We're Calling Up a Recent Bullpen Addition and Buying More of 2 Holdings

Symbol	Transaction Type	# Shares Traded	Recent Price $	Shared Owned After Trade	% Portfolio
AXP	Buy	135	297	135	0.8
LMT	Buy	18	488.50	388	3.8
QCOM	Buy	65	156	1,200	3.8

After you receive this Alert, the portfolio will make the following trades:

-- Buy 135 shares of American Express AXP at or near $297. This is a new position for the portfolio, and the 135 AXP shares will account for 0.8% of the portfolio’s assets.

-- Buy 18 shares of Lockheed Martin LMT at or near $488.50. Following the trade, LMT shares will account for roughly 3.8% of the portfolio.

-- Buy 65 shares of Qualcomm QCOM at or near $156. Following the trade, QCOM shares will account for roughly 3.8% of the portfolio.

We are following through on our opening comments this morning and picking up a few more shares of LMT and QCOM for the portfolio.

We are also calling up American Express from the portfolio Bullpen, establishing a price target of $330 and a Two rating. The decision to bring this membership business model company into the portfolio reflects the favorable technical setup in the shares as well as recent comments by Amex management that its business in the current quarter is “very strong.” That comment reflects spending during the week before Cyber Monday that saw U.S. retail spending up double digits, online consumer up mid-teens, and off-line foot traffic up high single digits. That compares to a 3.4% year-over-year increase in spending from Black Friday to Cyber Monday per data from Mastercard Spending Pulse. Management also said its fourth-quarter consumer travel bookings were higher than pre-pandemic levels and trending faster compared to recent quarters.

We recognize this is just a starter position with AXP shares, and we will stick to our strategy of either adding to the name on weakness or as signs emerge the company’s business is performing better than expected. With the former in mind, we see nice support near $288, which is the 50-day moving average. All things being equal, if we saw the shares fall near the 100-day moving average near $272, we would be more aggressive buyers.

In terms of signs we are watching for the company’s business, they include stronger-than-expected consumer spending and membership card growth. Also in that camp would be a quicker pace of growth for the company’s average fee per card, which would reflect successful efforts courting millennials and Gen Z with Gold and Platinum cards.

As we make this move this morning, we are seeing others warm up to AXP shares as well. Compass Point is lifting its price target to $325 and Monness Crespi is upping its target to $330. Keefe Bruyette has a more aggressive view with a $350 target.

Starting this position increases the portfolio’s exposure to sticky membership business models but it also brings another layer of dividend income to the portfolio. Amex will pay its next $0.70 per share quarterly dividend on February 10 to shareholders of record on January 3. This will be the company’s fourth dividend payment at that level, and if history holds it means we may be hearing about a dividend increase come April. We expect management will balance that decision as it contemplates the remaining 78.7 million share repurchase authorization it had exiting the September quarter.

Should we see a Santa Claus rally push our shares of Amazon AMZN and Marvell Technology MRVL each above a 4.5% position size for the portfolio, we will look to lock in a slice of their recent gains while re-arming our cash position in the process.

(Please note that we are looking to execute these trades at or near the share price mentioned above. Once the trade is completed, subscribers can see the trade's executed price here. Be sure to click on Closed Trade Gain/Loss and toggle the chart to sort by Purchase Date.)

At the time of publication, TheStreet Pro Portfolio was long LMT, QCOM, AMZN and MRVL.

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