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This stock is beating the S&P 500 by 55.71% YTD, and I hope you own it

Dec 19, 2022

Good morning!

Futures were all over the map last night but quickly took a turn to the downside when the opening bell rang. I had hoped that Fed Chair Jerome “It’s Transitory” Powell would see the light, but last week’s selloff made it clear that the markets do not believe his schtick any more than we do.

Good.

Chaos creates opportunity!

Here’s my playbook.

People forget that there's a buyer for every seller

People forget that the markets MUST have buyers and sellers to work properly, but as David Asman and I discussed this morning, that’s what makes ‘em great. (Watch)

The best companies are still putting up numbers, and those are the ones to buy right now. I’ll be sharing specific instructions about how to handle holiday week volatility with One Bar Ahead® members later this morning. Upgrade to Paid

How to play TSLA if the Chief Twit is sent packing

Twitter CEO Elon Musk says he’ll abide by the results of a Twitter poll asking users if he should step aside. More than 17 million people took part, and 57.5% of respondents said, “Yes.”

Tesla shares are trading higher, but not by much. If he does step down, I think that’ll be perceived as a good thing, even though it’s likely not.

Call options might make sense if you’re keen on chasing the hot money. I’d rather sell cash-secured puts on TSLA myself or throw a few lowball orders out there to see if I can get lucky. But that’s just me.

ATTENTION, Income Investors: This recession indicator works in your favour

What’s happening: Big-name companies with high credit ratings are returning to the bond market to raise cash. For example, Berkshire Hathaway announced a $842 million bond offering, and Duke Energy announced a $1 billion bond offering this past month. Amazon sold $8.25 billion last month. (Read)

What this tells you. Companies are building cash reserves as fears of a recession grow. People focus on the recession, but that’s misguided. Bonds are a debt instrument issued by companies that think they can pay investors back.

This matches investor appetite and higher rates because higher rates mean the right investment-grade corporate bonds are more attractive.

Up 36% YTD with plenty of upside remaining

L3Harris Technologies (LHX) agreed to acquire Aerojet Rocketdyne Holdings (AJRD) for $4.7 billion in cash. While this deal will bolster L3Harris’s Space & Airborne System unit, there is a much larger picture at play. (Read)

Defense is—unfortunately—one of the single biggest investment trends of the foreseeable future. Most investors could double their allocations yet still not own enough.

Case in point...

One of my favorite choices is up 36% YTD while the S&P 500 has fallen -19.17% over the same time frame. That’s a 55.71% performance advantage in just 12 months. I hope you’re on board because Upgrade to Paid

Buy now and hold forever

People are so busy running for cover that they’re forgetting how the game is played.

Buy low, sell high, especially when it comes to world-class companies like Valero. Valuations are dirt cheap, there’s a high dividend, and analysts love the dang thing. Piper Sandler dropped its target to “just” $165, which implies a 40% upside from where it’s trading now.

I like another energy provider even better because the yield is higher, the company has a global footprint, and it’s investing in assets that will come online next year when the world will need more of what it makes. Upgrade to Paid