Adding CVS & Amazon today
The Stay Invested portfolio was UP today: $635.65 (+0.59%)
Overall GAIN/LOSS YTD: +$4,207.04 (+4.10%)
Our benchmark index, the S&P 500 is UP Year-To-Date +6.95%
(daily performance is updated after the close, early blog posts typically show the previous days performance)
"Don't work for money, work for passion,
and let your money work for you."
― Clay Baker
The live portfolio feature has been not playing nice with some readers. A new version is now up that seems to be working okay. Prices are delayed and I haven't had time to integrate the color scheme with the web site; apologies for lack of style.
CVS Health Corp
On January 30th I stated that CVS might be the cheapest growth stock
opportunity in the market. I've set a limit buy order at $65. However I'm willing to buy any between $64.50 - $66. The after hours trade dropped below $63, so I reset my buy order at $63 and picked up half our position. I'll wait for another pull back below $63 to pick up the rest.
As I mentioned in my last post this merger will have a dramatic impact on healthcare costs in the US, not just prescription medicines, but over all healthcare costs. The Kaiser Family Foundation has provided these estimates.
Amazon has been on our buy list but the stock just wouldn't pull back. Yesterday the stock gained and then sold off hard after hours because during the earnings call we got news that the Wholefoods business isn't doing as well as analysts expected and business has been difficult in India. This is exactly what I was looking for and hope all of you are attuned to as well; an over reaction to news that is not a systemic flaw in the business. The stock market is a discounting machine for future growth; but analysts will take the hear and now and somehow conjure up that the future looks bleak. In the grand scheme of things Whole foods is a very new acquisition that is still being integrated and
perfected. Why would any analyst think that the failed Whole Foods business or any of their bricks-and-motor initiatives would suddenly be cranking out profits or even reducing losing investments? What's important is the YOY growth we keep seeing, the massive increases in YOY earnings. The growth of AWS and their advertising business and improvement in their retail ecosystem because of their voice activated devices is impressive. But the retail component is almost 70% of 2018 sales so expanding retail globally is important which brings us to India.
The most distressing part of the earnings call was India. India represents one of the largest consumer markets in the world, so obviously an important market for Amazon. During the call we learned that Amazon has been forced to pull about 400,000 products from it's India site; surprise! No not really. At the end of 2018 we learned that a new regulation in India imposes a ban on exclusive sales, prevents retailers from selling products on platforms they count as investors, and it applies restrictions on discounts and cashback promotions. In 2016 India passed a law that prohibits online platforms like Amazon and Walmart's Flipkart from owning the inventory they sell. The latest revision of the law prohibits Amazon from having its own branded products from being sold by third parties on the Amazon platform. These actions by India's government are a blatant attempt to restrict foreign retail dominance and to give support to local businesses; why, because eCommerce in India is worth about $100 billion dollars. It's the opposite of a free market. In the short-term the consumer will lose out, but the consumer who wants those products will prevail and find a way to get what they want. In the mean time lets profit from Amazon being offered up much too cheap. Cheap? Yes, on just about any metric I look at Amazon is cheap. Example; if I carve out Amazon's apparel business it's priced in line with Nike, who by the way sells its products on Amazon. Is that a fair comparison, yes, considering that Amazon is the largest US apparel and footwear retailing in the U.S. at roughly $30 billion in sales.
My buy below price has been $1600, but it doesn't seem to want to get that low, even on this horrendous news. I put in a limit order last night at $1,630 for 50% of our position and the order triggered shortly after the open. I would still be a buyer between $1,630 and $1,660.
We started the year with a 25% stake in our position, 12 shares at $47.02. The stock has pulled back so I'm adding 12 more shares at $45.54. This purchase has us at a 50% position and an average purchase price of $46.28; we lowered our cost basis. Sony's dividend isn't meaningful, so this one is a bet on growth over the next 11 months.
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Keep Me Honest
S&P 500 declines to 2,350 or more (1-3-2019)
Healthcare and Biotech sectors outperform (1-3-2019)
S&P reaches 3,000 by year end (1-11-2019)
CSCO reaches $60/share (1-18-2019)
Disclosure: I am personally invested long in some or all of these stocks or funds that appear in the Stay Invested portfolio and may purchase or sell shares within the next 72 hours. I am also invested in other stocks and funds that do not appear in the Stay Invested portfolio but may be mentioned or related to this article. It is not my intention to advise or encourage the purchase or sale of any security. I am invested long in these securities mentioned in this post:
CVS, CSCO, VEEV, STZ, AMZN, NVDA, BCRX, GS, BDSI, VEEV, VTI, GLD.
I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article. This article is not intended to offer investing advice, guarantee 100% accurate predictions, or to be interpreted as providing a personal recommendation.