Market bouncing around, gotta pick stocks
Our belief is that you have to be a stock picker today. The Nasdaq (QQQ) is up 8% this year and Dow Jones Industrial Average (DIA) is down 1%. We’ve made a couple stock picks over the last 6 weeks, so let’s take a look back at how each has performed since their selection:
|Stock||Closing Price on Day of Selection||Price as of 11A.M. on 5/31
|Alibaba Group Holding Ltd. (BABA) [Paired with JD.com in post]||$173.90 (4/26)||$197.88||13.8%|
|JD.Com Inc. (JD) [Paired with BABA in post]||$36.50 (4/26)||$35.49||(2.8)%|
|AutoZone, Inc. (AZO)||$619.29 (4/26)||$648.70||4.7%|
|Scotts Miracle-Gro Co. (SMG)||$83.45 (4/26)||$86.00||3.1%|
|AT&T Inc. (T)||$33.10 (4/26)||$32.23||(2.6)%|
|Take-Two Interactive Software, Inc. (TTWO)||$99.19 (4/26)||$112.50||13.4%|
|Lowe’s Companies, Inc. (LOW)||$85.07 (5/10)||$97.11||14.2%|
|Norwegian Cruise Line Holdings Ltd. (NCLH)||$51.40 (5/10)||$52.65||2.4%|
|AGCO Corporation (AGCO)||$64.51 (5/10)||$64.82||0.5%|
|Walt Disney Co. (DIS)||$101.68 (5/10)||$99.21||(2.4)%|
|T-Mobile US Inc. (TMUS)||$56.85 (5/10)||$55.33||(2.7)%|
|Weibo Corp. (WB)||$102.57 (5/25)||$102.26||(0.3)%|
On average, our picks have returned 3.4% since being selected. In comparison, the S&P 500 has returned 1.7% since April 26, 0% since May 10, and 0% since May 25. So the picks are ok so far. Let’s look and see how/if the thesis has changed for each one.
No change here – great quarter and accelerating growth for our Chinese online retailer- still one to own.
The quarter/outlook were slightly disappointing, but this is even more attractive now. EPS growth in 2019 accelerates to +62% from +27% in calendar 2018. This is an add.
This was a great quarter with better than expected EPS, however the outlook on earnings was worse as they open new stores and spend to do so. We are sticking with this one here because they are spending for the right reasons. And that should lead to future growth.
Scotts Miracle-Gro (SMG)
There is a little confusion on their acquisition here (and some dilution), but we love 32% earnings growth next year and near $5.00 in earnings, way too cheap.
Real potential catalysts coming with Time Warner (TWX) deal to be decided soon (they think). Plus 5G is coming, and we did get to collect one $.50 dividend payment so far. So really barely down on this on – still a buy.
People love games and with big titles coming soon, this still has room to run. Stick with it in front of GTA launch.
Quarter was great, move was great. The earnings profile is not as great as it was a year from now, but the next 3 quarter are 20%+ earnings growth. Dividend is still decent, but am not thrilled Ackman took $1 billion position. Still a long with and expiry date though now.
Norwegian Cruise Line Holdings (NCLH)
This should be doing better with oil coming back in. Wait for it.
Getting hit today on the steel and aluminum tariffs, but this cycle is just getting started. Maybe they can pass it on to customers. Will see.
In fairness, this thesis is a bit banged up. Solo did not do well at the box office, and Roseanne was fired. This one could have a tough quarter and outlook. But the long term value is still here – probably a wait to buy though.
Uncertainty on the Sprint (S) deal, but our view is the stock goes up either way with impressive growth they are showing. More of a buy than ever.
Too fresh to judge – still like it here.
All in all, we are navigating the choppy waters ok so far, but we know they will get choppier. So keep on the lookout for more picks soon.