I'm Shopping These Four Stocks as the Fire Sale Begins
Here's why and how I'm putting some of my dry powder to work as the market sells off.
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As my regular readers know, I have been sitting on a huge cash hoard allocated to short-term Treasuries for most of 2024. Now, I'm putting some dry powder to work in four stocks.
I'll get to the stocks further down, but, first, the "why now?"
Remember, I have felt that investors have become much too complacent around a myriad of concerns that they should have both on the economy and the current valuations in the market. In recent weeks, the Nasdaq has gone from hitting all-time highs on a regular basis on enthusiasm around all things AI to falling into correction territory in the blink of an eye. The Volatility Index also hit a 52-week high on Friday as Treasury yields plunged after a poor July jobs report and increasing fears of a potential recession on the horizon. The VIX has just moved to a four-year high in the early morning on Monday. Calls for the Federal Reserve to immediately cut rates have also heightened noticeably.
So, as fears have risen considerably and we suddenly have nicely lower entry points. That's why I'm making my move. Here they are, and they are almost exclusively via covered call orders:
Corcept Therapeutics CORT. This company reported blowout numbers for the second quarter last Monday and raised forward guidance. The stock initially galloped ahead by just over 10% on the big earnings beat. But by Friday, the stock was down 1% for the week and provided a more than solid entry point.
Aurinia Pharma AUPH. Similar to Corcept, Aurinia on Thursday beat second-quarter revenue estimates as sales rose 38% on a year-over-year basis, and management also reaffirmed full-year guidance. Unfortunately, the stock did not get the benefit of what normally would be a nice bounce as equities were hitting the skids. The stock is down some 10% from the end of July and I picked up some additional shares late on Friday. Another nice thing about both of these biopharmas is they should be somewhat recession-resistant should an economic contraction lie ahead.
PBF Energy PBF. Here, I'm moving out a bit on the risk scale. I just added some shares in this refinery name, which reported mixed second-quarter results and was hurt by a smaller crack spread in the quarter. But the company has a strong balance sheet and efficient operations. This mid-cap concern also bought back $100 million of its own stock during the second quarter and a beneficial owner added a large chunk of equity to their holdings in June as well. The shares also have a decent dividend yield of nearly 2.8%.
OneMain Holdings OMF. I must picked up some of this stock after the market took financial services stocks down hard with the overall market late last week. The company easily beat top- and bottom-line estimates with its second-quarter results that were posted July 31. I do worry a bit about the company’s customer base if we head into recession. But OneMain appears to be managing its credit risk quite well with delinquency rates falling nicely in the just completed quarter. The stock also yields a bit over nine percent which should help put a floor under the shares as well.
At the time of publication, Jensen was long AUPH, CORT, PBF, OMF.
