VIDEO: Let's Discuss the Newest Addition to the Portfolio

In today's Daily Rundown video, Chris Versace explains the portfolio's moves Thursday, including initiating a position in Labcorp LH from the Bullpen. 

He also discusses what we'll be listening for when American Express AXP and Procter & Gamble PG report their quarterly results Friday morning. 

Transcript

CHRIS VERSACE: Hey folks, Chris Versace here. Thursday, April 18th. And as I record today's video, the market's off its highs for the day, but so far still in the green as it looks to put in its first positive day this week.

When we think about the recent market pullback across the last several days, all told, the S&P 500 is down roughly 4%. Not something we would say is a major correction by any means, but it's something that has helped take some of the froth out of the market. And of course, the catalyst for that has been investors kind of wrapping their head around the fact that the prospects for rate cuts are shrinking and getting pushed out to late this year.

As I talked about earlier this week, the next big data point that we're going to want to watch is next week's April flash PMI report, for not only what it says about the strength of the economy but also its comments about input and output costs. That's kind of been a canary in the coal mine, if you will, for the last several pieces of key inflation data. So we're going to want to be watching that.

I will say that our plan has been to use pullbacks to put some cash to work for the portfolio. And today we did just that. Earlier today we called up shares of Labcorp, ticker symbol LH from the bullpen, with a starter position for this diagnostic company, our price target is $235. And in keeping with our overall plan for the portfolio, we laid out how we intend to build up this position from roughly 0.8% of the portfolio's assets to something more meaningful over time. The two things that we'll be looking for are either pullbacks in the stock. And the closer they fall to 190 or so, the more aggressive we're going to get because of the long term prospects for the diagnostic health market.

But at the same time, if we get a sense that Labcorp is realizing even more margin improvement that the market expects, that would be a catalyst for us to add shares as well. Remember that, as I just said, the overall diagnostic market is expanding. This makes it a play indirectly on our aging of the population investment theme. But we also know that Labcorp is expanding its offering inside this growth market. That's kind of like a nice double tailwind that we want to capitalize on with this position over the next several quarters.

We also today added to our positions in NVIDIA and again this week in the shares of Universal Display. And we did that really based on the innards of what we saw not only in Taiwan Semiconductors' March quarter results, which were stronger than expected, but its guidance for the for the current quarter that was also above consensus expectations. And when we parse through that data, we saw that year over year, revenue for TSM for both smartphone and its high performance computing unit, better known as data center and II, were very robust. And the prospects for that continue for the current quarter.

So we wanted to use the recent movements in NVIDIA and Universal Display to pick up more shares of that. We did that. Remember, the big thesis here as it relates to several of our holdings is not only the continued adoption of AI but the looming AI on device upgrade cycle that will be coming later this year that will drive incremental demand not only for AI related chips and data center chips but also drive incremental spending for network infrastructure and carrier infrastructure as well.

All told, when we digest Taiwan Semi's comments and guidance, not only is it positive for our shares of NVIDIA and OLED, hence our action today, but it also supports our multi-quarter bullish stance on the shares of Qualcomm and Marvell. And while both of those shares are trading off, I would argue that they are approaching very compelling levels for members that are underweight the shares.

We inside the portfolio have pretty much full positions in both Qualcomm and Marvell. We don't expect to be chasing it unless it becomes extremely compelling. But again, we'll keep our eyes on great points to pick up both stocks for members, again, that might be underweight the shares or for newer members.

Also today we learned that existing home sales fell slightly more than expected in the month of March paired with mortgages back over 7%. Again, rates being higher for longer, we're going to continue to keep potential housing plays in the bullpen for now. Also today Elevance delivered a beat and raise quarter, and we'll have more comments that we'll be sharing with you later this afternoon.

And before we end today's video, there's really three other quick items that I want to share. First, as it relates to alphabet or Google, Bernstein raised its price target from 165 to 160. The catalyst for that was an upward revision in some 2025 expectations. Needham also hiked its EPS forecast for Amazon, citing the benefit of, as we've seen Amazon do of late, incremental cost cuts. We certainly agree with that. We do think that we'll see improved margins, both at its domestic retailing business and at AWS. But we'll also when the company reports want to get a sense on how fast its advertising business is growing, which is, as you know, a very high margin business for the company.

And finally, tomorrow we have quarterly results from American Express and Procter & Gamble. With regard to American Express, we'll be very interested in its comments and its outlook for consumer spending. As we get those, we will kind of factor them and refine our thinking for Mastercard ahead of that company reporting its quarterly results in the coming days.

And as it relates to Procter, well, what we want to know most about is what are they seeing for input costs, other inflationary items on their P&L. We also want to get a better understanding from the geographic mix of their business. Where are they seeing strength? Where are consumers kind of paying up for the more premium products?

And then finally, what are they talking about in terms of potential incremental price increases as well as what's the impact of currency on their business? We know the dollar has rallied so far this year, and this will be a gauge for how we think about other companies with great or meaningful, I should say, international exposure.

That's today's video. Thank you for watching. And always, folks, please be sure to check your emails, your inboxes, your alerts. We want you to make sure that you're up on our latest thinking and any movements that we might make with the portfolio.

At the time of publication, TheStreet Pro Portfolio was long LH, NVDA and OLED.