A hearty thanks to all the members that tuned into today's July Members-Only Call once again smartly hosted by Katherine Ross, who did a great job holding our feet to the fire as we dug deep into all the current AAP portfolio positions and shared what we'll be watching this month. If you missed the live broadcast, you could watch the replay here and we expect the transcript will be ready later today. While some wait for that, here are several items we shared during the presentation.

  • Even though the portfolio's position size is rather full up on the shares of Costco (COST) , Microsoft (MSFT) , and AMN Healthcare (AMN) , the combination of favorable fundamentals and technical keeps their "One" rating intact.
  • Over the coming months and quarters should inflation pressures recede that headwind could become a tailwind for McCormick & Co. (MKC) , PepsiCo (PEP) , and Chipotle (CMG)  as price increases instilled in recent months and pending ones become likely margin drivers.
  • If Morgan Stanley (MS)  shares hadn't pulled back as much as they have, odds are we would have downgraded the shares to a "Two" rating from "One" given the sudden slowdown in the investment banking industry. Morgan's league table rankings point to it rebounding at the head of the pack when that business eventually returns.
  • The shoot first, ask questions later sentiment tied to rising recession concerns has hit shares of Ford Motor (F)  and the Energy Select Sector SPDR Fund (XLE) . As earnings season gets underway, we'll have a better sense as to how much bad news is priced into stocks and based on that we'll look to revisit our ratings on these two positions.
  • While Nucor's (NUE)  business will benefit from Biden Infrastructure Law spending, we are in no rush to build out this position out in the near-term given the market's increasing focus on a potential recession.
  • Similarly, if the forthcoming data points to the increasing likelihood of a recession, we may look to move to the sidelines with some of our chip holdings. Given the very oversold nature of Applied Materials (AMAT) , AMD (AMD) , and Nvidia (NVDA)  shares, such a move would translate into downgrades to "Two" ratings for their current "One" ratings. Odds are excess capacity could emerge in chip-land slowing the near-term need to additional chip making equipment, and we'll watch for any signs of slowdown in data center buildout or densification.
  • We like our plays on Cboe Global Markets (CBOE) , PepsiCo, and AMN Healthcare, which are solid names that may do well if the economy comes under pressure or turns upward.

The AAP is long all stocks in its portfolio including COST, MSFT, AMN, MKC, PEP, CMG, MS, F, NUE, XLE, AMAT, AMD, NVDA and CBOE.