Using Volatility To Initiate Some Names, Add To Some Key Positions

10 Nov 2021 3:15 PM EST

Stocks mentioned: SWKS, VWAGY, CSCO, GOOGL, AMD, F, DIS

Stock market is continuing its 2nd day of sliding off from all-time high, with the S&P 500 down about 1% at the time this post was written. This is exactly what we had predicted last week and executed our strategy of selling into strength, built up a heavy cash position, so that today we can start to think about go cherry-picking stocks and positions to add to our portfolio. 

Here are the moves we've made so far today:

1. We start a position in Skyworks (SWKS), this is a semiconductor play. This stock is now 2% of our portfolio. We will write a full, detailed analysis later on.  

2. We start a position in Volkswagen (VWAGY), an electric-vehicle play at a very low multiple (forward PE~7). We are just starting with a 1.4% weight right now, but would like to work it to a 5% over-time. This is in addition to Ford which we remain very strongly convicted in, which is 12% of our portfolio right now.

3. We start a position in Cisco (CSCO). This stock is now 2.4% of our portfolio. We have yet to give you a full, detailed analysis, but in short, this is a "value" tech play (strong balance sheet, have earnings, low P/E compared to broader tech market).

4.  We added to our position in Google (GOOGL), which we added mid-to-late October. Shares of Google now take up 2.4% of our portfolio, slightly underweight (we want 3%), so we will likely make a purchase within this month.

5. We're keeping our eyes on shares of AMD. It basically has given off all the gains that it had on Monday, after company announced new products and key partnering with Facebook. We wrote about that here. We also said that we're underweight in that position (3% currently compared to 5% desired), therefore we will be looking to buy more on further downside. We'd wait for the 20-day Moving Average to catch up, which is at 125$ currently.

6. We're also keeping our eyes on shares of Ford. With the sales that we have been making, we're also underweight in that position (12% currently compared to 15% desired). We will start looking to position ourselves in Ford for 2023 (yes, 2023), when analysts at JPMorgan expects the company to earn 2.65$/share. Given a 10x forward multiple (valuation it currently have), the stock in 2022 should trade up to 26.5$/share (but as you know, we expect more than a 10x forward multiple). We'd wait for the 20-day Moving Average to catch up, which is at 17.3$ currently.