Possible Pecking Order for Our Shopping List
Laying the groundwork for potential next moves following the ones we made so far this week.
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Following the moves we’ve made with the Portfolio on Tuesday and Wednesday and our cash level sitting just over 11%, we suspect that more than a few are wondering what any next moves might be, especially after recently bringing a few new names into the Bullpen. While we tend to be a little tight lipped and shy away from telegraphing a new position for the Portfolio, we will share that we are interested in diversifying the Portfolio’s exposure, which would also lessen the overall influence of tech, AI and AI infrastructure.
While we are not ready to pull the trigger, we will discuss two Bullpen holdings that are bubbling up to the top of our shopping list — Toast (TOST) and International Flavors & Fragrances (IFF) — as well as another that we’ll be looking to call back up to the Portfolio at lower prices.
Following our deep dive on TOST shares, we outlined how we can get to a $45 price target for those shares, and while that offers quite a bit of upside, what we’re seeing with the MACD indicator in the below chart has us holding off for now. Should see a turn in the slope of that indicator, and the shares get closer to the intersecting support level just below $32, that would be a very nice risk to reward entry point.
Turning to IFF shares, near-term we will remain focused on input costs, including petroleum-based ones used in the company’s Scent segment, and how they are expected to be a drag on margins in the current quarter. Recent pricing actions taken by management should begin to alleviate those pressures in H1 2027 and the expected sale of the of the Food Ingredients business for $4.3 billion should also close in H1 2027.
To us that means a sustained inflection in IFF shares is more likely an H1 2207 event, but that could be pulled forward if we see further meaningful declines in oil prices. What this means is we would like to start building our position ahead of that turn. That has us stalking the shares following their move below the 100-day moving average near $83.61 as well as their MACD indicator. More to come as we see what develops in the chart and with input prices.
The third that we are interested in calling back up to the Portfolio following our exit near $189 is the Health Care Select Sector SPDR Fund (XLV). When we sold the shares, we did so following the sharp run they experienced following the pullback that weighed on the market last week. But following CoreWeave’s (CRWV) earnings and the pending IPO from Anthropic that should alleviate some of the overhang on that complex, we would look to rebuild our position in XLS shares at lower levels. Ideally this would be closer to $180, which would fill the gap in the chart. Closer to $175 would be ideal, but that would also give us an opportunity to scale up the position size.
Keep in mind that as we share these lines of thinking, we will want to keep some flexibility in our thinking subject to fresh developments and data. While these are high on our shopping list, it is possible that something comes along that bumps another stock to the head of the list. But that’s part of the job.
