Latest Positions: Surprise, surprise, so you rub your eyes

Surprise, surprise, So you rub your eyes, Never knew UDS so cool as ice.

Five souls play the head role, Excite the middle between the two poles,
The globe rotates from new to old.  – Urban Dance Squad

I’ve bought three new stocks lately, Intel, Verizon and Snap, and it seems I’ve been surprising you guys with our new stock picks, based on the reactions I’ve been getting. It’s not ever advisable to be contrarian just being being contrarian’s sake, but I do like it when the timing, markets, prices and analysis come together to be “surprising.” I added two “old” tech names that are likely to become “revolutionary” again and one new name. As Urban Dance Squad once sang, the globe (and stock markets) rotates from new to old.

So here’s the list:

Longs –

• Forever assets and other permanent holdings –
  • Media and other private investment/business holdings (9+ because betting on yourself and running a business is always a best bet)
  • Real estate, including land and the ranch I live on in NM (8)
  • Physical gold bullion & coins (8)

• Primary stock exposure portfolio
  • Apple (8) – I’d mentioned on a recent Trading With Cody conference call, that I thought Apple could hit $150 before this year was over. Well, it didn’t take but a month for Apple to hit $150. Is it a buy now? Probably, certainly if you don’t own any Apple stock already or if you just a tiny position. Apple’s dividend yield is 1.65% which isn’t huge, but should be noted. Apple’s move in 2018 will be mostly based upon how well the iPhone X sells. If the iPhone X sells well, the stock is likely to top $175 next year. If the iPhone X sells extremely well, the stock will likely top $200 next year. And if the iPhone X bombs — we’re looking at $140 or so next year. I’d bet on the iPhone X selling like hotcakes and that $200 is likely next year.
  • Facebook (7) – Facebook’s gone and got itself in a bit of trouble with the government for the ad buying by the Russians looking to influence last year’s election and for the ability to target hate groups with your ads and other things that come along with being the most powerful and extensive network in the history of mankind — even as the company just became a teenager. Facebook’s stock would probably be worth half as much as it currently is if they hadn’t stolen Instagram for a billion dollars back a few years ago. Instagram has become a juggernaut unto its own and is every bit as popular as Snapchat is amongst US high schoolers and college kids. Meanwhile, Instagram has more users in just Europe than Snapchat’s entire global user base. Anyway, I think Facebook could struggle for a while and could even hit $150 before year end. Next year, nobody will remember these advertising controversies at Facebook and the stock will depend on how quickly Instagram can grow and how quickly Whatsapp can be monetized. Maybe $200 next year for Facebook if the company delivers another dominant year of growth.
  • Google (7) –I listened to George Gilder talk at the Money Show in Dallas and one of the points he made was that the idea of cordoning off part of the Internet and trying to control the end-user is a loser’s game over time. He’s right, of course, and I’ve written many times over the years about how “The end game of the Internet is total empowerment of the end-user.” and/or see: Cody Willard: Embrace the ‘revolutionomics’ of the internet. I’ve written about how Google used to be an open conduit and was content-source agnostic, but it has become decidedly more closed and focused on its own ad sites over the years. Something to think about for the long-term and I will be pondering and applying that analysis to Google in coming years. Now all that said, I wouldn’t be surprised to see Google pull back to below $900 before it’s next higher-high leg higher. That said, I also wouldn’t be surprised to see Google rally to $1100 sometime next year whether it pulls back to $900 first or not. In years past when the stock’s been hit hard, I’ve nibbled call options on Google to much success as long-time Trading With Cody subscribers remember. Meanwhile, did you know that Google is going to surpass $100 billion in annual revenue this year and is still likely to grow that number more than 20% next year.
  • Amazon (8) – Amazon’s become a conglomerate hasn’t it? Fifteen years ago, you were buying an online retail company and betting that they’d figure out how to get profitable one day on retail’s tiny operating margins. Now you’ve investing in the one of the world’s largest retailers, one of the world’s most successful cloud companies, one of the world’s leading artificial intelligence companies and the increasingly de facto standard Voice Revolution platform. I’d buy more below $900 if I get the chance, but am sitting tight on my investment in this name for years to come otherwise.
  • Nvidia (7) – After my speeches at The MoneyShow, I was swamped by people in the crowd with more questions. That always happens. But what was different this time was that most of the questions, probably 7 out of the 10 questions I heard as I walked, were about Nvidia. “Is it a great company?” “Should I buy Nvidia?” “Can we hold Nvidia forever?” Look, Nvidia bet their technology road maps and billions of dollars on trends that are now exploding, from AI to driverless cars to virtual reality gaming — that’s why the stock is up 500% since we bought it 18 months ago. But much of that is now priced in and there’s a lot more risk of headline shocks and/or downside potential if the company doesn’t keep upping estimates and beating the Street. So, I’d rather trim than buy Nvidia here but if you don’t own any, maybe get started with just a small position of maybe 1/5 of what you might consider to be a full-sized position.
  • Sony (7) – Sony come down a little bit of late in large part because the dollar has been so weak versus most other developed countries currencies including Japan. And remember that Sony makes a lot more money when they can sell their products while the yen is weak instead of strong like it has been like. Anyway, with the image processing business booming and the company’s valuable content library still in high demand, I think there’s potential this stock could see $50 in the next year or so.
  • Axogen (7) – Axogen is still a small cap, though it’s up 400% from where we bought it a couple years ago. Demand for the company’s industry-leading nerve repair products is in steady growth mode. I recently trimmed yet a few more shares of this one, but am holding the rest of my shares steady.
  • Ambarella (6) – Once Ambarella’s largest (and worst) customer, GoPro, just got rid of Ambarella in Hero 6 model. DJI, the largest consumer drone maker, didn’t use Ambarella chips in its latest budget drone. For the foreseeable future, all eyes should be on Ambarella’s new computer vision chip, named CV1. Their new chip is targeted for self-driving cars and other high demand visual-dependent markets. I’m going to ride this stock, which is double from where we bought it a few years ago but down a bunch from its all-time highs for another couple quarters though I expect the stock could get hit as the next two quarters are likely to be down year over year on revenue.
  • First Solar (7) – Will the Trump administration give more or less welfare subsidies to the solar industry than the prior administration or won’t it? As usual, such headlines are noise at worst and nuance at best — the solar industry remains the most likely mid- to long-term low-cost solution to much of the world’s energy needs. First Solar is the best capitalized and best run solar company in the US. Still holding this steady even as its up something like triple from where we first bought it.
  • Lion’s Gate (6) – New highs for this stock recently but I’m wondering if we’re getting a bit late in the Golden Age of Great TV Content cycle. That is, how many more shows can Amazon, Hulu, Netflix, the old cable companies and the even older TV networks possible put out in the market place and hope to make money? Netflix will be okay and so too with Amazon, I suppose but spending on TV shows is likely peaking soon and this might be another name to sell sooner rather than later.
  • Twitter (6) – I’m sick of looking at this stock on my sheets. In fact, I considered selling it when I bought Snap last week and I still might sell it as I have plenty of exposure to the social media industry with my Facebook and now with a small Snap position too.
  • Impinj (8) –In order to establish itself as the de facto standard in RFID technology’s in the marketplace, Impinj has a lot of work ahead of it, will need some luck and will need some big time wins over the next two to three years. We should be able to see some signs that it is becoming the de facto standard RFID solution in the marketplace over the next 12 to 18 months. Steady as she goes for now.
  • SolarEdge (7) – Solar Edge has been winning big deals, including this one with LG which will prepackage SolarEdge’s power optimizers with LG solar modules. And estimates have been on the rise, with the consensus for this year at nearly $2 from about $1.70 a few months ago. Holding this steady for now, but I will probably trim some of this name soon to lock in some profits which I’ve been patient about doing on this name even as it’s more than doubled from our purchase price a few weeks ago.
  • Palo Alto Networks (8) – The stock popped a good 10% in one day a few weeks ago after it reported a strong quarter and has hung around these levels since then. I have two words for you in regards to this stock though: Equi. Fax. Cybersecurity spending budgets at major enterprise that has any serious web business just went up yet again. This is my favorite cybersecurity company.
  • Intel (8) – Intel had been left for dead for the last few years but has had a nice pop since we added it to the portfolio a few weeks ago. Over the last couple years before we bought the stock, Intel bet nearly 1/3 of their equity/market cap and billions of dollars cash on buying IoT and self-driving vehicle platforms and now we can ride the upside if they deliver.
  • Verizon (8) – When I told a few hedge fund buddies of mine that I was about to start buying the best play on 5G they wanted to know what it is. When I told them Friday that I’d started buying Verizon, they each went off on a variation of: “Huh? Wha? Say Wah? I mean, did you say Verizon? As in VZ?” I like that, as I still remember some of those same hedge buddies of mine said the same thing when I bought Apple at a split-adjusted $1 per share back in March 2003. Anyway, I’ve just started buying this stock and have a 1/3 tranche of a position built up for now.
  • Snap (8) – Snap is creating new ways for us to interact/read/consume content. More important to us as investors though, I see Snap creating new ways for giant consumer companies like Pepsi, Doritos, Taco Bell, WSJ, NYTimes, etc to advertise and connect with customers. I think Wall Street is underestimating both Snap’s potential user growth and especially under estimating their potential revenue growth. Fair question tho, and always am concerned any time I risk my money on a stock!
  • The Street (7) – The stock’s been popping lately but remember that this is an illiquid small cap and it can rally on little buying pressure and get hit hard on little selling pressure. If the company can kick of a few million of cash flow from the $60 million topline they’re running at and/or grow that topline a little bit, the stock could double from here. If they fail to do so, the stock could end up right back near the 80 cents a share it was trading at a few months ago.
• Primary short portfolio
  • Pandora (8) – Pandora radio sucks. Their subscription product is worse. And the company’s trying to compete against Google, Amazon, Apple and Spotify. I remain short even when the stock hits new lows.
  • Biotech ETF IBB (7) – Biotech and health care companies continue to print cash and I think my timing on this hedge is probably not terrific right now.
  • SouthKorean ETF EWY (6) – I think the EWY and the South Korean stock market could get hit 10-15% in a hurry if there’s ever a downturn in the global stock markets. That’s a big “if” these days, for the last couple years, though, huh? Holding this short steady still…for now….still…for now. Sigh.
  • Herbalife (6) – The company’s buying back a bunch of shares and, some might say, playing accounting games and employing in financial gimmicks to keep shareholders happy. Maybe that’s a little harsh, as the stock did pop 11% on Friday and I’ve now got a loss on the position. It’s been a good hedge relative to our many longs that are up huge while this one’s barely budged for the last year or so while we’ve been short. But I’m not happy about seeing it pop on Friday.
  • IWM (7) – Big rally in the IWM of late and I might put a few more shares on this short as a hedge in the next few days.

Remember: I wouldn’t rush into a full position all at once in any of these stocks or any other position you’ll ever buy. Patience and allowing the market and time to work to your advantage by buying in tranches is key. Maybe 1/3 or 1/5 of whatever you  might consider to be a “full position” in any particular stock. And I wouldn’t ever have more than 5-15% of your portfolio in any one stock position at any given time. The younger you are and/or the higher the trajectory of your career income, the more concentrated and risk-taking you can be with weighting in your portfolio. But spread your purchases and your risk out over time and over a several positions no matter your age or risk-averse level.

Scaling into a position using an approach of buying 1/3 or 1/5 tranches over time is how I build my personal portfolio positions, but there’s no scientific way to go about investing and trading. Sometimes you have to pay up for the latest tranche but I try to be patient and wait for a temporary sell-off to add to the existing position.

** NOTE FOR NEW SUBSCRIBERS:

If you’re new to TradingWithCody or if you’ve been a subscriber for a while but haven’t acted on much of my strategies yet and/or if you haven’t been in the markets, but you’re sick of getting 0% on your CDs, Treasuries, savings, checking, etc while the markets have been continually hitting all-time highs this year, what should you do now?

Before you ever make any trade, step back and catch your breath before moving any money anywhere. Rank your positions and your whole portfolio and make sure you’re not about to make any emotional moves with your money.

If you haven’t yet read “Everything You Need to Know About Investing” then spend a couple hours doing so, please. It’s a quick read but chock-full of important ideas, concepts and strategies that amateurs and pros alike should understand.

Then, take a look at my own personal portfolio’s Latest Positions and slowly start to scale into some of the ones you like best and/or the ones I have rated highest right now. I’d look to start scaling into a few of the many stocks in the Latest Positions that are at all-time highs along with a couple that we’ve recently featured in our Trade Alerts that I’ve personally been scaling into.

You can find an archive of Trade Alerts here.