VIDEO: Our Next Bullpen Stock Could Come From This Area

In today’s Daily Rundown video, Chris Versace discusses today’s moves with the portfolio, including its latest addition. 

He also shares the plan for the inverse ETFs, the next known catalyst for Coty COTY shares, and what’s on our radar when it comes to the Bullpen. 

Transcript

CHRIS VERSACE: Hey, folks. Chris Versace here it is Wednesday, April 24. Happy hump day. We're in the middle of the week. And I wanted to share some of the latest moves that we made with the portfolio earlier today, also update some of our general thinking about things, and share some of the things that we are looking forward to bringing into the bullpen. So what do you say? Let's get started. Early this morning, we made a couple of different moves with the portfolio.

We closed out our position in McDonald's. As you know, we've had some concerns about the outlook for not only their March quarter results, but the forward guidance. We heaped on some comments about the dollar earlier this week coming off of PepsiCo's earnings. And then this morning, fresh headlines about rising egg prices due to bird flu, so just a number of factors that led us to finally give way to the MCD shares, especially since they had retraced back up to our cost basis.

So we exited the position without any major damage to the portfolio. In its place, what did we do? Well, we called up the trade desk shares TTD from the bullpen, establishing a one rating and a $98 price target. We kind of hinted that we would look to do something like this closer to the $80 level if we saw the shares pull back to that. And indeed, over the last several days, we did. Remember that this is a multiplatform play on the shift towards digital advertising. It's not just what you see on your laptops or your internet screens, what have you.

But it's also what we're seeing in the app world, streaming world, podcasting, and a whole host of modalities. That is what this platform helps advertisers get to, in other words, reach the eyeballs where they are. And in our alert, we shared with you some of the facts and figures regarding the ongoing shift towards digital advertising, but I'll just say this. It continues to pull dollars away from traditional media, TV, radio, print. And that bodes extremely well for the overall growth in digital advertising.

And again, that's where the trade desk is centered. We do have a position already through Alphabet and Google Search for the search advertising market. But my view, this really kind of rounds out our position to the shift towards digital advertising. So we did that. We also added and upgraded the shares of Universal Display. That's an existing position. So we just use the recent pullback to add more shares. But given that pullback and our 210 price target, multiquarter out price target, we upgraded the shares to a one.

Remember, the play here is the ongoing adoption of organic light emitting diodes most predominantly in displays. We've seen that happen in smartphones. We're going to see that unfold in PCs, notebook computers, tablets, and other end markets. But remember the end game here is general illumination lighting following very much the roadmap laid out by LEDs. So this will be a longer term position for the portfolio. So those are the moves that we made today.

I did want to talk a little bit about our inverse ETFs, SHPSQ. Yes, the market did kind of fall a little bit more. It started to rebound a little bit. But we've held on to those inverse ETFs. And while, again our plan is to work our way out of them, we are at the mouth of quarterly results from big tech. We want to make sure that the market's footing in the near term is as solid as some think it might be, so just a little extra caution here. And I will share that we will probably not exit SHPSQ scores in one fell swoop.

Likely, were likely to do it in stages two, maybe three trades when we begin that similar to the way that we exited the shares of McDonald's. And I also wanted to touch-- just checking my notes here real quick. There was some news out as well about luxury goods company Kering and the really weak outlook at their Gucci business that led them to slash their outlook for the first half of the year. Remember back in March, there was some initial headlines about the weakness at Gucci.

And we pointed out to you that it's a very different business compared to what we have in the portfolio with Coty, which is predominantly fragrance and skin care. When we look at Gucci, it is more apparel, handbags, that sort of thing, kind of apples and oranges-- apples and cherries, if you will, compared to what we have with Coty. So from our perspective, the next catalyst that we want to watch is going to be quarterly results from Inter Parfum. That will come out on May 7.

One other thought as it relates to the bullpen. I know that we've called up a couple names, recently Labcorp, and again, earlier today, Trade Desk. We are looking for some new candidates for the bullpen. And if you've been reading the signals that we share with you, these are those ripped from the headlines data points, nuggets as they relate to our investing themes, you may have noticed that the continued build out in data center and the expectations for AI are going to create significant demand for power predominantly and electricity, but also other modalities as well.

That is an area that we are looking to tap into with the bullpen, at least, initially. And let me be clear. We're not looking to add a utility like a Dominion Power or a Con Ed. No, we want to look for companies that will benefit from their capital spending as they look to increase the amount of power that they can supply. So that's just a quick hint as to something we'll be looking for. And then finally, after today's close, we will get quarterly results from Waste Management and United Rentals.

Both will hold conference calls tomorrow morning. So we'll have more updated thoughts about that. As you know, with United Rentals, we have essentially a full position, continue to like that, given the multiple tailwinds of infrastructure spending and the oncoming one associated with the CHIPS Act. With Waste Management, our position is smaller here. And if we do see a pullback following the company's quarterly results, this could be one that we look to add to. We'll also want to continue to watch economic indicators for the strength of the US economy, particularly manufacturing. But when Waste Management reports too, we are really interested in learning more about the progress of the rollout of automated trucks. Excuse me. Why?

Well, this reduces the number of people on the route, drives productivity, drives margins. So that'll be something that we're looking forward to hear. And again, members, please be sure to check your emails, your alerts. We want to make sure that you get all of our latest thoughts, our insights, and of course, any moves that we make with the portfolio because we want to make sure that you're in touch. And one other thing. If you've got questions, thoughts, comments, we do have the forum. I have something that I think I'll be sharing pretty soon about what we're going to try in the forum, so stay tuned for that. But that is today's video. Thanks for watching.

At the time of publication, TheStreet Pro Portfolio was long COTY.