Analysis: ABBV WMT SH

After you receive this alert, we will make the following trades:

  • Sell 135 shares of AbbVie (ABBV) at or near $174.50. Following the trade, the portfolio will own 175 ABBV shares, roughly 0.8% of the portfolio.
  • Sell 140 shares of Walmart (WMT) at or near $156.50. Following the trade, the portfolio will own 860 WMT shares, roughly 3.5% of the portfolio.
  • Buy 2,725 shares of ProShares Short S&P 500 ETF (SH) at or near $14.35. Following the trade, the portfolio will own 2,725 SH shares, roughly 1.0% of the portfolio.

With equity markets poised to move lower this morning, March inflation data later this week that runs the risk of moving meaningfully higher month over month due to the Russia-Ukraine war, and a March quarter earnings season that runs the risk of revising expectations lower...

We're not only adding some portfolio protection in the form of ProShares Short S&P 500 (ETF) shares but we're also doing some prudent register ringing as well. As we make those trimming trades, we'll modestly add to the portfolio's cash, which will help insulate us in the near term, and use some to fund the acquisition of SH shares for the portfolio.

As we shared last week, ABBV shares have been on a tear of late significantly, outperforming the market and blowing past the Wall Street consensus price target of $157 as well as our own at $150. While we applaud the company's ability to continually increase its dividend over the years, we will continue to be prudent investors and that means booking gains. We're leaving just over half the current position intact to capture the upcoming $1.41 cash dividend payable May 16 to stockholders of record at the close of business on April 15. The rationale behind the trade now is to capture the current share price, which as we know could retreat ahead of the 15th.

With Walmart, we are also doing the prudent thing as the double-digit run-up in the shares over the last several weeks has swelled the position size above 4%. We continue to see Walmart benefitting from the consumer shopping pivot as they face inflation and look to maximize the disposable spending dollars they do have. As such, we are keeping ample skin in the game and will look to trim WMT shares on continued strength. We are also revisiting our $165 price target with an eye toward boosting it, however, to justify the One rating we would need to see a price target near $188. As such we are downgrading WMT shares to a Two rating. We would look to revisit that below $140.

(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.)