As we reach 2017's later stages, much of the muddy water that's clouded our market vision this year has cleared to the point where it's easier to see the landscape. So, how should we play things this month?
Many of you know that I've been bullish for quite some time -- years even. I felt fine being optimistic when almost everyone else was sounding alarm bells. But now that so much of the street has joined me in the optimism camp, I'm starting to feel like I'm doing something wrong. What am I missing?
As we sail from one month with a troubled history (September) into another (October), I expect trouble to pop up somewhere -- but volatility shouldn't scare us. We should just slow this game down for the home-gamers who aren't Wall Street professionals and try to share an understanding of what's at risk.
So let's dig in, gang. This is where I've been the most active since I last laid out my market moves heading into September:
Man, did I miss out on buying these stocks back when they were cheap.
Fortunately, because prudent investors do stay diversified, I stayed long Citigroup (C) based on valuation and international exposure. I also remained long KeyCorp (KEY) because I think the firm could be a winner among regional banks down the road. I did lighten up on my KEY holdings, though.
Lastly, I'm looking to add Bank of America (BAC) on weakness, although I don't currently own the stock.
I'm still long on "The Mouse" -- Walt Disney Co. (DIS) -- but I don't own a share that doesn't have an option written against it. I'm basically stuck in neutral on that one.
I'm also long an initial tranche of Hasbro (HAS) that I discussed last month. I bought about a fifth of a position there and got run over, but I haven't bought more so far.
Elsewhere in the sector, I think General Electric (GE) will be a "sleeper hit" for me. I bought it right around current prices, but new CEO John Flannery is streamlining the firm. GE pays a nice dividend, and they have a ton of money stashed overseas for a non-tech company. I think all of that adds up to the stock going to $28 from Friday's close at $24.18. That's where I'll sell it.
North Korea's threat against human civilization isn't going away anytime soon, and anyone who reads my columns knows that I love Kratos Defense (KTOS) .
I'm still pounding the table for KTOS, as these guys are the elite in the drone space. I am also still long Lockheed Martin (LMT) and Raytheon (RTN). All three of these stocks have outperformed my portfolio by a longshot.
That said, I did recently add one other name in the defense sector -- II-VI Corp (IIVI) . This is a laser/precision optical firm but isn't a pure defense play, as IIVI also sells medical and commercial applications.
Talk about a turnaround! Energy's drag on my book is dragging no more.
My favorite energy name is still Apache Corp. (APA) . Even though second-quarter earnings were a huge disappointment, I still like APA based on the company's potential and its massive holdings in the West Texas Alpine High energy field. I ended up having to buy more Apache than I should have, but I'm in the green as long as the stock stays in the mid-to high-$40s. (APA closed Friday at $45.80.)
Meanwhile, Schlumberger (SLB) -- which for my money is the best-in-class oil-services name -- is starting to show some life. Valero (VLO) is also one of my holdings in this group given how it rode out Hurricane Harvey.
Lastly, I bought Sanchez Energy (SN) on speculation. Sanchez is a name that I dabble in from time to time just to trade the momentum. I don't get myself into a jam over the stock.
I hate to say this when many people are still suffering the effects of Hurricanes Harvey and Irma, but it was obvious that certain firms would do well in the rebuilding that's following these storms.
I previously went long on home-improvement retailer Home Depot (HD) , and I moved into building-supply makers Owens-Corning (OC) and Weyerhaeuser (WY) immediately following Hurricane Harvey. As noted above, I also bought oil-refinery play Valero, and I added United Rentals (URI) shortly after Harvey hit.
All five of these stocks have been an absolute gift. I've since rung the cash register on WY, but I remain long the other four names.
Both have made significant moves to differentiate themselves from the rest of retail -- and both have performed superbly for me.
I rang the register and recently sold my shares of Nvidia (NVDA) , but I still love the company. I'll buy it back on a serious dip, but discipline demanded that I sell.
Elsewhere in tech, I'm long Intel (INTC) , Activision Blizzard (ATVI) and my new all-time-favorite stock, Lam Research (LRCX). I'm also long Seagate Technology (STX) for the dividend, although that's been a poor decision in retrospect.
Oracle (ORCL) has also been very good to me in the past, but I got caught on some puts that I wrote against the stock going into the company's earnings release. However, I decided that I needed some cloud exposure anyway, so I let the shares get "put" to me, then bought some more right around current prices. (ORCL closed Friday at $48.35.) I'm down a little on the position, but I think it's kind of like recovering a fumble on the one-yard line.
I sold my shares of Southwest Airlines (LUV) at a nice profit and I'm now flat the airlines -- but that doesn't mean I dislike transports.
You give me a U.S. tax-reform plan and I'll give you growth, and you give me growth and I'll show you higher stock prices for railroads and delivery services. That's why I recently rolled into CSX Corp. (CSX) . ("Rolled in" -- get it?) CSX is a name that's done me well in the past.
I'd also like to add FedEx (FDX) but the stock carries too high of a price tag right now (kind of the same problem with Boeing). However, I'll buy some FDX in early October if I see some weakness in the name.
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