The portfolio tracker tool has been updated for August, and our holdings and performance remain on track for continuing long-term success. We’ve made one position change to our target weights for both the Disciplined Growth and the Income Equity portfolios.
New Options Trade: Very High Upfront Income, Bullish Vertical Put Spread
This report reviews an attractive high-income-generating options trade on a compelling long-term fintech business (Warren Buffett and Cathie Wood are both shareholders). The trade generates attractive upfront premium income, and gives you a shot at picking up shares of this attractive business at a lower price. We believe the trade is an attractive one to place today, and potentially over the next few trading sessions, as long as the price of the underlying shares doesn’t move too dramatically.
Celsius Fitness Drinks: High-Growth Disruptor, Important Things to Consider
Celsius Holdings offers fitness-focused energy drinks, and the business has been experiencing dramatic growth as the pandemic serendipitously led the company to shift its marketing strategy from gyms to mainstream. Investors are optimistic as the company has serious momentum but currently holds just over 1% market share (suggesting a lot of room for continuing growth). However, Celsius faces formidable competition (such as Red Bull, Monster and Rockstar). In this report, we consider the business model, market opportunity, financials, valuation and risks, and then conclude with our opinion on investing.
Dry Bulk Shipper: 6.4% Yield, Attractive Supply-Demand Dynamic
There is a lot to like about this large dry bulk shipper, not the least of which is its attractive 6.4% dividend yield. More specifically, the company is benefiting from a cyclical rebound in dry bulk shipping rates, on both the supply and demand sides. It’s expected to announce earnings on August 5th, and its 8.0% yield baby bonds are expected to be called at the end of this month. In this report, we review the business, market conditions, prospects, valuation and risks, and then conclude with our opinion on investing.
New Options Trade: Dividend Capture Covered Calls, Blue Chip Pharma
Today we share an income-generating options trade on a healthy-dividend blue-chip pharmaceuticals company. The trade not only generates compelling premium income and gives you a shot at selling the shares at a solid gain in less than 1-month, but it also gives you a chance to capture the dividend payment if the shares don’t get called away from you before the ex-dividend date in a little over 1-week from today. Also very important, we like this healthy-dividend company as a long-term investment, and we wouldn’t mind holding on to the shares if they don’t get called away. This is an attractive trade to place today and potentially over the next few trading sessions.
Powerful Blue Chip: Highly Attractive, Classically Misunderstood
The stock we review in this report is highly attractive, even though its financials are misunderstood by many. Specifically, the company is the strong leader in providing a business critical function that is being transformed from an outdated manual process into a 21st century digitized cloud-based solution. And the total addressable market opportunity (to keep growing rapidly) is massive and growing. Unfortunately, many investors misunderstand the high valuation multiples and low profitability as a weakness. To the contrary, it’s an absolute strength and the right thing to do as the company capitalizes on the highly attractive opportunity. This business will eventually become a massive cash cow.
Top 5 Growth Stocks: Despite Fear, Massive Upside
One of the biggest deterrents to successful long-term growth investing is near-term fear. Whether its driven by the relentless media fearmongering, short-term Wall Street valuation methodologies, or the psychological notion that people react more than twice as strong to down moves as up moves, near-term fear prevents investors from participating in massive long-term gains. It’s challenging for some people to recognize the amazing power of compound growth, but it is often referred to as the 8th wonder of the world by those who understand it. In this report, we countdown our top 10 growth stocks with massive upside potential (despite near-term fear), starting with #10 and finishing with our #1 top idea.
New Options Trade: High Upfront Income, Attractive Mortgage REIT
As interest rates (including mortgage rates) have slipped in recent weeks, so too has the share price of this attractive mortgage REIT fallen. It now trades at a significant discount to its last reported book value, and we believe this combination of events has set us up for a nice high-income-generating options trade. Specifically, we believe the trade described in this report is an attractive one to place today and potentially over the next few trading sessions, as long as the underlying share price doesn’t move too dramatically before then.
New Options Trade: Dividend Capture Covered Calls, Energy Midstream
Today’s income-generating options trade utilizes a dividend capture covered call strategy, whereby the trades nets you attractive premium income, potentially attractive dividend income (if the shares don’t get called), and captures attractive share price gains (if the shares do get called). The trade is on a compelling “high-dividend” midstream company that we own already, but you can also purchase the shares as part of this trade if you don’t own them already. We believe the trade is attractive to place today, and potentially over the next few days, as long as the share price doesn’t move too dramatically, and as long as you own the shares (settled in your account) prior to the ex-dividend date (expected on or around July 29th).
The Trade Desk: Growth at an (Un) Reasonable Price?
If you don’t know, The Trade Desk (TTD) is growing rapidly. The company’s self-service software platform (that enables ad agencies and brands to make data-driven ad placements across a variety of mediums) is benefiting dramatically from secular growth in digital ads and Connected TVs. Further, the company’s recent launch of a more secure and effective Unified 2.0 solution (an alternative to cookies) has added to the growth momentum. But is the company’s valuation simply too high? In this report, we review The Trade Desk’s business model, its market opportunity, financials, valuation and risks, and then conclude with our opinion on whether the shares offer an attractive balance between risks and rewards.
Digital Payments Company: Attractive Growth and Value
The company we review in this report has tremendous long-term price appreciation potential—thanks to its ongoing high growth trajectory, its large total addressable market and its reasonable valuation. The pandemic accelerated one half of its business, and now the other half is expected to accelerate thanks to re-openings. This one doesn’t pay a dividend, and the growth can be lumpy, but over the long term the company has a clear path to dramatic share price gains. In this report, we review the health of the business, growth opportunities, valuation, risks, and conclude with our opinion on investing.
New Purchase: High Growth Media Platform Stock
This is simply a quick note to let you know we made a new purchase in our Discipline Growth portfolio this morning. This is a high growth company that recently posted another quarter of impressive results whereby they raised forward guidance on their already very strong and healthy growing business. The shares are trading below the price when we released our original full write-up on the company back in March (see that full write-up below). And as mentioned, the business continues to improve. The shares sold off hard on Friday (on what appears to be incorrect news about an application rule change). We don’t expect the price to stay low for long, and we just added shares this morning.
Very High-Income Options Trade, Bullish Vertical Put Spread
This global oncology company with patented “Tumor Treating Fields” (“TTF”) technology. It has multiple programs in phase 2 and phase 3 of clinical trials which can potentially result in exponential revenue growth and Total Addressable Market (“TAM”) expansion. The shares are volatile (for example yesterday they declined more than 14% as the market reacted to the company’s final results from a liver cancer study), and this volatility has given rise to an attractive high-income-generating options trade. The trade strategy sounds complex (i.e. “bullish vertical put spread”), but it’s not. It puts attractive upfront premium in your pocket today, it gives you a chance to pick up shares of this attractive stock at a lower price, and it gives you a little insurance on the downside (i.e. your max loss is limited). We believe this is an attractive trade to place today—and potentially over the next few trading sessions (including post the holiday)—as long as the underlying share price doesn’t move too dramatically before then.
7.7% Yield: A Rare BDC Offering Dividend Growth, Equity Upside
While other business development companies (“BDCs”) were cutting their dividends as a result of the pandemic, the big-dividend payer we review in this report not only maintained theirs, but has also significantly increased it in each of the past four quarters. Moreover, the shares are trading at an attractive discount to net asset value (“NAV”). In this report, we review the health of the business, the highly-experienced management team, its balance sheet, liquidity, dividend safety, valuation and risks. We conclude with our opinion on investing.
New Options Trade: High Upfront Income, Attractive Business
The company we review in this report provides value-based care exclusively to Medicare eligible patients, and it is improving outcomes and reducing costs. The business is attractive as a long-term investment, however it is setting up nicely for a high-income-generating options trade. We believe the trade described in this report is an attractive one to place today and potentially over the next few trading sessions, as long as the underlying share price doesn’t move too dramatically before then.
A Top Growth Stock: Well Positioned to Leverage Global Streaming Tailwind
There are a lot of things to like about the largest TV-based on-demand streaming platform in the US, starting with its dramatic business growth thanks to the global shift from linear TV to over-the-top (“OTT”) streaming services. The company is consistently delivering powerful top and bottom-line growth, driven by an increasing number of users and higher advertising revenues. It’s also taking initiative to expand into international geographies (to fuel more growth), and it enjoys a very large and expanding total addressable market opportunity. In this report, we review the business, growth, its unique selling opportunity, the financials, valuation and risks. We conclude with our opinion on investing.
Top 10 High-Income CEFs (5.2% to 9.4% Yields)
If you like high-income investments, this report reviews our top 10 high-income closed-end funds (“CEFs”) with annual yields ranging from over 5.0% to over 9.0% (many of them paid monthly). The opportunities range from bond funds to style-specific equities, and we consider the distribution yields, premiums/discounts (versus NAV), investment strategies (versus current market opportunities), fees, risks and more. We currently use a handful of CEFs within our prudently concentrated Income Equity portfolio (along with other attractive income opportunities, such as dividend-growth stocks, REITs, BDCs and more), and if you are an income-focused investor—the CEF names on this list are very attractive and worth considering. Without further ado, here are the details on our top 10 high-income CEFs.
PIMCO's Big-Yield CEFs: Cracks in the Dam? (PCI) (PDI) (PKO)
Income-hungry investors flock to PIMCO’s fixed-income closed-end funds for multiple reasons, including the big yields (often in excess of 9.0%), monthly payments, and sometimes even the ridiculously low prices (as we wrote about here and here). And while some investors are reassured by PIMCO’s track record of no distribution cuts in several of their most popular funds (for example (PDI), (PCI) and (PKO)), there is a lot more going on under the hood, and the recently proposed merger between these funds could be a little window dressing by the firm as the track of no distribution cuts may be in jeopardy. In this report, we pull back the curtains on these funds to reveal a little bit about how the sausage is made, and then conclude with our opinion on whether they still make for good investments, or if it is time to move on to new opportunities.
Palantir: Selling Put Options, Lots of Cash
Big data software company Palantir has become an emotional stock for many people with widely ranging viewpoints. And these differing viewpoints have created volatility that leads to high premium income (i.e. cash) being available in the options market. In this report, we share a high income-generating options trade on Palantir that we believe is attractive to place today and potentially over the next few trading sessions, as long as the price of the underlying shares doesn’t move too widely before then.
Palantir: Massive Upside
Palantir is a software company, that is growing rapidly, and it has a massive total addressable market. It provides big data analytics solutions (ranging from data mining to visual analytics), on a single consolidated platform, thereby enabling informed decision-making. The company is having great success landing and expanding government agency contracts, but is also recently attempting to diversify into enterprise-grade commercial organizations too. In this report, we analyze Palantir’s business model, its market opportunity, financials, valuation, risks, and finally conclude with our opinion on investing.