Trade Alert and Latest Positions: Analysis, ratings plus other ideas

Here is a list of my latest personal portfolio positions and most of the hedge fund positions with updated commentary and ratings for each position. Can I just say, sometimes I feel a lot of pressure to deliver. I do my best guys, but I will make mistakes and be wrong sometimes, of course.

A couple of notes first. I’ve actually been buying a few T-Mobile (stock ticker: TMUS) call options dated out into July and August, about 10% out-of-the-money recently. I’m also selling my UA entirely, taking our profits and our ball and going home from that stock.

I’ve broken the list into Longs and Shorts. I’ve further broken the list down in order of highest-rated to lowest-rated. Those ratings go from 1 to 10, 1 being “Get out of this position now!” and 10 being “Sell the farm, I’ve found a perfect investment.” The stocks that are bolded are those that I consider to be “core” holdings and am unlikely to ever sell out of them entirely.

Longs –

• Forever assets and other permanent holdings –
  • Media, hedge fund and other private investment/business holdings (9+ because betting on yourself and running a business is always a best bet)
  • Real estate, including the office I work out of, some land and the ranch I live on in NM (8)
  • Physical gold bullion & coins (8)
• (Driverless Revolution) –
  • TSLA Tesla (9) – Binary set up here. Over the next three to five years, TSLA is either likely going to drop in half from here or its likely going to go up 10-fold from here. I think the odds favor it going higher as the company rolls out semi’s and trucks and is presently rolling out to the masses full autonomous driving. The company plans to compete against Uber in robotaxis too.
  • UBER Uber (8) – Uber has been absolutely trashed as it came public and the IPO sold off 20% in the first two days. I’m not willing to call a bottom here, but I do think the risk/reward scenario is quite asymmetric here too. That is, over the next three to five years, UBER could drop in half from here or it could go up 5-fold fold. Tesla and Uber are not boring blue chip stocks, at least not yet!
• (Social Revolution)
  • FB Facebook (7) – Facebook’s in the unique position of having its stock sold off whenever there’s a headline how the company and its industry is going to be ever more heavily regulated, despite the fact that more regulations (as I’ve long explained) are actually good for FB since it makes it too expensive for potential competitors to start social network/messaging startups. A core holding since the stock for my personal portfolio since the stock was at $25 (now at $180), I’m sitting tight with it both personally and in the hedge fund.
  • TWTR Twitter (8) – Twitter’s been on fire since its blowout earnings report showed Wall Street that it might be underestimating the company’s earnings power and relevance. I think Twitter still has a lot of potential upside over the next five to ten years and is probably headed towards $50 this year.
  • SNAP Snap (7) – Snap’s an innovative company and while we built our position when the stock was much lower than today’s prices, I think there’s still more upside potential ahead. The company added games to its platform. Simply put, kids and adults alike would agree that Snap is the most fun and innovative social network app out there.
• (5G Revolution)
  • VZ Verizon (7) – The path to 5G dominance for Verizon’s clearly isn’t going to happen overnight. But Verizon is quite likely to dominate 5G services in the US for the next five years. If T-Mobile is allowed to acquire Sprint (which I do expect to happen), then the combined companies might actually become a viable 5G competitor to Verizon. I do expect that the merger will go through and if it does, Verizon’s stock will likely rally big as the stock market will celebrate the elimination of a 1 of 4 wireless services competitors in the US. I’d probably sell a good bit of Verizon holdings into that rally. I’ve actually been buying a few TMUS call options dated out into July and August, about 10% out-of-the-money recently, as I’d noted above.
  • QCOM Qualcomm (8) – Qualcomm’s one of my biggest winners this year and it’s still one of my favorite stocks here. The company is primed to be a leader in 5G chips for the next three years and analysts will have to be raising their estimates and the stock is trading at 12x this year’s earnings estimates. If you have call options that are up 2000% or more, you might want to trim some of them. But this stock still has very good asymmetric risk/reward scenarios here.
  • COMM (7) – The company is just getting about to start its integration with major acquisition Arris which closed  in April. The quarter was pretty bad for both companies, but I will give it a quarter or two to play out and used the recent sell-off to nibble a little.
• (Cloud Revolution)
  • Palo Alto Networks (8) – The best pureplay on cybersecurity and one of the best undiscovered plays on 5G. Palo Alto is one of my favorite stock picks for this year and for the next five years. The stock isn’t terribly cheap, trading at 7x next year’s sales estimates and 30x next year’s earnings estimates. But this is a very high margin business and the company’s margins and sales growth rate both accelerated last quarter.
  • DELL Dell (7) – When I started buying this stock and long-dated call options back when it was near $40 a share, I predicted that it could go to $80. Now with the stock at $65, I think it’s probably more of a trim than a strong buy here. One thing to realize is how just how correlated this stock trades with VMW, of which Dell owns about 80%. Complicated ownership structure here, which is partly why there was such a great opportunity to buy this stock and call options when it was trading at 6x earnings a few weeks ago.
  • SQ Square (8) – Square reported another strong quarter of revenue growth and if you pay attention, you see the company taking market share at the stores you visit both in the real world and online. It’s not cheap at 60x next year’s earnings, but with a 20-25% top line growth rate and a terrific recurring revenue model, I consider it a core holding at this time.
  • NVDA Nvidia (6) – Nvidia will report earnings tomorrow night. We do know that Nvidia’s chip sales to Tesla for the Full Self Driving computer are gone since Tesla started building their own chips. That said, the company’s chips are still in big demand for data centers, AI and other fast growing, Revolutionary sectors.
  • ZEN Zendesk (7) – I’ve nibbled this name a little bit more since starting the position earlier this year and am just holding tight for now. I like seeing cloud based companies making sure they offer integration with Zendesk’s products, helping make Zendesk’s platform a de facto standard in the industry. I wouldn’t be shocked to see Oracle or someone like that try to buy Zendesk at some point.
  • SPLK Splunk (7) – Splunk has one of the highest gross margins of any company I cover, at nearly 90% and the company is growing 20-25% topline per year. The company is becoming a major beneficiary of the Amazon Web Services (and also from Google’s and Microsoft’s cloud businesses too).
• (Energy Revolution)
  • SEDG SolarEdge (6) – After blowing up last quarter, the company blew out the estimates this quarter and the stock rallied big. I am a big believer in The Solar Energy Revolution and this is one of the best plays on it (Tesla and First Solar being the other best plays on solar).
• (China Middle Class Revolution)
  • JD JD.com (7) – Despite all the handwringing about China, The Great Trade War, and all that, JD reported another very strong earnings report last week and the stock is in rally mode. I’d been a buyer of this one in the mid $20s and I’d probably look to trim some of this one now and/or as it gets closer to $35 or so.
• (Defensive names)
  • CPB Campbell’s (7) – We had a 25-30% pop in Campbell’s since we bought it earlier this year. I don’t expect there’s another 25% upside this year but I plan on holding this food platform network with its nice dividend of nearly 4%.
  • Altria MO (7) – The best play on The Cannabis Revolution is likely Altria, which has already invested about $2 billion into a cannabis company called Cronos. Cronos, among other things, is focused on developing synthetic cannabinoids. More importantly, Altria has also invested billions into e-cigarette maker Juul, you can imagine one day they might be selling e-joints made with synthetic pot for very high margins.
  • GLD Gold ETF (7) – Gold, which has sold off in April as I write this letter, is one of the few asset classes that isn’t through the roof this year. I think gold is likely headed higher later this year and, more confidently, over the next 10,000 days.
• (The Trillion Dollar Basket)
  • GOOG/GOOGL Google (7) – In the prior Latest Positions update, I wrote this: “The company guided towards increased spending on cloud and data centers which didn’t impress Wall Street despite Google putting up great numbers last quarter. Sometimes I wonder if Android is Google’s most valuable asset, despite the fact that it doesn’t generate much revenue. Being the operating system on every Huawei and other Chinese smartphones means that Google, despite all the claims that Google’s not in China, is perhaps the most entrenched US company in China. Android runs billions of devices around the world. Google owns and controls the “open source code” of Android. I’m not sure how or when Google will ever directly monetize that unrivaled global ubiquity, but Android’s critical mass is truly unrivaled in this world’s history.” Since then, Google Alphabet reported another disappointing quarter and the stock has broken its range, technically speaking. Trading at 2ox next year’s recently reduced earnings estimates, and a recently guided down topline growth rate, the stock might be in no-man’s land.
  • AAPL Apple (7) – Last time I wrote: “Apple’s one of the best plays on 5G and nobody realizes it yet. In 2021, there will be enough 5G penetration along with the new apps and feature sets and services that 5G penetration will spawn that we’ll finally see a major upgrade cycle hit for the iPhone. Hundreds of millions of people will upgrade to the new 5G smartphones in 2021 and 2022 and Apple’s going to make a bunch of money on that. In the meantime, I’d buy more every time it gets hit by 5-10%.” Since I wrote that six weeks ago, the stock rallied some 40% and then pulled back more than 10% in the recent sell-off. I still think Apple is a core holding, but I don’t think it’s the best risk/reward scenario in the portfolio.
  • AMZN Amazon (7) – Prior: “Is Bezos distracted? Perhaps. Is there potential overhang from his pending divorce and the shares/control of Amazon his soon-to-be ex-wife might have as a result? Maybe. Is Amazon’s cloud service the gold standard of the cloud services industry for the next 5-10 years? Yes. Is Twitch one of the most under-rated, fastest growing and valuable assets under the Amazon umbrella? Heck yea. Is Amazon likely to be higher or lower than these levels ten years from now? Higher.” The stock’s up a bunch since then and it’s one of my largest positions, but I don’t think it’s a screaming buy at this level. Buffett/Berkshire Hathaway finally started buying some Amazon and I’d be willing to be that they’ll buy more every time it gets hit.

• (Other)
  • UA Under Armour (6) – I think it’s time to move on from Under Armour as the company just continues to fail to create any kind of innovative product. Consider this the Trade Alert that I’m selling UA.
  • AXGN Axogen (7) –Steady as she goes here. Axogen reported a strong quarter and even increased the size of their potential market. I’m holding a tiny position in the hedge fund in this name now too.
  • TST The Street (6) – We got a huge cash dividend from TST a few weeks ago and the market cap is now down to $37 million. I’m just holding it steady.
  • BA Boeing (7) – As a Trading With Cody subscriber put it the other day: “Gotta think BA is a good a lifelong hold as any other stock out there, no? Pretty much a duopoly. Now if there is another Max crash, all bets off.”

Shorts –

• Primary short portfolio
  • IBB Biotech ETF (7) – IBB’s been one of the best hedges we could have in the markets this year, but that could change in a heartbeat, I suppose. I do think medicine-related businesses will be under fire as the Republicans and Democrats who run for offices in the next elections will pretend that they’re going to do something about it. Closer to the election, if biotechs and hospitals and other healthcare industry stocks are getting crushed, there might be some good buying opportunities.
  • QQQ Nasdaq 100 ETF (6) – I’ve bought just a few QQQ puts and shorted a small amount of QQQ common to keep some hedge exposure on.
  • SMH Semiconductor ETF (6) – I’ve bought just a few SMH puts and shorted a small amount of SMH common to keep some hedge exposure on.
  • IWM Small Cap ETF (7) – I’ve bought just a few IWM puts and shorted a small amount of IWM common to keep some hedge exposure on.
  • EWU and EWUS British ETFs (6) – I’m mostly out of these short hedges, but still have a small short exposure in each.
  • Tiny short hedges, rated about a (7) – in EGHT, VHC, GLUU. I might cover these at any time and I’m not expecting to make much money on these shorts. They’re just hedges for the hedge fund and I’m not sure any of these are no-brainer shorts. Please don’t just go around blindly shorting these for your personal portfolio.

Cryptocurrencies/tokens –

• • • Bitcoin (7) – I bought bitcoin futures for the hedge fund when bitcoin was still below $4000 and am holding most of them steady.
    • Stellar Lumens (6) – I think it’s best not to group all cryptos together and that over time, each will trade on its merits and perceived/accepted values. That’s probably what’s happening right now with Bitcoin.
    • Ethereum (6) – I think it’s best not to group all cryptos together and that over time, each will trade on its merits and perceived/accepted values. That’s probably what’s happening right now with Bitcoin.
    • Ripple (6) – I think it’s best not to group all cryptos together and that over time, each will trade on its merits and perceived/accepted values. That’s probably what’s happening right now with Bitcoin.

Disclosure: At the time of publication, the firm in which Mr. Willard is a partner and/or Mr. Willard had positions in some of the positions mentioned above although positions can change at any time and without notice.

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.