Latest Positions with Ratings and Analysis

Here is a list of latest positions with updated commentary and ratings for each position.

You’ll note that I lowered the Revolution Investing Rating for several of our long positions by one notch. That shouldn’t be terribly surprising as you’ve seen me do some trimming and hedging in the last week as stock prices have continued their ascent.

I’ve broken the list into Longs and Shorts. And from there, I’ve broken down each list into refined categories in order from the largest positions within each category to the smallest. I also give each stock a current rating from 1 to 10, 1 being “Get out of this position now!” and 10 being “Sell the farm, I’ve found a perfect investment.”

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 (7)

• Primary stock exposure portfolio
  • Apple (7) – Over the last six weeks, Apple is up almost 25%. I’ve trimmed down some of my recent Apple additions to keep the stock at a reasonable level, and while I do think the stock will pullback 5-10% at some point soon, I fully expect to see this stock back to $130 or so by the end of the year, as I’ve been predicting for the last few months.
  • Facebook (7) – Facebook’s slowly but surely monetizing their 1.5 billion monthly users. Facebook is even more slowly but just as surely starting to monetize Instagram. Whatsapp is next. And Facebook’s Oculus Rift Virtual Reality platform has a lot of potential in coming years too. FB is supposedly looking for Oculus Rift revenues to grow from $0 last year, less than a $1BB in 2016 to $10BB in 2020. That’s a lofty goal, but one that also seems possible.
  • Google (7) – Do you own Google because they are starting to dominate mobile search as much as they do desktop search? Or for Android? Or for YouTube? Or for driverless cars? Google’s 15-20% topline growth and even stronger bottomline growth make this stock look cheap on the out years, as they could earn $70-80 per share in two or three years from now, up from $40 in 2016 which is up from just a couple dollars per share in annual earnings ten years ago.
  • F5 (7) – The stock has bounced back nicely in recent weeks, and is still trading rather cheaply at less than 12x next year’s earnings estimates. I continue to think F5 could be a potential acquisition target, but that’s not why I own it.
  • Sony (8) – Sony’s becoming a de facto way to invest in the Virtual Reality Revolution. And as the Sony PlayStation VR platform arrives for next Christmas, I think this stock could rally well into the $30s.
  • Amazon (6) – As I broke down about five or six Amazon boxes to dispose of again this weekend, as I do most every weekend, I thought to myself as I often have — what if Jeff Bezos had never created a de facto shopping center for the Internet. And when my wife orders six new shirts for our eight month old daughter or whatever else she shopped for on the nights she was up with the baby last week, at least we’re putting some of that money into our own pocket as shareholders, right? Frankly, I think Amazon is overextended here and could underperform for a year or two as the company’s fundamentals continue to grow and catch up with the stock. I’m likely to trim this one down again at some point soon.
  • Qualcomm (7) –  Qualcomm was in a huge rally mode along with some of our other large positions — until the “Apple’s going to start sending Intel some of the iPhone modem business” rumors kicked in full gear. Meanwhile, Intel’s mobile chip chief just left the company this week, which I don’t think would have happened if Intel were finally about to break through in the Apple iPhone modem business. Net/net, if Apple is actually giving Intel more than just a few scraps of the iPhone modem business, Qualcomm’s stock could drop another 15-20%. More likely, I think we’ll look back in six months and wonder why everybody thought Intel was suddenly going to knock Qualcomm of their mobile modem pedestal. 
  • First Solar (6) – I expect we’ll see First Solar earn over $4 per share this year, which gives the stock a P/E of 18. The fact that so many other solar companies are bogged down with too much debt means that First Solar will be able to pick among the carcasses of companies like SunEdison to become even more dominant in the solar industry.
  • Netflix (6) – Netflix is investing $6 billion in original content this year, and as Kheang Ly, the Scutify CEO who is based in Sydney Australia put it this week: . The biggest threat to Netflix dominance as a de facto standard in the App Revolution is whether or not they can continue to create great TV shows. The number of TV series and movies that Netflix offers is down 30% over the last three years because the company has basically bet the farm on original content. I might sell this stock down a little more.
  • Ambarella (7) –$AMBA is diversifying away from $GPRO as its primary customer and that’s a good thing. Taser and other leading wearable companies are using Ambarella chips. And Ambarella does still supply GoPro and if GoPro were to ever actually stage a major comeback, AMBA would be a low-beta way to be exposed to that GoPro recovery. I’m holding my $AMBA common stock steady for now.
  • FitBit (8) –$FIT shipped more than 1 million Fitbit Blaze and 1 million Fitbit Alta devices in the first month that they were available, which exceeded internal Fitbit sales forecasts. Based on a Mean Suggested Retail Price (MSRP) of $199.95 for the Fitbit Blaze and $129.95 for the Fitbit Alta, those shipment figures equate to approximately $330 million in total sales in only one month. Given that management’s guidance for Q1 2016’s sales was $420 to $440 million, and that sales of the Fitbit Alta and Blaze surpassed internal sales estimates, $FIT is certainly on track to surpass its initial guidance (and analysts’ consensus estimates for $432.7 million in sales) in Q1 2016 if one assumes that all else has gone well during the quarter.
  • Nvidia (8) – Nvidia has about $5 billion in cash offset a little bit by about $1.5 billion in debt. The company’s market cap is $17 billion and analysts expect another year of low single digit growth for the topline as it will take a few quarters still to get the VR and auto-car businesses up to scale and even a year or two more after that to go mainstream. The stock is trading at about 20x next year’s earnings on a P/E basis which goes down to about 18 when you include the $3.5 billion net cash (about $6 per share). We also get a 1.5% dividend yield to boot. Nvidia’s got to grow faster than single digits next year for this stock to work. But with the potential for 20-30% growth in the VR and Smart Car Revolution, I think the stock could double or triple from these current levels over the next five years.
  • Axogen (8) – The biggest threat to this company’s growing dominance in nerve reconstruction products is 3-D printing of human nerves. That’s still several years away from market at best though, and I think this remains an undiscovered Revolution Investment for us.

• Primary short portfolio
  • Pandora (7) – The company’s insiders had been hinting that Pandora could be sold to a larger company like Apple or Microsoft…and then they brought back the old CEO who founded the company in a sure sign that they’re not for sell any time soon. The stock is at new lows and I think it’s headed into the low single digits in coming months.
  • Spy (8) – Just a pure hedge against our overall net long and still bullish portfolio.
  • GW Pharmaceuticals (8) – The stock is down 30% since spiking above $90 per share a few weeks ago on a the announcement that their latest marijuana drug trial wasn’t a complete disaster. I think it’s headed back towards $50 in the next few months.
  • IBB Biotech ETF (8) – Just as I’d noted in the most recent Latest Positions before this one, IBB has been a good short hedge as its remained weak even as most of tech and the broader markets have bounced back strongly from their February lows. I’m holding it for now as I continue to expect more biotech/health-care pricing scrutiny from the government and a general repricing of these health-care related valuations.
  • SeaDrill (8) – The stock is down 40% since we bought these puts and I think it’s headed lower still as the company faces having to recapitalize this overleveraged offshore energy services company in a depressed energy market.
  • Valeant Pharmaceuticals (6) – *Tiny Position I’m not terribly surprised by any of the$VRX cockroaching headlines as I laid all this out in my original report when I shorted the stock five months ago. But I am still shocked that hedge fund giant Bill Ackman basically bet his career on this company when it was 8-10x today’s price.
  • Kandi Tech (*no rating, too hard to short, puts too expensive) –*Tiny Position I’m going to go ahead and sell my puts in this name as they are too illiquid to mess with any longer, even though I do think this stock is will be cut in half this year.

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.