VIDEO: Here's Our Take on March Retail Sales

In today’s Daily Rundown video, Chris Versace discusses the portfolio's decision to add to Universal Display OLED and boost its Qualcomm QCOM price target. 

He also walks through the implications of the March Retail Sales report and touches on a few other portfolio holdings, including Bank of America BAC and Morgan Stanley MS.

Transcript

CHRIS VERSACE: Hey, folks. Chris Versace here. April 15th, better known as, unfortunately, tax day. Hope you're all caught up, got all your paperwork done, whatever that may be for you. As we kick off the day, the stock market is higher, but we are waiting to see what happens next in the Middle East. Is there going to be a round of further escalation between Israel and Iran, or do we see some deescalation, calmer heads and the averting any potential risk of, let's just say, something more potentially a war?

But we'll continue to wait on that, ascertaining what that might mean next for our shares of XLE on the energy front, or gold with GLD. But let's get to some of the action this morning. We upgraded our price target on Qualcomm to $200 from $175. We also added to the portfolio's position in Universal Display. What was the catalyst for that? Well, IDC came out with their initial findings for smartphone volumes in the first quarter, and they were up about 7.8% year over year, a little better than expected.

But when we dig into the report, there was a little more positive news. Yes, Samsung's smartphone shipment volumes in the first quarter were down ever so slightly. Apple was down 9% plus, and I'll talk about that in a second. But when we strip those out and we look at the rest of the market, it was up about 17% year over year, huge volumes, which is really very good for Qualcomm, the arguable arms merchant, when it comes to the types of chips that it manufactures.

And we know there are more devices sold, which means that volumes were likely better for organic light emitting diode displays, a positive for our shares of Universal Display. So with that, we did upgrade our price target for Qualcomm, and we picked up some additional shares of Universal Display, like I said. The next catalyst for both of those names, as well as Apple shares, will be Wednesday's report from Taiwan Semiconductor.

Now, last week, we know the company reported a simply great March revenue number for themselves. And when we aggregate that together with their January and February results, the March quarter positive, as well. But when Taiwan Semiconductor reports on Wednesday, we'll understand how much of that is high performance computing, how much is smartphone. Based on IDC'S findings, that looked like smartphone might surprise a little to the upside.

But more importantly, when Taiwan Semi gives its guidance, we'll have a better idea of what's in store for the current quarter, when it comes to smartphone volumes, good for Qualcomm Universal Display, and potentially, Apple. But remember, with Apple in particular, as well as Qualcomm, really, what we're watching for 2024 is the AI on device upgrade cycle. So we will want to be hearing comments from that out of Taiwan Semiconductor again on Wednesday, but also from other companies, as they report in the coming weeks.

As we saw last week with Apple shares, there is excitement and potential enthusiasm for Apple's AI events. They talked about, last week, bringing a round of AI with the new M4 chips later this year for its Macs. Soon we will see what they're going to do for the larger revenue contributor business that is iPhone. So we'll continue to be positively optimistic on that. If we do see the shares pull back, we do have some room to add further to Apple and it is something, as I've said, we'd like to do before the AI on device upgrade cycle really gets underway.

Now, today we also had the March retail sales report. And, boy, oh, boy, was it a strong one. You know, the retail only print was up about 3.6% year over year. Again, that's for the month of March. How does that compare? Well, February was up 1.5%, and for the quarter in full, it's about 1.6%, again, on a year over year basis. So that tells us that consumers are feeling incrementally positive, opening their wallets much more than they did in February, much more than they did in January.

Where were they spending? Well, as we suspected, digital shopping was up big, 11.3% or so on a year over year basis, up substantially, compared to plus 7% year over year in February. Again, we know why this is. Amazon's big spring sale event and competing efforts by others. We continue to favor Amazon, as well as Costco, as inflation continues to linger. Arguably, consumers will feel the pinch incrementally of higher fuel prices. We think that bodes extremely well for Amazon, Costco over more traditional retailers.

And as you know, we do like to talk about the March retail sales report, relative to Costco's recent print. They came out last week with their March revenues. And without a doubt, sizing up the two, Costco continues to take consumer wallet share. So we remain bullish on Costco, especially as they continue to expand that high margin footprint. Two other quick areas where folks were opening their wallets more, restaurant shopping, restaurant retail sales, obviously, good for our shares of McDonald's for its US business, but then, also, grocery, which is, of course, positive for our shares of PepsiCo.

One other thing just to talk about this, the overall strength and acceleration. This does have us wanting to revisit our Mastercard price targets, so we're going to put on our thinking caps and see what kind of upside we can see, relative to our $490 current price target for Mastercard. And we'll have more in depth comments and alert coming to you later today. But just some other quick portfolio news. Citi named the shares of Nvidia as a 90 day catalyst watch. Lockheed Martin shares were upgraded to a buy over a JP Morgan.

No surprise in our view, just given the current geopolitical landscape. But also, we're getting that much closer to a potential positive announcement on the F-35 front. And as we talked about in Friday's roundup, you know, Lockheed just continues to win very large, very favorable programs that are just extending its multi-year backlog even further. We do love that type of visibility that we get with Lockheed Martin. And then finally, this morning, Goldman Sachs came out and reported simply wonderful numbers.

Reaffirms our view that the financial firms, investment banks that kind of have a greater exposure to investment banking and asset management should do very well. I think this speaks favorably for what we hear from Morgan Stanley tomorrow, Tuesday, but also from Bank of America, as well. That, folks, is today's video. Thanks for watching.

Please be sure to check your alerts throughout the day. We want to make sure you're getting our latest thoughts in any moves with the portfolio, especially given the amount of economic data we have this week, the 11 Fed heads that are on tap, and incremental vector and velocity, as we like to say, when it comes to earnings season. And remember this week, we do have Morgan Stanley Bank of America tomorrow, Tuesday, Thursday, Elevance Health. Again, thanks for watching.

At the time of publication TheStreet Pro Portfolio was long OLED, QCOM, BAC and MS.