8-Nov Portfolio Action: Trimming Some Nucor (NUE)

8 Nov 2021 9:10 AM EST

Futures market is indicating we will open up this morning, at another all-time high, and this move is largely contributed by the passage of the infrastructure bill late on Friday afternoon. One strong benefactor of this is Nucor (NUE), best-of-breed steel maker company which we own. We wrote about this expectation in our weekly round-up last week, which you can read here to prepare for this trading week. 

Shares of Nucor is indicated to open up 6%, between 118-119$. However, we will use this strength to trim some shares of Nucor at this price (trim about 1/5 of our position). While passage of the infrastructure bill is certainly good news for Nucor, we believe this is not necessarily "news", given everyone expects some form of infrastructure will get passed at some point. We own Nucor in the $105, and at this opening price we're sitting on a ~10% gain. This highlights our investment strategy of actively managing our portfolio by opportunistically buy and sell, rather than inactively buy-and-hold forever. Still, our investment thesis in Nucor remains unchanged, that steel demands will be strong for years to come, and current analysts' estimates of Nucor 2022 earnings (to be cut in half) are too low and should be revised higher.  

U.S. Lifts Its Travel Ban Today

Today the U.S. lifts the pandemic travel ban on international visitors from over 30 countries that has been in place for 19 months. The new rules for entry require proof of vaccination and a recent negative COVID test. United Airlines (UAL) expects 50% more international inbound travels today from last Monday and plans to fly 69% of its international schedule next months, up from 63% this month and its trans-Atlantic schedule will be 87% restored in December. American Airlines (AAL) expects it international capacity for November and December to be more than 2x that of the same time period in 2020 and just over 70% of 2019 levels. We expect this catalyst will drive the shares of Disney (DIS), which we actually have been seeing this stock moving up in the recent days from the low 170$ to the high 170$. DIS will report earnings later this week.

PayPal Earnings After the Close

After today's market close, beleaguered PayPal (PYPL) will report its quarterly results. While PayPal has a track record of beating its consensus expectations, its June quarter revenue fell short of expectations. We'll see how conservative the company's "soft" September quarter outlook that calls for revenue of $6.15-$6.25 billion and EPS of $1.07 is. In that report we will be paying close attention to growth in active accounts, transactions per active account and potential room for margin improvement as well as in-story payment initiatives and Merchant Services growth. As we review those outcomes and the company's outlook, we'll continue to keep close watch on the technical outlook for PYPL shares.

Rivian IPO This Week

Lastly, this week brings the expected IPO from EV company Rivian (RIVN), which is expected to price 135 million shares in the $57-$62 range. Given the portfolio's ownership stake in Ford Motor (F) and Amazon (AMZN) , we will be closely watching how this IPO performs in the coming days.