KATHERINE ROSS: Welcome to our March members only monthly call. That's quite a tongue twister right there. I'm Katherine Ross. And I am joined by Chris Versace and Bob Lang.
It's been a bit of a rough start to the month with geopolitical tensions rising. And we're seeing them weigh on the markets. We've also got the focus shift away from the end of earnings season and towards the Federal Reserve as we await a rate decision later this month.
Chris, we're going to discuss specific stock impacts of the Russian invasion of Ukraine later on. But give us an overview of how you're approaching it now that you've had time to dig into the portfolio.
CHRIS VERSACE: So that's a great question, Katherine. Last week, we shared some comments with members-- a lot of tongue twisters, Katherine, today. Trying to really assess the impact of their exposure to Russia and Ukraine where we can. As we pointed out in an alert to members, it can be a little tricky doing that, given how companies disclose their geographic revenue or profit breakdown. But we are continuing to chip away at it as more information becomes available.
The good news is Russia's about 1.7% of global GDP. So any impact from a demand side probably isn't going to be that demonstrative. There will be some areas with greater exposure. I would handicap it somewhere between 3% and 6%, 3% and 7% in general.
Where it gets a little trickier, however, is going to be on the cost side of things. We know that, again, even though Russia is a very small part of global GDP, its impact on oil, wheat, certain aspects of semiconductor materials and the like, is far greater. So we're going to have to be on guard for cost side exposure in the portfolio.
So we're going to continue to try and quantify that. Companies don't exactly come out and disclose that type of information. But we're going to continue to roll up our sleeves and assess that impact and what it may mean for the upcoming earnings season. I know, Katherine, we just closed the books on the December one. But right around the corner is the March one. So we have some time to fine tune our thoughts on that.
KATHERINE ROSS: Bob, you're a bit lucky here. We're having the green day of the week. So where does the market stand? And while it has been rocking, we are seeing this bounce back. Where do we really find our footing?
BOB LANG: Well, I would say that today's most likely considered a relief rally. We had a huge amount of selling yesterday and came into the week. Also the sellers hit the markets pretty hard on Monday to end the month of February on a sour note, even though we did rally back at the end of the day on Monday.
But make no mistake, this is a bear market behavior. And if we are in a bear market, rallies are going to be sold. But that doesn't mean we can't have opportunities to buy stuff and to add to our names, which we've been doing quite consistently over the past several weeks.
But right now, the markets are giving us a signal right now. The signal is that people are scared and worried about Fed policy being a little bit too aggressive. We did hear Chairman Powell this morning say that he is going to suggest a 25 basis point rate hike in a couple of weeks. And of course, that stoked a bit of a rally here so far this morning. As you mentioned, we are green.
And if that's the case, then, still, I still don't think that it is going to appease the people who are watching inflation. In fact, we have some inflation numbers coming out next couple of weeks. We have the jobs report later on this weekend. It's going to be an interesting moment here if it's showing some inflation.
So I'll be curious to see what's going on. But as far as the rally here today, Katherine, most likely just a relief rally. People are going to be selling into this.
KATHERINE ROSS: All right. Without further ado, let's get stock by stock. And before we do that, just really quickly, I want to thank you, all members, for responding to our surveys. We greatly appreciate getting a consensus of what you want to hear on these monthly calls. We will be going to every single stock in the portfolio. We're going to start with Apple today.
Warren Buffett referred to Apple as one of the four giants. And this is obviously a stalwart of the portfolio. With this in mind, Chris, it's currently the heaviest weighted stock within this portfolio. Actually, Bob, I'm going to go to you first. If a member was looking at the chart of this position, where should they look to either trim or nibble?
BOB LANG: So these last four days we've seen Apple pull back to the 200 day moving average. It's been an excellent buy point over the past several years to pull back to the 200 day moving average. It doesn't happen very often. In fact, last week we saw it drop significantly below that 200 day moving average when the markets were getting hammered on Thursday. Came right back up. And the last few days has been making higher highs, higher lows, which is interesting and very strong in the face of a very weak tech market.
NASDAQ has been weak for the last four days. So I do like Apple here, especially, again, off the 200 day moving average. Let's call it 152 to 153. And it's bouncing up here. It's making a higher high, higher low, making a run at the 50 day moving average. It gets a good close up there today. Tomorrow, we're going to be making a run towards that 170, 175 area. Good 8% higher than where it is right now.
KATHERINE ROSS: So Apple has reportedly stopped its product sales on its online website in Russia. What kind of impact could this have going forward?
CHRIS VERSACE: Got it. So when we look at the Russian market, particularly for smartphones, it's the sixth largest in the world. So we're inclined to think, wow, that could be a big exposure for Apple. But when we dig into the market share numbers, which is critical, Apple's only about 15% of that marketplace.
So I would handicap it, Katherine, by saying, again, we need to slice it again for those online sales. After we do that, again, given my comments kind of earlier, we're looking at probably a low single digit exposure for Apple overall. I suspect that we're going to be talking about that range quite a bit over the next hour for a number of companies.
KATHERINE ROSS: All right. With that, let's move into AbbVie. AbbVie closed its deal to buy Syndesi Therapeutics. Chris, is this acquisition important to the company? And how can it add to your thesis of AbbVie?
CHRIS VERSACE: Well, so the whole key with any of these companies is what is the pipeline? And what does it mean for future product sales? Because as we have seen in this space, there are long lead times for products. But at some point, they come off, and then they begin to go generic. So it's important that they continue to invest in their R&D and their product pipeline and their product portfolio.
So this will give it some legs. I think, candidly, Katherine, AbbVie has shot up to our 150 price target here. The reason being it's a safe haven environment. It's also a wonderful, wonderful company from a dividend perspective. It might give us a couple of points in our price target, but probably not much.
If we weren't so heavy on cash right now in the current geopolitical environment, we might consider trimming AbbVie back. But in the near term, again, it's a safe haven. And we're likely to let it stick out for a little while longer.
KATHERINE ROSS: I think you just stole my question for Bob. Bob, I was going to ask you-- I was going to note that this stock is riding right up against your price target. And I was going to ask if you were going to tell members to take some off the table.
BOB LANG: So yeah, right up against our price target. And actually, right up against an all-time high. And you have to think for a moment. How many stocks in the stock market right now are breaking out to new all-time highs? AbbVie one of the very few.
And it's actually one of the best looking charts that we have in the portfolio, probably one of the top two or three charts. It pulls back sharply to that 20 day moving average, and the buyers pick it up. This stock moves like a champ. It's overbought, and it's been overbought for a while. Not necessarily a reason to sell the stock discriminately.
But what Chris said is when we hit our price target when we would be thinking about taking some profits in a name, again, it doesn't really matter if it's overbought or at levels that-- new all-time highs. We're always looking to trim something and take some money off the table. But yeah, this stock is one of the best performers that we have in the portfolio. And we're pretty happy to have it.
KATHERINE ROSS: Let's go to Airbnb. Bob, Airbnb has been volatile, which has led multiple members to question whether it should be in their personal portfolios. What does the chart tell you?
BOB LANG: Well, the charts-- it's really basically kind of in a no man's land right now. Recent high of about 193. Came out after the earnings. Came out after the earnings were fantastic. But again, with a lot of the growth names in the technology area, the stock got pummeled and came recently down about 140 or something. And really caught some buyers around that area.
So we're looking at that area as some good support. We like the prospects of this name. As I've said several times, probably my stock of the year. Again, it's not moving right now. There's a lot of issues happening in Europe and so forth. But the prospects are good. And some of the technicals on the chart are still actually rather positive, even as the stock has pulled down for the last couple of weeks.
So it's still constructive, just in a no man's land right now. If it gets above 170, 175, it's got some room to go to the upside.
KATHERINE ROSS: Chris, Andrew H. noted that the analysts who follow Airbnb aren't quite as bullish as the team here at AAP is. So what makes you such a believer in this stock?
CHRIS VERSACE: Thanks for that question, Katherine and Andrew. I will sidestep the notion that we don't want to be herd followers and just do what everybody else is doing. Andrew, if you remember the thesis behind Airbnb was twofold. One, it's the structural change in how people are traveling, and we are seeing that, given the book-out rates for Airbnb. But also the lengthening for their times of stay. And again, we are seeing that as well.
I can personally continue to like Airbnb as a what we'll call a re-reopening play now that mask mandates are falling. The TSA data remains very, very favorable. We're starting to see similar metrics improve in Europe. So I think, all in all, that's really what we're looking for.
I think, once again, as the data continues to turn out to be more favorable for Airbnb, you're likely to see some of those skeptics jump on board, particularly at or near the current share price.
KATHERINE ROSS: All right. I'll be watching for that to follow up on this stock later. Let's move into Applied Materials. Applied Materials is up around 10% over the past year. It's been a rare find in the way that it's been able to shrug off that chip shortage. What do you want to see in this name in order to buy more, Chris?
CHRIS VERSACE: Well, that's a wonderful, wonderful question, Katherine. I think I want to see supply chain issues kind of come down. We are starting to see some of that happen as evidenced in the manufacturing PMI reports for February that we talked about yesterday. So that appears to be improving.
However, the geopolitical environment, Russia-Ukraine, poses another potential wrinkle in that. So I think we're going to want to get through that. On the demand side, there's little question that chip demand, and therefore, chip manufacturing, equipment demand remains robust. Even President Biden called it out last night in his State of the Union address, sharing how Intel is going to spend $100 billion in a complex in Ohio that follows other longer term spending announcements from Taiwan Semiconductors and others.
So make no mistake, when the supply side corrects itself, the demand side will drop a lot of revenue and earnings to the bottom line for Applied.
KATHERINE ROSS: All right, Bob. Let's get technical with it. What kind of approach should members take?
BOB LANG: So when we first got into Applied Materials back in October, one of the first buys that we bought for the portfolio when we changed over-- Applied was at the bottom of a range. And I identified that range on the chart as being between about 125 and 160 to 165 on the high side. So as an investor, we want to be able to grab shares in a name that comes in at the bottom of the range.
So it was in the 120s. And we scooped some of it up. And the stock took off for us and has made a run up to that 160s area and rejected up there. And then, of course, some of the growth names have pulled down. And now we're right back into the 120, 130 area.
So this is an attractive level, we think. We do have it as an area that we want to be adding the shares. We do have a little bit-- we're a little bit more exposed to this name than we were in the past. But certainly, at this level in the 125 to 135 range, it's a good pickup right here. And we think that Applied Material's prospects are good. And I think certainly to get back to that 160 range, probably not too much of an effort for Applied Materials.
It's been there a few times in the past couple of months. And we think that just to run back up there would be a really nice move from the 130 range.
KATHERINE ROSS: AMN is our next stock. And Al pointed out that he's concerned that the receding
COVID concerns make him question the position in AMN. Chris, I know that this name was initiated as part of your aging population push. So can you explain exactly how AMN fits into that thesis.
CHRIS VERSACE: Sure. I mean, it's very simple. You know, AMN's business is really a placement service for nurses and doctors. So what we have is the push-pull of a aging population that requires increasingly more care. At the same time, we actually have a nursing shortage. So that pain point, that disconnect, is really the longer term opportunity for AMN. And the reality is that given the limited number of nursing education facilities, that pain point is going to be with us for several years.
Now, I understand that at the margin the falloff in COVID may result in a modest headwind for AMN. But that won't be extremely long. If anything else, I would say that the longer term driver associated with the aging population is going to point to multi-year growth prospects for AMN, hence our bullish stance, not only over the 12 to 18 months, but even longer than that.
KATHERINE ROSS: And Bob, you've had a small gain on this name. You initiated around $95 a share. It's up pretty heartily today. With the look of the chart, are you going to continue to be a buyer here, or is it time to book some profits?
BOB LANG: Well, I have to say, Chris first introduced me to this name a while back. And it was intriguing. And then more recently, looking at the chart, much similarly to Applied Materials, which we just talked about, it's been trapped in a range, pretty wide range. Volatile name.
Stock had some big down moves in the fall of last year and even more recently at the beginning of January. And it bounces right back. And so I told Chris. I said, look, this is one of those names that, again, you identify the range. And we want to be aggressive and start picking it up at the bottom of the range.
Fortunately, when we first got into the name, much similar to Applied Materials, we got in right near the bottom of that range, in the mid to low 90s. So we feel really comfortable with our buy there. And look, if we get another opportunity to come back down to that level, which we did right before earnings came out a couple of weeks ago, this is a great name to add. It's a nice diversified name against everything we have in the portfolio.
It's not technology. It's not housing. It's not banking. It's a really great play here on a different area, different sector, that may not be affected by a lot of the things that are going on in the world right now. But I think back into the 120s, certainly a great possibility here. We talked about it just not too long ago. And I like this stock for another move, maybe another 10%, 15% from here.
KATHERINE ROSS: Our next talk is AMD. And while it had a bit of a rough day yesterday, it is bouncing back in today's market, at least so far. So Chris, when you're looking at a stock such as AMD, how much time should members spend thinking about how a potential China invasion of Taiwan could play out? And I want to note before you answer, this is purely hypothetical. But it is an ongoing concern after the Russian invasion of Ukraine.
CHRIS VERSACE: It's a fair point, Katherine. And it is one of those things that we're obviously thinking about as well. We can point to Taiwan Semiconductor looking to diversify its geographic presence with some initiatives here in the US. But make no mistake, in the short term, should something happen it's going to be a little bit of a headwind here. So again, we'll continue to watch those developments and see if anything happens.
I also think that the other key point for AMD is to really focus on the synergies to be had now that it's closed the merger with Xilinx and the diversification. To me, that gets me a little more excited about the upside opportunities over the coming quarters for the company. But we do have to recognize any risks that show up. And again, we'll continue to monitor that issue with China-Taiwan should it come to fruition.
KATHERINE ROSS: Bob, Chris is going to be a little bit jealous, because I'm going to ask you about the Xilinx acquisition and how this is going to impact AMD. Because we've talked about this quite a bit. But what level would you buy AMD at now that we've seen this acquisition close?
BOB LANG: Well, similar to Apple, the stock has been flirting with that 200 day moving average. And any pullback to that 200 day moving average is going to be a great buy opportunity here. Let's call it 113 to 114. Stock's about $3 above that level right now. So any pullback there, which we saw yesterday, would be a great opportunity.
Been catching a lot of good support at that 200 day moving average for weeks. And actually at the middle to the end of January it fell sharply below there and rallied right back in a huge way. According to the chart, the daily chart, it's really kind of in a no trend, a no man's land right now with lower highs but higher lows on the chart. That's kind of the definition of no trend. But as it pulls back to the 200 day moving average, Katherine, good spot to add.
KATHERINE ROSS: All right, Bob. I'm going to apologize to you, because I actually have two fundamental questions on our next name, which is Amazon. The first one, Chris, is that it opened its first cashier-less Whole Foods that has cameras which track customers throughout the store. Does this play into Amazon really shaping the future of retail and how we shop?
CHRIS VERSACE: I think it does. One of the things that folks tend to forget about Amazon, it incubates a lot of interesting technology, for example, Amazon Web Services, on the inside, and then it looks to commercialize it. And I think this is another initiative that we'll see the company look to monetize.
I believe that there are some other small wins that have been announced. The names elude me. Nothing major like a Kroger or a Costco, anything like that, but smaller retail establishments, which I think will be a good proving ground for the technology. Look, I think you're going to see more of that happen, candidly. And it's kind of a wild card upside option with Amazon.
KATHERINE ROSS: And that kind of feeds into my second question, which is, with the Amazon Alexa integrating Teladoc into its user interface, how does that play into its overall pharmacy business? And could this dominate the sector as heavily as it dominated online shopping?
CHRIS VERSACE: That, I think, is a long term play for Amazon. And they've been slowly cobbling the pieces together. You mentioned that with Teladoc they have their own chime business. They are starting to really ramp with their other health care initiatives, including what they're doing with PillPack and the move to Amazon Prime for prescriptions.
I think Amazon is going to do what they historically have done, Katherine, which is they're going to just chew away at little market opportunities. And then all of a sudden we will realize that they have cobbled together a rather large exposure. Given the size of the health care economy, both in the US and outside, it's a trillion, trillion dollar opportunity. I think Amazon is going to continue to focus in on this.
And I think when we first took over AAP, it was one of the things that I said that-- it's an underappreciated aspect of the stock. And as more and more of it flows through to the revenue and the profit generation, we're going to have to once again revalue how-- or sorry, rethink, and therefore, revalue Amazon shares.
KATHERINE ROSS: Let's move into to Boeing. Dan W. noticed that Boeing has been slipping. Bob, what does the chart tell you about how members can apply your analysis to their position currently?
BOB LANG: Well, I think our operative word of the day here, for charts at least, is range bound. So it's kind of still in a range bound mode here.
It's not breaking the lows around below 190. It's tested those levels a few times. But it seems to bounce back. It's below key moving averages. So that's not bullish. But again, it's just kind of bouncing around in this very wide range between 190 and 220.
Again, it's just trying to carve out a bottom over here. We're not bottom picking over here. But certainly anything-- when the price comes down to about that 188 to 192 range, good spot to add the shares. But we think it's going along here smoothly in this little range. If we can break out above that 220 level, though, look out to the upside.
KATHERINE ROSS: And Chris, part of that pressure that Bob just talked about does come from the fact that it's got Russian exposure. It suspended its part supply in Russia, maintenance and support as well. Biden's closing the airspace to Russian planes. Do you maintain the one rating of Boeing in the portfolio? Is the weakness really, truly an opportunity to snap up shares?
CHRIS VERSACE: So what that requires, Katherine, is assessing how much of a revenue impact is Russia. And again, it can be a little challenging. But when we step back, and we look at the commercial aerospace market, Russia's roughly 3%. So it's a very, very modest layer. Will they have to upgrade their own aircraft over time because they're aging? Yes. But again, is it going to be a primary driver of Boeing's revenue, its profits? The answer is no.
We can get another second set of eyes on this when we look at companies like Air Lease. The vast majority of commercial aircraft are leased either, again, through companies like Air Lease or AerCap. And I even believe AerCap recently said that Russia's only 5% of its lease book.
So again, very modest exposure. I think Bob is right. If we see it continue to trend lower on this news given the perception, it could be an opportunity to scoop up more shares.
KATHERINE ROSS: There are only two names in the AAP portfolio that are currently slipping in this market. And one such name is Chipotle Mexican Grill. We've talked about the increase in prices. And I believe that you, Chris, agreed with Brian Nichols, CEO, his sentiment that consumers would not mind paying a little bit more for their burritos. However, after talking to numerous traders, investors, and even friends and family, think that consumers are a little bit more concerned now about inflation hitting their burrito budgets.
If consumers aren't as willing to shell out more for Chipotle, how could that impact the stock?
CHRIS VERSACE: Well, look, it's a restaurant company. So key and critical to the revenue stream is-- it's either going to be volume or price. And we know, as you pointed out, Katherine, the price went a little higher. Thus far, Chipotle seems to be relatively unfazed by it, at least by what we have seen and by the monthly retail data that we collect, whether it's the retail sales figures or others.
So I think it's relatively inelastic. Remember, 2%, 3%, 4% price increase doesn't even crack $1 for Chipotle. So here we're talking nickels and dimes. I would argue largely bypassed by the majority of consumers. So I'm not so concerned about it.
If, however, input costs continued to balloon at Chipotle forcing a more sizable future price increase, that's when I would think that we would have to take another hard look at what the revenue impact is. But so far we're not seeing it. In fact, I was at Chipotle earlier this week. Lines out the door.
KATHERINE ROSS: Yeah. But I don't know. I got a text from my producer last night about how he shelled out some money for guacamole. So I'm going to be circling back on that question with you, Chris.
But going to you, Bob. The stock has not performed well so far. What do you need to see from the technicals to back Chris's fundamental views?
BOB LANG: So that 50 day moving average has really been a blocker for Chipotle, especially since the latter part of 2021. We had a monster drive down in price in January from about 1,800 to close to 1,300. It retraced about 50% of that move, literally in a couple of days when earnings came out. But again, that 50 day moving average was the ceiling. And the stock has kind of been drifting sideways to lower since that earnings report.
So we're down a little bit from the earnings. But if we can get a little bit of sideways activity right now, just a little quietness in Chipotle, see some of the big institutions start coming back into the name, we can get a move up above that 50 day moving average. If that starts to flatten out a bit-- it is pointing lower, so it's going to be a ceiling for a while here. But if that thing flattens out a little bit, that 50 day moving average, we can get some movement up and some buying in there. Stock can make a run back up to those old highs.
KATHERINE ROSS: All right, let's move into Costco. I'm not going to lie about this. So I was torn about where I'd add in this question, since it really could fall under Amazon, Costco, or Walmart. But we've seen Target increasing its minimum wage to as much as $24 an hour. If a company like Costco follows suit, how does that impact their bottom line, Chris?
CHRIS VERSACE: Oh, it's going to hit them. I think the key there, Katherine, is Target said that it's going up to for some positions $24. So without really understanding the impact and mix of the number of workers elevated to that level it's hard to give an exact answer. But having said that, if Costco were to follow suit, yes, they would see their cost structure move a little higher.
Candidly, all they would need to do is do a membership price increase, $5, $10, something like that, something very de minimis, again, that most people would simply go, I can absorb that in one trip to Costco. And that would go a long way to helping offset that.
Perhaps that will be something that we see in the coming months. But for now, Costco treats their employees rather great. Great benefits, great wages. We may not even see that move at all.
KATHERINE ROSS: As long as they don't raise the price on those rotisserie chickens. Bob, this stock has been a bit of a safety net for members, up nearly 60% over the past year. Members know how important a stock like Apple is for the portfolio. Would you say that Costco is the retail equivalent?
BOB LANG: Absolutely. I mean, as far as the chart's concerned, Katherine, stock had made a bold move above the 50 day moving average. Stock corrected quite sharply in January. And it's made a series of higher lows. And now just on the precipice of making a higher high on the chart. And that would indicate stock's going to make a run back to the old highs from about 570 or so.
This has been a stalwart in the portfolio for such a long period of time. It's a stock that Chris and I had in a prior portfolio for quite some time too. So no, I certainly think that a bold move here by Costco-- I think they have earnings coming out later on this week. Bold move by Costco above that 530, 540 level, which is where it's at right now, is going to make a strong bid towards the old highs, almost toward 600.
KATHERINE ROSS: All right. To make up for giving Chris Amazon, I'm going to give you, Bob, Cisco. We've discussed the reports of an offer that Cisco made on Splunk before their last earnings report. And members know what you all thought about the quarter. But Bob, what does the chart tell you? Buy, sell, hold here?
BOB LANG: Again, another one that's kind of slipping. Slipped below the 200 day moving average recently. And it's kind of flirting with it right now. I'd still say it's a buy down here.
KATHERINE ROSS: All right. Let's move into Deere. Could Deere's construction revenue be big enough to materially benefit from the infrastructure legislation passed at the end of last year? Or, Michael M. is wondering, is it too small in comparison to the agriculture segments aimed mostly at farmers, Chris?
CHRIS VERSACE: The latter is true, Michael. If we were to pick-- if we were to go hunting for companies for construction equipment exposure poised to benefit from the Biden infrastructure package that will be rolling out later this year, candidly, I wouldn't be picking Deere. I would be picking Caterpillar, Terex, or another company like that.
Deere, on the other hand, is going to continue to benefit from the things we've talked about, rising commodity prices particularly, remember, wheat. Russia and Ukraine are roughly 14% of overall wheat production. So we're going to see wheat prices move higher, sparking farmer income.
And remember, too, that if we're cutting off ties with Russia, it means we're going to need more out of the existing plantings. That's a great, great driver for precision ag equipment, a place where Deere is a solid, solid leader.
KATHERINE ROSS: So Bob, as we previously discussed in our Daily Rundowns, there was some slight confusion with Deere and the term circle back. So let's circle back. Is this a buy after you all trimmed this stock?
BOB LANG: Yes. And actually more recently, after earnings came out-- actually, let's go back to prior earnings a couple of weeks ago. Chris and I huddled up and said, you know what? We have a really strong profit in Deere. Let's take a little bit off the table. We trimmed some of it. Because we talked about the earnings were probably going to be strong, and they were. But yet, profit takers came in and took the stock down to the low 320s.
It's bounced back sharply in the last four or five days, incredibly. Stock is up more than 15% just in four trading days. Pretty spectacular move since Thursday and Friday. So right back into the zone here of 375. If we get a little bit of a pullback, maybe a couple of dollars down to 350, 355, would be a good area to get involved here. But we did get severely oversold and bounced sharply off that level.
I think the big institutional money was waiting for that price to come down to these levels. And they scooped in there and bought it. So good support down there in the 320, 330 range. But we think even above there is still a good buy.
KATHERINE ROSS: Up next, we have Disney. It's going to pause its film releases in Russia. Chris, with movies such as Doctor Strange and Lightyear on the docket for later this year, Russia isn't necessarily a huge movie release market. But this move is notable nonetheless. What does it mean for the balance sheet?
CHRIS VERSACE: For the balance sheet? That's a-- you've kind of caught me off guard with that one, Katherine. I don't think it means much for the Disney balance sheet, to be quite candid with you.
Look, the movie theater business is one that is going to be part of that re-reopening that we've talked about. Even AMC and other theaters are flirting with some surge pricing. I think we'll know a little more with that after The Batman shows up. So I don't see Russia having a big impact on them, candidly.
Again, the more of the reopening that we're seeing, I'd rather get focused more on the parks business given the operational leverage that they're going to have as we see spring break happen and travel continue to pick up again, referring to that TSA data that we talked about with Airbnb. So I don't lose much sleep at night when it comes to Russia and Disney, Katherine.
KATHERINE ROSS: But see, I have to keep you on your toes here. We've talked about the parks business recently. And for those of you interested in the parks business, please revisit our previous Daily Rundowns. Bob, let's go to you now. How does the chart of Disney look? What would be your action here?
BOB LANG: So it's kind of been in a bit of a no man's land again. Stock has been trading in a range of about 100. On the low end, at the end of January, about 130, which is pretty historically rather low for the stock, to about-- capped about $158, to $160 cap in a couple of times. Even after earnings the stock ran into a bunch of sellers.
So we're in the middle of that range right now, 147 to 149. And I still think that the stock and the chart is still fairly constructive down here. Again, you know what, we like to pick up stocks at the bottom of the range. And it's certainly right there. It's slightly above it right now.
If we can get a move up past 160 over the next maybe couple of months, some news has been-- again, Chris alluded to some of the news that has been coming out with parks reopening. I think Disney's got some levels up there, about the 170, 175 area, where we could find some resistance. But certainly a move back through 160 would be a good start.
Let's talk about Ford, which is keeping us on our toes this morning. Ford is reorganizing its operations to separate its electric and internal combustion engine businesses into separate units and will be breaking out the financial results by 2023. That does echo what you, Chris, were saying after there were reports that Ford would spin off its EV business. So how should members think about this news, and what's the long term impact?
CHRIS VERSACE: Well, I think it's great news, candidly. Because one of the things that people have tried to struggle with, ourselves included, is what's the composition of EVs relative to the overall revenue profit cash flow EPS perspective? As they break this data out, we will be able finally to assess that information. And again, something I alluded to with Amazon, but rethink how we value the shares.
There's been a lot of talk about the disconnect between values afforded some of the Chinese EV companies and Tesla with very lofty valuations, whereas traditional gas-powered vehicles had very low valuations. And the argument has always been that we would see some continuum closure on that, unlocking value in Ford. And now Ford has put us on the path to be able to do that. So I, for one, am very excited about it.
KATHERINE ROSS: So Bob, before this news my question was going to be, with the recent weakness in the stock, where would you look to add your shares? And I just want to add a note for members listening in. Obviously, I'm not discussing today with the surge that we're seeing in the stock currently.
BOB LANG: Yeah. The stock's having a nice day today. And frankly, again, another name that is strong off the 200 day moving average. And again, four or five days ago the stock was flirting with that level. And now it's making some higher lows. And makes it run towards $18, $18.50, which is around the 100 day moving average. I like the stock for higher and probably get about $20, $21 before it stalls down.
But this is a good spot, good area to add. We talked about it a few times, that when the chart showed me that it got down to that $16.50 to $17 level, it would be a nice area to snap up some shares. It's true, I think. And we're still there right now. So I think at this point on the chart, it's telling me it's still a good buy, at least for another 15%, 20%.
KATHERINE ROSS: Let's go to Alphabet. Yesterday, I did ask about Alphabet referring to TikTok ad revenue in Russia and the YouTube banning of channels such as RT and Sputnik. But where would you buy based off of the technicals, Bob?
BOB LANG: Again, this stock broke down below that meaningful 200 day moving average. That's another word that we've been using pretty often today. That 200 day moving average is now some resistance here. I'd be a buyer anywhere between here and about 27, 2750-- 2650 to 2750. I think it's a good spot for our subscribers to enter the name.
They do have a 20-for-1 stock split coming up in the beginning part of July. And I think at that point in time as we lead up to that, there's going to be a lot of interest coming into Google, and people wanting to have more shares. So just that alone is probably going to boost the stock up from here. So anywhere between here and 2750, great spot to add Alphabet.
KATHERINE ROSS: Let's go to Honeywell. Honeywell is labeled as a two rated stock. It's below the price target of $230. And the last time the stock was touched was actually back in July of 2021. I mean touched by the AAP portfolio.
So Chris, what's the game plan here? Do you plan to keep watching until the infrastructure deal really starts to come through?
CHRIS VERSACE: So I think there's two things to think about. One is the infrastructure bill, as you talked about, Katherine. But given my comments almost at the top about the impact of the current Ukraine-Russia crisis, given Russia's percentages of various key materials, steel being one, for example-- Honeywell is one of the companies I was alluding to that we really are going to try and dig in on the cost side of the equation.
They've had issues with margins in the December quarter. Again, we were waiting for infrastructure. But this latest hiccup could be something that leads us to revisit that two rating. Because the margin pressures could be intensifying. And I don't think we necessarily want to be holding the Honeywell bag when that gets announced.
KATHERINE ROSS: Bob, does this chart say that this position should be trimmed? Or is it worth holding, based off of what Chris just said?
BOB LANG: Yeah, it's been struggling here. The 20 day moving average has been a big ceiling for this name for a while. This is a name that Chris and I have been talking about together more recently, as whether-- is it deserving of being in a portfolio any longer?
So again, we've been talking about this. I don't know if we get a huge recovery in this stock. And we're talking above 205 or 207 area. That would be more than 20%, if that's likely here in this environment.
So sometimes it's necessary to fire away at stocks and remove them from the portfolio before something worse happens. So I'm not necessarily saying that that's the case with Honeywell. But certainly with a series of lower highs and lower lows on the chart, it does tell us that market distribution is happening with Honeywell. So why do we have to be the last ones in holding the name? We don't have to be like that. So the chart is telling us something.
KATHERINE ROSS: All right. Well, I'll check back in with you guys on that at a later date. Let's move into Marvell. We've loosely talked about this name previously, but it's been a laggard so far this year. It's a one rated stock, meaning that you'd buy it on a pullback. And it's been, well, pulling back this year. Why haven't you added this name, Chris?
CHRIS VERSACE: I think we just want to get through the latest round of earnings, Katherine. The comments have been very favorable. But I think if we were to have contemplated nibbling, given the comments that we shared earlier about neon and some other key gases coming out of Russia where the costs are going, what the margin impact is-- when Marvell reports later this week, we should start to get some insight as to how damaging that may or may not be. And I think once that known-- sorry, to quote Rumsfeld, once that unknown known is known, then I think we're going to be free and clear to nibble on that.
But from a fundamental perspective, demand side-- we look across all the company's markets continuing to fire on all cylinders.
KATHERINE ROSS: Gave yourself a bit of a tongue twister there. OK. So Bob, from the technical perspective, what do you need to see to pull the trigger?
BOB LANG: Really like it here, Katherine. I think it's holding at some support at the mid-sixties level, a 200 day moving average, and then recent lows around October. It fired up in a big way at the beginning of October. And has some support in this area from back then. So I like it right here. And the recent highs in the low 90s are certainly achievable. It's going to take a little bit of time to get there, of course.
But I like it right here in the mid 60s. And again, Chris said that earnings coming out later this week, probably going to be real strong. And maybe the stock has already sold off in front of that earnings. I do like Marvell right here.
KATHERINE ROSS: So let's move into Morgan Stanley then. Morgan Stanley and other bank stocks have been under pressure after Russia invaded Ukraine and the economic sanctions were put in place. We are seeing-- I'm looking at my heat map right now. We are seeing the financial sector kind of bounce back today. But how will this impact Morgan Stanley in the short term, Chris?
CHRIS VERSACE: Well, that's one of the things we tried to wrap our hands around in our morning comments this morning. We kind of dug into the 10K that Morgan Stanley has. And the positive is that outside of the US and Asia, Morgan Stanley only gets about 13% of its revenues across its various businesses from that larger block.
The challenge, however, is to assess exactly how much of that 13% is going to be out of Russia and Ukraine. When we look at other companies that have disclosed, whether it's Goldman Sachs or even CitiBank, the overall percentages are rather small. And I suspect Morgan Stanley is going to be in line with that.
So again, I don't think it's going to be a demonstrative impact to Morgan Stanley. If anything, we're going to be patient here and muddle through until we find out exactly how much the exposure is. The why behind that, Katherine, is the company continues to target growing its AUM, or Assets Under Management, for its $10 trillion from $6.5 trillion. That's a huge opportunity for the company, huge opportunity for that business, which we like very, very much, given the steady state fee income nature of it. It's a great predictable business.
KATHERINE ROSS: Steve pointed out, Bob, that banks should technically start making more money if interest rates go up. So does that mean that MS-- is it the right time to buy it here?
BOB LANG: Yeah, I mean, I think this company would be a great beneficiary of higher interest rates. At the margin, the net interest margin is going to increase, especially if the economy stays rather strong. So the recent pullback from roughly 110 down to about 85 offers a great opportunity to get on board here.
We did add some recently before the market got hammered last week. And we're very happy where we bought the stock. And it's down to a level a little bit below there. But we still like Morgan Stanley right here.
And I think at least a 50% retracement back, Katherine, would take you back up to about $95, $97, which is around the 200 day moving average. So we think that if markets turn around over here, which we think is going to happen pretty soon, we got to move back up to that level pretty quick.
KATHERINE ROSS: Let's take a look at Microsoft. On February 27, Stifel did put out a note on a meeting with the IR team over there at Microsoft. Stifel wrote, and I quote, "Microsoft is one of the best positioned names in the software sector for sustainable, durable, profitable growth in the foreseeable future." I think it's safe to say that you agree with that, Chris. But what else do you want to see from Microsoft?
CHRIS VERSACE: Oh. Well, I mean, look, clearly Microsoft is a force to be reckoned with. And the great thing about this current environment, it's going to continue to pop up as cloud in adopted, as security continues to come back to the forefront, cybersecurity in particular, given what's going on over, again, Russia and Ukraine. So we do like it for that.
What I want to see, though, Katherine, is what the longer term plans are with its pending acquisition of Activision, where it can take its gaming business, but also how it's going to combine the Azure business, the gaming business, and really start to lay the seeds for its vision of the metaverse. To me, that's the next big mountain to climb with Microsoft.
KATHERINE ROSS: All right, Bob. Turning your attention to the chart. What do you want to see from that?
BOB LANG: Well, I want to see this stock continue. Having a really good day, by the way, Katherine. I want to see the stock make a move, sustain above this 200 day moving average, which it's moving above today. It's actually moving through the 200 and the 20 day moving average, which are really near each other. And make a run at that 50 day moving average. Let's call it 308, 309 on the 50 day moving average.
Makes a run up there. And it may stall a little bit. But if it comes back in a little bit and makes a higher low on the chart, and then right back through 310, which has been some good resistance, we can get a good run on Microsoft to try to fill that gap, which is sitting at around 327 to 328. So no, I do like the chart of Microsoft's constructive. And we do like it here.
KATHERINE ROSS: One stock that's perhaps not having the best of days in this green market is Mastercard. Bank of America noted that their client spending grew 20% in comparison to January 2021. We have inflation on the table, which might be a bit spooky for consumers to stomach. So can credit card spending continue to stay strong, Chris?
CHRIS VERSACE: It's a great question, Katherine. And I think the right way to think about it is Mastercard makes money no matter what the transaction is, if it's a debit card, credit card, what have you.
So to the extent that people are a little extended, and they're going even further on their credit-- swipe, swipe-- or mobile payment, that is still a transaction over Mastercard. Or if folks want to get a little more cost conscious, they want to keep better track of their savings. They want to downgrade from credit to debit. So they're just paying with the money that they have. Swipe, swipe. That's another transaction on Mastercard.
So I think coming or going, what we're really talking about here is the continued shift away from cash and check. And yes, Mastercard continues to benefit from that. So we continue to like the name over the long term.
KATHERINE ROSS: Bob, this is another name that you all haven't really acted on, despite the weakness that it's seen and the fact that it's rated a two. So what's the approach?
BOB LANG: Yeah. So it's kind of been bouncing around over here. It made a nice series of higher highs. But it rolled over in February and came right back down to the breakout level that it had at the end of January. It had a really sharp move up in January for about four or five days. It went up about 25% to near all-time highs, around $400. And pulled back a little bit here.
We think that this area here in this 340 to 350 range is a good spot for subscribers to add the stock. Again, the chart was extremely constructive there. It's pulled back. So you know what? We look at these pullbacks as great opportunities to jump on board. So this area right here would be a good spot for subscribers to add.
KATHERINE ROSS: Next up, we've got NortonLifeLock. Between the Nvidia reports and Russia's invasion of Ukraine, there's been plenty of attention paid to cybersecurity, which leads me to NortonLifeLock bumping right up against that price target, Chris. Is it time to reassess this name?
CHRIS VERSACE: Oh, it absolutely is. Remember, Katherine, that one of the catalysts we were waiting for was the closure of its pending acquisition of Avast. They hit some regulatory timing hurdles. And they've pushed that out to, hopefully, early April. I believe the target date is April 4.
So as we close in on that and understand the potential synergies upside to revenue and the bottom line, we will indeed be taking a look at that price target, most likely revising it higher.
KATHERINE ROSS: All right, Bob. When would you trim this name?
BOB LANG: No, I actually I think buying it on pullbacks like we had more recently at the end of February is a great opportunity to get on board. And again, the trigger being this whole cybersecurity thing. Stock's really made a huge move up towards this $30 level. Seems to find buyers up $28, $29, $30. So no, I wouldn't be trimming this name yet at all.
KATHERINE ROSS: All right, let's go to Nucor. Nucor closed above your $130 price target, Chris. Mind you, it was by $1, but it's rated a two. So are you going to readjust this price target?
CHRIS VERSACE: So remember that we said we would keep Nucor as a play on the infrastructure bill. And that, as we commented earlier, still has yet to really kick in. That will be something for the back half of the year. But one of the things that's happening as a result of the current environment is steel prices have, along with other commodities, moved higher.
And we think about the price dynamics. Again, price times volume is revenue. For a company like Nucor, volumes can stay the same. Pricing moves higher. There's going to be some incremental revenue leverage and operating leverage. So I do think that it is time to take the pencil out and kind of revisit our Nucor price target.
The question for us, though, is going to be-- yes, steel prices are moving higher. How sustainable is that? So I think that we'll have to factor that into our thinking.
KATHERINE ROSS: All right, Bob. I'm not going to let you off easy with this one. Because now it is-- now in intraday trading it's above your price target by a couple of bucks. So when would you trim this name?
BOB LANG: Probably now. Take some money off the table. So to be honest with you, this is, along with AbbVie, one of the two or three best looking charts that we have in the portfolio. So when we see stocks move up through new all-time highs, it's a-- actually, I want to say it's a fun conversation for Chris and I to have.
Because we like to book profits. That's what we're supposed to do. That's the name of the game. And when we say that, hey, look, let's trim some off the table. We have some good gains on this particular name. And we often do that. And probably are often rewarded for that. As long as we keep some of the position on in the portfolio, take a little bit off the table here.
So yeah, this is probably an area where we're going to be doing some trimming. We've done it in the past. We did more recently on this name when it was up there in the high 120s. And we pulled back right after that. So yeah, this is an area where I'd consider taking some money off the table.
KATHERINE ROSS: OK. Our next stock up-- pardon me. Our next stock up is Nvidia. We talked about the reports around Nvidia's cybersecurity breach. And the company has now confirmed that the threat actor took employee credentials and Nvidia proprietary-- oh my goodness-- proprietary information from their systems, leaking it online. I want to reiterate that there's still no connection to the Russian invasion of Ukraine.
Chris, this is a short-term issue, obviously. But is it concerning? And does it make you grateful to have a company like NLOK in the portfolio?
CHRIS VERSACE: Of course it does. To me, what you just pointed out for Nvidia is a proof point for cybersecurity in general. Good for, as we shared in a note with members this morning, Cisco, Microsoft, and yes, NortonLifeLock.
Are we concerned about the impact on Nvidia? That same note really talks about how it takes time for companies to wrap their heads around it. The positive is that Nvidia appears to have been alerted to this attack rather early, which should minimize the overall damage. Hopefully, it'll just be a simple bump on the road as we continue to talk about the opportunities to be had, both in the graphics and data center business, but also the emerging ones tied to metaverse and their auto business.
KATHERINE ROSS: Bob, on Monday you told me that there'd be a buying level around $230. It's now at $240. Give me an update on where you'd buy it now.
BOB LANG: Yeah. It firmed above that 200 day moving average for the last couple of days and bounced off of it this morning. So I think even right here is kind of like your low risk entry point.
The only problem is on the high side you got the 100 day moving average coming in at about 268. So from here to there, it's about 10%, which is not a bad gain, of course. But it may get stymied up there, that 100 day moving average.
So again, right here would be a good spot to pick some shares up. If it gets up to that 268 to 267 level, you might want to consider taking some off the table. We're going to hold on to our shares. But again, from here, this is probably not a bad low risk entry point to add Nvidia.
KATHERINE ROSS: OK, let's go to Starbucks. Similarly to Chipotle, the rising price of labor and inflation
are concerning. We've talked about that. So I don't want to seem like too much of a broken record for our Daily Rundown watchers. But Chris, with Starbucks continuing to sink lower, what's the game plan with this stock?
CHRIS VERSACE: Sure. So again, the fundamental data for restaurant demands is positive. We know Starbucks has pushed through some price increases. So on the one hand, Katherine, we have that positive sentiment to deal with.
On the other side, though, one of the things that is popping up increasingly on the radar screen is unionization efforts as well as the continued rise in certain key inputs, coffee being one of them, but also other inputs in the food arena. We talked about wheat, but certainly others as well.
So this is one of the ones that we're really starting to take another hard look at to assess, OK, how much more upside do we reasonably have in the portfolio? How long are the shares potentially going to be range bound? And of course, what's the worst case scenario? What's the downside if all these negatives hit?
So it's one that we're starting to develop a new line of thinking on, Katherine. That's probably the cleanest way I could say it. So I would say stay tuned on this.
KATHERINE ROSS: All right, Bob. But with this range bound stock, what's your thinking here? What does the chart look like?
BOB LANG: So last week had a nice reaction low down to the low to mid 80s. And bounced back sharply, and now we're right back into the low 90s again. So I think the best scenario that we can have right here if we hold the shares, just a little bit of sideways consolidation here in the low to mid 90s. We can get that. And we get these moving averages starting to flatten out a bit. Maybe some earnings news coming in April is going to trigger some more buyers to come in.
It appears that maybe a lot of the selling was pretty washed out last week. So a lot of heavy volume, heavy turnover, which is what you see when the stock goes down when people are just saying, just get me out. I'm out. I'm done. I don't want to have anything to do with the stock any longer. And that often opens up the door for big institutional money to step in and start buying the stock.
So I think that that's where we're at right now. It could take a little while to get stock up above 100 again, maybe a couple of months. But let's see how it goes.
KATHERINE ROSS: We've got a few stocks left. Our next stock up on the docket is Skyworks. Chris, it continues to drop, though today it's higher. But it is nearing a 52 week low. This was a big conviction buy for you at the beginning of-- or at the end of last year, I should say. So what would make you cut the loss on this name? Or are you still incredibly convicted on this name?
CHRIS VERSACE: My conviction remains high, Katherine. I did my best Joe Biden impression there. I
hope people recognized it. No, continue to like the name.
Candidly, there really hasn't been any change in the thesis. I don't think that there will be any change in the thesis. Which, again, for newer members joining us, it really surrounds the revenue multiplier for Skyworks and its dollar content for 5G device, which should benefit not only as the overall smartphone market continues to roll out a greater mix of 5G devices, but also as Skyworks moves into other arenas, whether it's IoT and automotive.
And remember, they made that acquisition from the Silicon Labs business that should jump start its exposure to those markets. So continue to remain very, very bullish. Frustrated with the company for how painfully quiet it tends to be. I do wish they were one of the ones that would talk more about what they were doing.
KATHERINE ROSS: Bob, I got to put you on the spot here. Does the chart back up what Chris's fundamental analysis says?
BOB LANG: Well, the stock has fallen to about the 130 level a couple of times over the past few weeks and has caught some buyers down there. So I'm willing to wait it out, be patient over here. Moving averages are starting to flatten out a bit, which means that the downside is probably far limited now than it was before.
But let's give the stock the benefit of the doubt over here. It goes a little sideways here for a bit and gets a little bit of energy. It caught some buyers around a 150 to 165 level more recently. So I think if we can get back to those levels, we can get some more upside. It's going to take a little bit more time, but let's be patient.
KATHERINE ROSS: Union Pacific Corp. is one of those that I would like to call, as you just said, Chris, quiet. It's one of the more quieter portfolio names. We really don't talk about it as much.
So shine a light on this company here, Chris. What does it mean to you? And why is it still in the portfolio?
CHRIS VERSACE: So we tend to talk about Union Pacific about once a month on average, Katherine, whether it's in the Roundups, Alerts, or even on the Daily Rundown. And the reason for that is, while the company itself is rather quiet, I would argue rather boring, we do get some really good data out of the American Association of Railroads. And they have weekly data that they put out. But it's really the month data that really matters to us.
And I'd show you-- it's right on the screen over here. I'm staring right at it. February rail traffic was up 11% year over year. And that's crucial, because it was down in January. And that tells us a confirming sign that, yes, as Omicron has faded, the manufacturing economy has picked up. Goods are moving. The economy is actually picking up, again, the domestic economy.
To put some magnitude around that, February was up about 11%. That makes the first two months of the year up plus 3.6%. Remember I said January fell. So we like the company. It's a great economic indicator, goods and services-- sorry, goods, not services, have to be moving around in order for the economy to move. That's why UNP is a great, great name to watch. You know, like the name here.
KATHERINE ROSS: Bob, this name has seen slight weakness so far this year. But so has the entire market. It's still up nearly 16% over the past year. With this two rated stock, how much weakness would you need to see to pull the trigger?
BOB LANG: Pretty much a range bound stock here, Katherine. Since late November, around Thanksgiving, stock's been traveling between about the 230 range to 233 up on the down side. High side about 255. So it's about roughly a 10% range for the price of the stock, about 20 to 23 points.
So I do like UNP here. If it gets a break above that 255 level, look out above, because it's going to make a run towards 300. So I do like the stock here. Any pullback to that mid to high 230s range would be a great opportunity for subscribers to jump on board. Again, right here, it's in the middle part of a range.
It's a little bit more dicey right here unless it breaks out. Then we'd be inclined to suggest adding more shares as a momentum play. So we do like UNP. And again, like Chris said, it's going to be a nice infrastructure play down the road for many years to come.
KATHERINE ROSS: All right, we've got UPS up next. It's another name that's been impacted by Russia-Ukraine. UPS announced this weekend that it was suspending shipments to Russia and also halted inbound and outbound services to Ukraine as well. What kind of impact could that have on the next quarter, Chris?
CHRIS VERSACE: Well, I think the larger question, Katherine-- good points, as always. But the larger question is what the limits on Russian airspace are going to be. I say that, because when you look at the data in the air cargo market, about 25% or so has to cross through that going from Asia to Europe, Asia to the US.
So to me, that's the bigger concern. And again, it's kind of a moving target, no pun intended. Because we just don't know how long this is going to last. Odds are we're going to see some negative revisions for UPS because of, not only what I just pointed out, but also the key parts of your question there, Katherine.
So this is one of those names that we will see those revisions happen. But I think people will eventually look through that, given the longer term opportunity with continued adoption of e-commerce and other driving factors. So it could be a little bumpy road ahead for UPS, if you will, Katherine.
KATHERINE ROSS: Bob, the stock is down slightly in the past month. It's only $50 or so away from your price target. What kind of weakness or what level would you want to see the stock sink to in order to hit the buy button?
BOB LANG: So up to 100 day moving average three or four days in a row here, Katherine. The stock has made a nice move today. The low being around 205, 206. It's up $6 today. Having a strong move. It's above yesterday's high.
If it pulls back down again to that level, I'd certainly want to pull the trigger and add. Let's call it 205 to 207, roughly, in that area. But if it continues to move through after today's nice move, we're going to make a run towards that gap. There's a big, huge gap that's opened at around-- let's call it 224, 223.5. So that's an area that I'd be looking to move towards if the stock falls through on today's move.
KATHERINE ROSS: And our final stock by stock name today is Walmart. Chris, after looking through the Target quarter, I have to ask, why own Walmart instead of Target?
CHRIS VERSACE: Well, you can't own all of them. That's the first comment, Katherine. Why do we like Walmart? Look, a couple of reasons. We've written about it somewhat extensively from the angle of it being an inflation darling. And by that, I mean consumers looking to stretch their disposable dollars. But that's the same with Amazon and Costco.
And I think one of the other angles that we have to appreciate with Walmart is, one, its omnichannel presence. It's clearly, clearly a monster in that arena. But there's some other things, too, that Walmart is doing to really expand its presence, particularly on digital. There's some new technology they announced today on the AR front that allows people to virtually try on clothing. They are also doing some other things, taking their online brands upstream as well.
So Walmart-- I'm not going to sugarcoat it. It's been essentially dead money since we took over the portfolio. And I can understand why members would be frustrated. But remember, Walmart's kind of like a tanker ship. It moves slowly, but as it really picks up speed, we start to see the benefits of those moves and those investments that they've been making. So I wouldn't exactly count Walmart out just yet.
KATHERINE ROSS: Bob, does the chart back up Chris's comparison to a tanker ship?
BOB LANG: No, I like the Walmart opportunity here for subscribers. Stock is flirting with that 137 to 139 range where it caught support in December and October of last year. It's been pretty constructive more recently. Had some really good volume. When it got down to those mid 130 levels, it just broke through last week and bounced right back again.
So no, I'm pretty constructive. It's not going to get there overnight. But I certainly think that a move right back to the all-time highs, another 10% from here, is certainly not out of the realm of possibility here. I think that-- catching some buyers more recently. It's picking up big institutional money. Again, volume, turnover really tells the story for that.
And again, just working its way towards the moving averages, the 200, the 50 day moving average. Not too far away from here is going to be positive for Walmart. So I like Walmart right here.
KATHERINE ROSS: All right, guys. Let's end with the biggest question that I've gotten pretty much all year long so far. And Chris, that is the amount of cash that the portfolio has shored up.
CHRIS VERSACE: I'm so happy. I'm so happy.
KATHERINE ROSS: How will the portfolio put the cash to work? What kind of opportunities are you eyeing?
CHRIS VERSACE: So I was taking quite a bit of notes on our conversation today, Katherine. And it is true that we did run the cash up. We were a little concerned about the unfolding of the geopolitical landscape. And it turned out that we were correct on that.
But for folks listening today, we talked about Morgan Stanley. We talked about Applied Materials, AMN. We talked about potentially even Nucor. And I believe Bob was a little bullish on UPS there at the right price.
So there's ample opportunities for us to put that cash to work. Recently, too, we also introduced several new names into the bullpen, one of which includes Cboe Markets. I touched on the Biden infrastructure bill this morning and said it has us circling back-- sorry-- taking a fresh look at companies that include Vulcan Materials, Granite Construction, MLM, Martin Marietta Materials, and others that are poised to benefit.
There's was a question about Deere and benefiting from infrastructure. I countered with Caterpillar, Terex. Other companies we could put in there would be United Rentals. So we are painfully aware of the amount of cash that we have. It has served us well. But we also don't want to be caught flat footed with that cash. So we are preparing to make the move as the markets, particularly on the geopolitical front, and the earnings expectations that need to be revised because of that, start to get baked in.
KATHERINE ROSS: All right. As always, I'm going to be following up with you on that. Members, that ends our munch-- oh my goodness. Our March monthly members only call for Action Alerts Plus. Thank you so much for joining us today. Please continue to send any and all questions to email@example.com. And we'll see you next month.