the model.

Q. Cody, any thoughts on OPRA?

A. I owned OPRA for a bit earlier this year, but sold it because I decided it wasn’t quite best of breed in the browser wars. I might revisit here though. The stock is trading at less than 20x next year’s earnings estimates and the gross margins of 80% are pretty good. The topline is growing 30% per year but earnings next year are only supposed to grow about 10%, so I’d need to figure out what’s going on with that before I’d buy some. But I can think of worse ideas than owning some OPRA.

Q. Cody Merry Christmas, amigo!

A. I have that same maroon Gibson Les Paul Studio they use in this song. Bought it at Grandma’s Music Center in Albuquerque almost 30 years ago. Still looks and sounds brand new. My wife’s niece in Austin is borrowing it right now. Here’s my favorite song of hers.