Got Housing?
“The best stock to buy is one you already own."
- Peter Lynch
The Portfolio
Year-To-Date the portfolio is up over +28%.
Our benchmark index, the S&P 500 is up 25.17% YTD.
If you're an investor looking for diversification and growth, and you'd like to know more about the way I build a portfolio; please feel free to email me. clay@claybaker.com
Got Housing
Today mortgage giant Fannie Mae's Economic and Strategic Research Group announced that housing starts increased at just over 1% annually in 2019. For 2020, housing starts will accelerate to 10% and in 2021 will top 1 million new homes, which is a post-great recession high, but still below the 1.7 million new starts achieved in 2005. Single family housing starts and building permits have been increasing since May. Fannie Mae see's housing starts only increasing more beyond 2021 as the number of 25-34 year-olds living at home is still increasing. As the great wealth transfer continues from boomers to millennial's and rates remain low, housing starts will grow steadily. What's pushing the new housing starts number is a lack of existing housing for potential buyers.
The Mortgage Bankers Association reported that mortgage applications for newly built homes were up 27% in November. Supporting this data, Home Builder confidence soared to the highest level in 20 years during December.
So how does this impact our investment thinking? One might think, buy the home builders, there several good ones to choose from if you know their market segments and can analyze the stocks of each one. There are a variety of building products companies that will benefit from all this new construction, again I think this is a tough approach, especially since building products companies tend to be conglomerates with individual divisions that can sway performance.
My call is perennial favorite Home Depot (HD)
Home Depot (HD)
Based on this new research I'm adding 15 shares, increasing our holdings to 35 shares of Home Depot for a long term hold.
To fund the purchase I'm selling a great company, Heico. Heico is an exceptionally well managed company that sells parts and services to the aviation industry. Unfortunately Heico along with all the other supply and services companies in aviation have been hit by headwinds from Boeing.
Our sale today of Heico will capture a 50.63% gain, selling shares at $116.51.
I'm also trimming our holdings in Tilly's which is near our price target of $13. I'm selling 100 shares of Tilly's at $12.12 per share for a gain of 53.42%.
Sold HEI @ $116.51
Sold TLYS @ $12.12
"Markets don't go to zero, Portfolio's do.
Buy quality, be patient...and look twice for motorcycles."
- Clay Baker
Stay Invested,
Clay
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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)
VEEV reaches $145/share (2-14-2019) (achieved $145.23 on 5-10-2019)
CVS reaches $91.50 (2-27-2019)
Bull market takes another leg up (4-7-2019)
The Fed will lower rates 1-2 times (5-13-2019)
Clay's Rules
Rule #1: Don't lose money
Rule #2: See Rule #1
Rule #3: Portfolios go to zero, markets don't, Stay Invested
Rule #4: When a good stock you own drops 10% below your cost basis, add shares
Rule #5: Bull markets aren't sustained without the Transports
Rule #6: When Forward P/E is lower than TTM P/E, expect earnings to increase
Rule #7: When an investment bank sells below book value, buy it
Rule #8: Tips are for waiters. Do your own homework.
Rule #9: Don't sell a stock because you're bored with it. Do your own homework.
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:
HD, AMRN, BSTC, CVS, CSCO, VEEV, STZ, AMZN, NVDA, BCRX, GS, BDSI, VEEV, VTI, GLD, HD, AWR, XLNX, MRVL, NBRV
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.