Stock Opinions by Jim Lebenthal

COMMENT

September is living up to its reputation as a volatile month for markets. But when volatility dies down, expect more M&A in the market. Also, watch for the UAW strike that could happen this week and will benefit no one in the economy. Its impact will be that deep.

Unknown
HOLD
Qualcomm

The Apple news of striking a chip deal with Qualcomm surprises him in a good way. The three-year deal is a long time. The stock is up today and it's been very disappointing. Maybe both companies are learning to live with each other after a long history of lawsuits. Qualcomm remains a cheap company focused on IP needed for mobile telephony, an industry that has been terrible for 1.5 years (and he's waiting for it to bottom). China is key to their business, but China is having economic trouble these days. Maybe all the bad news is priced into this, but watch your back with this stock.

Telecommunications
DON'T BUY
Tesla Inc
Tesla was upgraded today with 60% upside based on their new supercomputer, Dojo

They need the car business to be a tech company, and they are facing a lot of competition now in EVs, much different from 10 years ago.

Consumer Products
COMMENT
Walt Disney Co.
Disney and Charter reach deal

He expects the Disney-Hulu deal to wrap by the end of this year. Who cares about the cost of this Charter deal? The industry is leaving linear TV and heading firmly into streaming. Disney's CEO is no dummy; he knows where the industry is going.

entertainment services
PARTIAL SELL

A high-quality biopharma with a strong cystic fibrosis drug. Are trying to get into other franchises like diabetes treatments. Will do well long-run. Trades at 23x with 11% earnings growth, so you can take some profits now. Had a good run, so take some money off the table.

Pharma & Healthcare
COMMENT

The unemployment rate rose today, largely because participation increased. Good news in terms of the Fed's rate hikes, but you also don't want this trend to continue. The market is focusing on 2024 earnings. We are set up for a huge Q4 rally after September seasonality. He's position for the market to rip after that. When a market has rallied like this has this year, it crescendos positively in Q4--people chase performance, Many felt when this year started that there will be a recession, and that hasn't happened. He likes the market broadening, though tech won't collapsed. 

Unknown
BUY
Amazon.com, Inc.

Annualized returns over 3 years is -6%, or -18%/3 years. They've grown revenue 22% annually, though. Good to buy now.

specialty stores
BUY ON WEAKNESS
Nike Inc

He's considering this, though consumer sentiment will likely falter in September, so he's not rushing into retail. He's light in retail. Prefers this to Lulu, because Nike is the best in business. Will buy 10% lower at a lower PE.

misc consumer products
BUY

Many felt that the cycle was over and prices would collapse, but he feels this is a little downturn. Demand will bounce back because of infrastructure spending to come next and demand for EVs and batteries. This is where the cycle is heading for base metals.

steel
BUY
Cheniere Energy Inc

He expects natural gas prices to continue to rise if we see a cold winter.

oil / gas
BUY
Boeing

He bought a lot last year and expects it to rise. China is expected to pick up deliveries of the 737 Max, which will generate a lot of free cash flow.

Transportation
BUY ON WEAKNESS
Nike Inc

Now at a forward PE of 27x, but would buy at 24x. A quality company.

misc consumer products
PARTIAL SELL
Home Depot

He trimmed, because it's not going anywhere near term. He is building cash for the current market pullback. He will add to Nvidia, Microsoft and Apple on more weakness.

specialty stores
COMMENT
Walt Disney Co.

Now at a new post-Covid low. Frustrating. There's no new catalyst, but a malaise. ESPN is the real albatross, though there have been talks with other parties like Amazon to partner.

entertainment services
COMMENT

He's been raising cash, because by the second half of September, this weakness, particularly in big tech, will be done. History says that in strong years like this, there will be a good Christmas rally.

Unknown
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