After you receive this Alert, we will make the following trades:
-- Sell the remaining 325 shares of Nucor (NUE) at or near $104. This will close out the portfolio's position in NUE, one that returned -4% since being added to the portfolio in July 2021.
-- Buy 95 shares of PepsiCo (PEP) at or near $168. Following the trade, PEP will account for roughly 3.8% of the portfolio.
We are continuing to refine the portfolio's holdings and that is leading us to close out its small position in NUE shares. We alluded to this likelihood in last Friday's Weekly Roundup given concerns over weakening steel prices and the uncertain outlook for Nucor's steel mill business that could pressure the shares further amid recession concerns. The portfolio will continue to have exposure to the Biden Infrastructure Law spending, though, through our positions in Vulcan Materials (VMI) , United Rentals (URI) , and ChargePoint (CHPT) .
We will use a portion of the returned capital from the NUE sale to grow the portfolio's holdings in PepsiCo with the balance to the cash position. As we shared in our opening comments from this morning, the continued strength in the dollar (see chart below) is an increasing risk to revenue and earnings expectations in the second half of this year and leading into 2023. Mixed with other end-market weakness and uncertainty we will continue to evaluate both existing positions and potential new ones for the portfolio.
Meanwhile, we would note that shares of American Water Works (AWK) , Costco (COST) , and Verizon (VZ) , with its above-6% dividend yield, are on our radar. We are also examining potential plays in the defense space as well as REITs whose businesses are domestic focused and non-consumer, non-retail in nature. And should Clear Secure (YOU) come in further, we may be inclined to initiate a small starter position there as well.
(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.)