As discussed on the AAP members' call, we are making several trades on Wednesday. After you receive this alert, we will make the following moves:
- Sell 200 shares of Honeywell (HON) at or near $194.75. Following the trade, the portfolio will own 200 HON shares, roughly 1.0% of the portfolio.
- Buy 1,355 shares of ChargePoint Holdings (CHPT) at or near $17.70. Following the trade, the portfolio will own 4,500 CHPT shares, roughly 2.0% of the portfolio.
- Buy 35 shares of United Rentals (URI) at or near $325.75. Following the trade, the portfolio will own 160 URI shares, roughly 1.3% of the portfolio.
Following on our comments made Wednesday during the April AAP Members call, we are trimming our position in Honeywell, given a combination of technical, as well as fundamental, concerns. These include inflationary pressures and supply chains issues that will be headwinds in the near-term and meaningful technical resistance at the $200 level. We are also downgrading HON shares to a "Three" rating from
"Two" and will look to exit the shares at or near that resistance level.
We are deploying the returned capital from that trade into our share of ChargePoint, which is now, we believe, getting unfairly hammered following comments from U.S. Sen. Joe Manchin yesterday at the LNG Allies' Transatlantic Energy Security Forum IV event. Per reports, Manchin, who represents West Virginia, said he will not, "sign up (to transform) our energy and transportation system around EVs that have to be dependent on foreign supply chains."
Candidly, we see Manchin's comments as not only erroneous, but also filled with grandstanding. As we parse the monthly data from auto companies, we continue to see the mix of EV grows and as that continues the pain point addressed by our ChargePoint shares will become clearer. With that in mind, we are using the pressure in the shares to build out our position size, while modestly improving our cost basis.
Turning to United Rentals, the shares have retreated from their recent high, and that adds to the upside to to our $420 target. We would look to build out the position size more aggressively if the shares retreat below the $315 level.
The net impact of those three trades should leave the portfolio's cash position little changed. As we make these trades, we would also share we are closely watching the share of Chipotle Mexican Grill (CMG) with an eye to add to our holdings between $1,505-$1,535. We also find the recent pullback in recently added Bullpen resident Cboe Markets (CBOE) improving the risk-to-reward trade off we discussed when we added the shares to the Bullpen.
Following our fundamental and technical comments on the April AAP Members Call, we will also formally downgrade the shares of NortonLifeLock (NLOK) to a "Three" rating from "Two." Previously we've called the position "dead money" in the near-term given the latest pushout in the company's pending acquisition of Avast plc due to regulatory reviews. We will replace the formal $30 price target with $28, at which point we will look to exit NLOK shares.
(Please note that we are looking to execute these trades at or near the share price mentioned above. Once the trade is completed, subscribers can see the trade's executed price here. Be sure to toggle the chart to sort by Purchase Date.)