VIDEO: Strong Gains Have Us Watching These Two Positions
Here's what's on our Portfolio radar screen over the next 24 hours.
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In today’s Daily Rundown video, Chris Versace discusses why some prudent Portfolio management may be called for with shares of Morgan Stanley MS and Marvell MRVL.
He also previews what we’ll be listening for earnings after today’s market close from Alcoa AA, CSX CSX, Steel Dynamics STLD, Discover DFS and PPG PPG, and in Thursday's report from Taiwan Semiconductor TSM.
He also touches on potential implications for holding Applied Materials AMAT.
"Our thinking is that, given the strong ... revenue gains over at Taiwan Semiconductor, it could very well signal that it needs to bump up its capital spending for this year and it might give some positive indications about capital spending for next year," he said. "That could be a potential catalyst for us to pick up some additional shares of Applied Materials."
Transcript
CHRIS VERSACE: Hey, folks. Wednesday, September 16. Chris Versace here. And as you can see, we are having a relatively mixed market today.
Dow, S&P 500 higher. But NASDAQ still in the red by a little bit. Financial stocks continuing to work well, as you can see, coming off the continued stream of earnings the last few days from the likes of our own Bank of America, And. This morning from Morgan Stanley. But we are still seeing some fallout from ASML's September quarter results.
As we suspected in our note yesterday, Intel's issues are impacting ASML's bookings and guidance. But even so, the market is still treating all the semi-cap names the same. That's leading to some additional pressure on our shares of Applied Materials today.
Now, tomorrow brings Taiwan Semis quarterly results and guidance, and it should be a positive report that garners attention for several portfolio holdings. You know the drill here, NVIDIA and Marvell when it comes to AI and data centers, Apple, Qualcomm and Universal Display when it comes to smartphones and PCs, both for their September quarter results, as well as what Taiwan Semi has to say about the current quarter.
Now, in a note to you guys today, we kind of shared some expectations of what Taiwan Semis is likely to say about the smartphone market and the PC market as it relates to their September quarter results. We tallied in this Alert I'm referring to data from IDC and Canalys about the rebounding smartphone market and PC market in the September quarter. So that tells us that Taiwan Semi should have some very good comments about those end markets, as well as AI and data center. But as we know coming off of ASML's results yesterday and even that from United Health, it's going to be the guidance that really matters, guidance for the current quarter and any indications that we get about 2025.
Our thinking is that given the strong several months in a row of revenue gains over a Taiwan Semiconductor, it could very well signal that it needs to bump up its capital spending for this year. And it might give some positive indications about capital spending for next year. That could be a potential catalyst for us to pick up some additional shares of Applied Materials. So that's one thing that we'll be watching in that report.
I also think that those positive comments about AI and data center could lift our shares of NVIDIA and Marvell. With Marvell, we have to recognize that the shares have been a monster performer of late. I shared some data with you yesterday regarding Eriksson's September quarter results and their outlook, which really reaffirmed our thoughts on Marvell's enterprise and carrier infrastructure businesses. And that has helped push Marvell shares above 4.5% of the portfolio's assets.
We also saw that happen with Morgan Stanley coming off those very, very robust earnings that I referred to earlier just a few moments ago. So with that, for Morgan Stanley, we boosted our price target to 130, but we also downgraded the shares to a 2-rating. And here, too, we signaled to you that if we saw further gains in Morgan Stanley shares, odds are they would move past the 4.5% level. Sure enough, they have. And we might have to do some prudent portfolio trimming, where odds we are going to wait with Marvell and Morgan Stanley shares until maybe sometime tomorrow.
Why would we do that? They're already above 4.5% today. Well, hear me out. Our thinking is that the report from Taiwan Semiconductor could give some additional lift for Marvell shares. And with Morgan Stanley, given what we saw today, we doubt that we will be the only people to boost our price target on the shares. So let's give it a little time. Let's capture the incremental price target increases and any incremental lift that they might bring for Morgan Stanley.
But one way or another, we do recognize that both positions are above the 4.5% level. And yes, prudent portfolio management is called for, and that is what we will deliver. Before we get to the quarterly results from Taiwan Semiconductor tomorrow morning, I just want to quickly cover a few things we'll be watching after the close when we get results from Alcoa, CSX and Steel Dynamics. We'll be picking over those for what they have to say about the manufacturing economy and the overall economy.
Remember, with CSX, rail traffic, it really matters, just like truck tonnage does. So we want to see what they have to say about that. And with Steel Dynamics, what are they seeing in terms of incremental demand for the second half of the year for the housing market, as well as non-residential construction? All of that will give us some insights perhaps for Builders FirstSource, but also United Rentals, Vulcan Materials, and to a lesser extent, Waste Management.
We're also, after the close today, going to have quarterly results from Discover. DFS is the ticker. It's kind of one of the also rans, in my view, in the credit card space. But we will want to pay attention to what they have to say ahead of tomorrow's retail sales report for September, but also ahead of quarterly results from American Express later this week and upcoming ones from MasterCard and Visa.
Finally, after today's market close, we will get earnings from PPG, which is a chemical company. And we're not involved, but we do have to remember that they are a manufacturing partner for Universal Display. So to the extent that they say anything about the organic light-emitting diode market, that would be some nice data points for us to collect ahead of when Universal Display reports its September quarter results in the coming weeks. So we've had a busy week so far. It's going to continue to be busy.
So I would ask you, please continue to pay attention for your emails, your Alerts. We want to make sure you're getting our latest thoughts and insights. And if we make any moves with the portfolio, and if you watch the video, as I know you just have, you should be expecting some prudent portfolio management when it comes to the shares of Marvell and Morgan Stanley. And we want to make sure that as we make those moves, you are making them with us.
Two other things to point out. One, I will be subbing in for Doug Kass on tomorrow's Diary. That's Thursday, October 17. And yes, we will have office hours as well, from 12:00 to 1:00 in the forum. But because I'm manning the Diary, my response time to some of your questions during tomorrow's office hours may not be as quick as they usually are. But either way, we hope to see you at the diary. I hope to see you in the forum tomorrow. And of course, continue to check your emails and alerts. That's our video for today, folks. Thanks for watching.
At the time of publication, TheStreet Pro Portfolio was long MS, MRVL and AMAT.
