Big Mo
The good times are here again. The S&P 500 is up over 19% YTD and is now within just 4% of the all-time high. Stocks are in a strong uptrend that began in the beginning of May and appear likely to move still higher.
Inflation is crashing. The Fed is about out of bullets. And there is no recession in sight. Things could always discombobulate down the road. But there doesn’t appear at this point to be anything ahead in the next month or so that will change the current positive narrative.
New positions AbbVie Inc. (ABBV) and Digital Realty Trust (DLR) got a big boost last week on positive earnings reports. Intel (INTC) also spiked higher on strong earnings. There have also been strong upward moves in Qualcomm (QCOM), Global Ship Leasing (GSL), ONEOK Inc. (OKE), and Hess Inc. (HES) recently.
Several stocks have moved into the range where there are opportunities to sell attractive calls against the positions. But this portfolio has recently sold calls on three positions and there is good reason to believe that the current momentum can carry the recently hot positions higher in the next few weeks. We’ll hedge our bets at this point by selling some calls and holding off on others in case the market continues marching higher.
It’s also true that ongoing narratives tend to be less fickle in the late summer as many investors tune out and go on vacation. But things can also change, and sometimes quickly. So, keep an eye out for “Trade Alerts” in your email.
Past Month Activity
July 11th
SOLD V August 18th $235 calls at $9.00
SOLD GSL August 18th $20 calls at $1.25
July 18th
Purchased Digital Realty Trust, Inc. (DLR) - $117.31
Intel Corp. (INTC) - Rating change “HOLD” to “BUY”
Qualcomm (QCOM) - Rating change “HOLD” to “BUY”
July 21st
BIPC July 21st $45 calls – Expired
Brookfield Infrastructure Corp. stock (BIPC) – Called
July 25th
Purchased AbbVie Inc. (ABBV) - $141.63
Sold OKE Sep 15th $65 calls at $3.20
Portfolio Recap
AbbVie Inc. (ABBV)
Yield: 3.9%
This position was added in last week’s monthly issue. AbbVie reported earnings last Wednesday that beat on both earnings and revenue and the company also raised earnings guidance for the year. The stock has spiked 6.3% since the report. Humira sales were down less than expected and AbbVie’s replacement immunology drugs did better than expected. The report emboldens the notion that the revenue drop from the Humira patent expiration will be very temporary and AbbVie will turn the corner sooner than expected en route to a promising future. BUY
Digital Realty Trust (DLR)
Yield: 4.0
This other new portfolio addition also reported better-than-expected earnings last week as a result of strong data center demand and solid growth. The company also assuaged fears that had driven the stock price down earlier this year by executing on the capital recycling plans that raised over $2 billion by selling joint venture assets. The move strengthens the balance sheet and secures the dividend. Now the REIT is poised to benefit from accelerating data center demand growth prompted by the AI craze. BUY
Global Ship Lease, Inc. (GSL)
Yield: 7.0%
Shipping stocks are getting a boost from the expected acceleration of Chinese growth and the resilient American and global economies and an improving outlook for shipping rates. Global is also strong ahead of earnings this week as the container shipping company stock has consistently impressed in past quarters. GSL is up over 6% in just the past couple of days and has made an impressive 26% move higher since the end of May. The stock has made a new 52-week high and can hopefully add to the momentum after this week’s earnings. HOLD
Hess Corporation (HES)
Yield: 1.2%
The exploration and production company also reported earnings last week that beat expectations. Higher production offset lower realized oil and gas prices. The company’s strong margins give it strong leverage in a rising energy price environment and the stock has benefitted from the recently rising oil prices and positive prognosis going forward. The stronger economic environment is clearly benefiting the stock in the near term, and the longer-term dynamics are strong for energy prices. HES is up 16% in the last three weeks. BUY
Intel Corp, (INTC)
Yield: 1.5%
The chipmaker reported earnings last week that beat estimates, and the company returned to profitability. The PC market appears to have bottomed out and is poised for a second-half recovery as Intel is also increasing market share. At the same time, Intel has a promising future as it has invested heavily in chips in high-growth areas. The road to recovery appears smoother and insiders have been buying heavily into the stock. INTC soared nearly 7% on the news after being upgraded to a “BUY” last week. BUY
NextEra Energy, Inc. (NEE)
Yield: 2.6%
This combination regulated and clean energy utility stock is currently at the low end of its range as defensive stocks have floundered. But that might not last. This company is targeting earnings per share growth of 6% to 8% annually through 2026 and 10% per year dividend growth through at least 2024. NextEra is right on track. The utility grew earnings 8.6% in the second quarter and 11% in the first half versus the same periods last year. It also has predictably solid earnings going forward because of a considerable project backlog. Sure, utilities are out of style right now. But there is also rotation. And NEE is the best of the breed. BUY
ONEOK, Inc. (OKE)
Yield: 5.7%
After getting clobbered in May when the market hated its purchase of Magellan Midstream Partners (MMP), OKE has been coming right back and has regained all those losses. It’s up over 17% since the beginning of June and is within less than 10% of the 52-week high. OKE has been trending sharply higher as the energy sector is recovering and the rally is broadening. The midstream energy company reports earnings next week that could stifle the rally or drive the stock toward the high. HOLD
Realty Income Corp. (O)
Yield: 5.0%
This legendary monthly income stock is showing some signs of life after a rotten first half where both the real estate and consumer staples sectors floundered. It currently sells well below the pre-pandemic high, despite having higher earnings. But income and safety will come back into vogue eventually. Realty Income reports second-quarter earnings this week. Hopefully, that can get it going. BUY
Star Bulk Carriers Corp. (SBLK)
Yield: 7.7%
The dry bulk shipping company is still floundering near the low and hasn’t had the move that GSL had. The outlook for shipping rates is improving in the near term, and the longer-term supply/demand dynamic for dry bulk shippers is still excellent. The performance has been disappointing. The shipper reports earnings this week and, hopefully, that will positively impact the stock. HOLD
Qualcomm Corp. (QCOM)
Yield: 2.5%
Here comes QCOM too. The chipmaker is up 6.5% in the last couple of days and 28% since late May. It’s not an immediate AI beneficiary, but it keeps marching slowly higher ahead of the period where it might surge higher quickly. Qualcomm describes itself as the “on-device AI leader,” and the company should benefit mightily from the increasing shift towards AI, and profits are now likely to soar sooner than previously expected. Qualcomm reports earnings on Wednesday. BUY
Visa Inc. (V)
Yield: 0.8%
V loves the still-strong economy and increasing soft-landing odds. Consumer spending remains strong, and the company reported another impressive quarter. The stock has pulled back after soaring to a 52-week high. But that was expected and why a covered call was sold when V was higher. This is a fantastic stock to own in the longer term, and in the near term we can exploit its range and generate a high income. HOLD
The Williams Companies, Inc. (WMB)
Yield: 5.3%
I’m disappointed in this one. But WMB is finally getting the lead out. It’s up close to 20% in the last couple of months. This had been a tough year for defensive stocks and energy stocks. But the broadening rally is lifting WMB. And the momentum could last. WMB is still well off the 52-week high, and earnings have been growing strongly. WMB has been trending higher since the end of May. Hopefully, the earnings report on Wednesday can thrust the stock to a higher level. BUY
Existing Call Trades
Sell V August 18th $235 calls at $9.00 or better
After hitting a new 52-week high, V has pulled all the way back to within a couple of dollars of the strike price with more than two weeks to go before options expiration. We are generating a strong income from V with the second call sold in this position. It makes sense to cash in after this bouncy stock surges to a new high.
Sell GSL August 18th $20 calls at $1.25 or better
GSL had another strong move higher after surpassing the 20 per share level. It is red hot and has soared to a new 52-week high. Global reports earnings on Wednesday and the market’s reaction will likely tell us whether it is likely to be called in a little over two weeks from now.
Sell OKE Sep 15th $65 calls at $3.20 or better
The midstream energy company is still moving higher ahead of earnings next week. There are still six weeks to go before options expiration and a lot can happen. Either way, we have secured another round of great income from this stock.
CIA STOCK PORTFOLIO | |||||||
| Open Recommendations | Ticker Symbol | Entry Date | Entry Price | Recent Price | Buy at or Under Price | Yield | Total Return |
| Qualcomm Inc. | QCOM | 5/5/21 | $134.65 | $129.48 | $130.00 | 2.47% | 0.84% |
| Visa Inc. | V | 12/22/21 | $217.96 | $235.75 | NA | 0.76% | 9.42% |
| Global Ship Lease, Inc. | GSL | 2/23/22 | $24.96 | $21.58 | NA | 6.95% | -4.55% |
| Star Buld Carriers Corp. | SBLK | 6/1/22 | $33.30 | $18.17 | NA | 7.71% | -31.77% |
| Intel Corporation | INTC | 7/27/22 | $40.18 | $36.83 | $35.00 | 1.45% | -4.63% |
| The Williams Companies | WMB | 8/24/22 | $35.58 | $34.06 | $38.00 | 5.26% | 1.25% |
| ONEOK Inc. | OKE | 3/28/23 | $60.98 | $67.22 | NA | 5.68% | 11.84% |
| NextEra Energy, Inc. | NEE | 4/25/23 | $77.50 | $72.85 | $85.00 | 2.57% | -5.79% |
| Hess Corporation | HES | 6/6/23 | $132.25 | $149.02 | $140.00 | 1.17% | 13.05% |
| Realty Income Corp. | O | 6/27/23 | $60.19 | $61.47 | $62.00 | 4.99% | 2.56% |
| Digital Realty Trust | DLR | 7/18/23 | $117.31 | $122.78 | $125.00 | 3.97% | 4.66% |
| AbbVie Inc. | ABBV | 7/25/23 | $141.63 | $150.85 | $150.00 | 3.92% | 6.51% |
| Existing Call Trades | |||||||
| Open Recommendations | Ticker Symbol | Initial Action | Entry Date | Entry Price | Recent Price | Sell To Price or better | Total Return |
| V $235 Aug 18th call | V230818C00235000 | Sell | 7/11/23 | $9.00 | $3.81 | $9.00 | 4.13% |
| GSL $20 Aug 18th call | GSL230818C00020000 | Sell | 7/11/23 | $1.25 | $1.75 | $1.25 | 5.00% |
| OKE $65 Sep 15th call | OKE230915C00060000 | Sell | 7/25/23 | $3.20 | $3.25 | $3.20 | 4.92% |
| as of close on 7/28/2023 | |||||||
| SOLD STOCKS | |||||||
| Security | Ticker Symbol | Action | Entry Date | Entry Price | Sale Date | Sale Price | Total Return |
| Innovative Industrial Props. | IIPR | Called | 6/2/20 | $87.82 | 9/18/20 | $100.00 | 15.08% |
| Qualcomm | QCOM | Called | 6/24/20 | $89.14 | 9/18/20 | $95.00 | 7.30% |
| U.S. Bancorp | USB | Called | 7/22/20 | $36.26 | 9/18/20 | $38 | 3.42% |
| Brookfield Infras. Ptnrs. | BIP | Called | 6/24/20 | $41.92 | 10/16/20 | $45 | 8.49% |
| Starbucks Corp. | SBUX | Called | 8/26/20 | $82.41 | 10/16/20 | $88 | 6.18% |
| Visa Corporation | V | Called | 9/22/20 | $200.56 | 11/20/20 | $200 | 0.00% |
| AbbVie Inc. | ABBV | Called | 6/2/20 | $91.04 | 12/31/20 | $100 | 12.43% |
| Enterprise Prod. Prtnrs. | EPD | Called | 6/24/20 | $18.14 | 1/15/21 | $20 | 15.16% |
| Altria Group | MO | Called | 6/2/20 | $39.66 | 1/15/21 | $40 | 7.31% |
| U.S. Bancorp | USB | Called | 11/25/20 | $44.68 | 1/15/21 | $45 | 1.66% |
| B&G Foods Inc, | BGS | Called | 10/28/20 | $26.79 | 2/19/21 | $28 | 4.42% |
| Valero Energy Inc. | VLO | Called | 8/26/20 | $53.70 | 3/26/21 | $60 | 11.73% |
| Chevron Corp. | CVX | Called | 12/23/20 | $85.69 | 4/1/21 | $96 | 12.95% |
| KKR & Co. | KKR | Called | 3/24/21 | $47.98 | 6/18/21 | $55 | 14.92% |
| Digital Realty Trust | DLR | Called | 1/27/21 | $149.17 | 7/16/21 | $155 | 5.50% |
| NextEra Energy, Inc. | NEE | Called | 2/24/21 | $73.76 | 9/17/21 | $80 | 10.00% |
| Brookfield Infras. Ptnrs. | BIP | Called | 1/13/21 | $50.63 | 10/15/21 | $55 | 11.65% |
| AGNC Investment Corp | AGNC | Sold | 1/13/21 | $15.52 | 1/19/22 | $15 | 5.92% |
| ONEOK, Inc. | OKE | Called | 5/26/21 | $52.51 | 2/18/22 | $60 | 19.62% |
| KKR & Co. | KKR | Sold | 8/25/21 | $64.52 | 2/23/22 | $58 | -9.73% |
| Valero Energy Inc. | VLO | Called | 11/17/21 | $73.45 | 2/25/22 | $83 | 15.53% |
| U.S Bancorp | USB | Sold | 3/24/21 | $53.47 | 4/13/22 | $51 | -1.59% |
| Enterprise Product Ptnrs | EPD | Called | 3/17/21 | $23.21 | 4/14.2022 | $24 | 11.25% |
| FS KKR Capital Corp. | FSK | Called | 10/27/21 | $22.01 | 4/14/22 | $23 | 13.58% |
| Xcel Energy Inc. | XEL | Called | 10/12/21 | $63.00 | 5/20/22 | $70 | 12.66% |
| Innovative Industrial Props. | IIPR | Sold | 3/23/22 | $196.31 | 7/20/22 | $93 | -51.23% |
| One Liberty Properties | OLP | Sold | 7/28/21 | $30.37 | 8/24/22 | $25 | -12.94% |
| ONEOK, Inc. | OKE | Called | 5/25/22 | $65.14 | 1/20/23 | $65 | 2.66% |
| Xcel Energy, Inc. | XEL | Called | 10/26/22 | $62.57 | 1/20/23 | $65 | 4.67% |
| Realty Income Corp. | O | Called | 9/28/22 | $60.37 | 2/17/23 | $63 | 5.41% |
| Medical Properties Trust | MPW | Sold | 1/24/23 | $13.22 | 3/21/23 | $8 | -38.00% |
| Brookfield Infrastructure Cp. | BIPC | Called | 11/9/22 | $42.43 | 7/21/23 | $45 | 8.72% |
| EXPIRED OPTIONS | |||||||
| Security | In/out money | Sell Date | Sell Price | Exp. Date | $ return | Total % Return | |
| IIPR Jul 17 $95 call | out-of money | 6/3/20 | $3.00 | 7/17/20 | $3.00 | 3.40% | |
| MO Jul 31 $42 call | out-of-money | 6/17/20 | $1.60 | 7/31/20 | $1.60 | 4.03% | |
| ABBV Sep 18 $100 call | out-of-money | 7/15/20 | $4.60 | 9/18/20 | $4.60 | 5.05% | |
| IIPR Sep 18 $100 call | in-the-money | 7/22/20 | $5.00 | 9/18/20 | $5.00 | 5.69% | |
| QCOM Sep 18 $95 call | in-the-money | 6/24/20 | $4.30 | 9/18/20 | $4.30 | 4.82% | |
| USB Sep 18 $37.50 call | in-the-money | 7/22/20 | $2.00 | 9/18/20 | $2.00 | 5.52% | |
| BIP Oct 16 $45 call | in-the-money | 9/2/20 | $1.95 | 10/16/20 | $1.95 | 4.65% | |
| SBUX Oct 16 $87.50 call | in-the-money | 10/16/20 | $3.30 | 10/16/20 | $3.30 | 4.00% | |
| V Nov 20 $200 call | in-the-money | 9/22/20 | $10.00 | 11/20/20 | $10.00 | 4.99% | |
| ABBV Dec 31 $100 call | in-the-money | 11/18/20 | $3.30 | 12/31/20 | $3.30 | 3.62% | |
| EPD Jan 15 $20 call | in-the-money | 11/23/20 | $0.80 | 1/15/21 | $0.80 | 4.41% | |
| MO Jan 15 $40 call | in-the-money | 11/25/20 | $1.90 | 1/15/21 | $1.90 | 4.79% | |
| USB Jan 15 $45 call | in-the-money | 11/25/20 | $2.00 | 1/15/21 | $2.00 | 4.48% | |
| BGS Feb 19 $27.50 call | in-the-money | 12/11/20 | $2.40 | 2/19/21 | $2.40 | 8.96% | |
| VLO Mar 26 $60 call | in-the-money | 2/10/21 | $6.50 | 3/26/21 | $6.50 | 12.10% | |
| CVX Apr 1 $95.50 call | in-the-money | 2/19/21 | $4.30 | 4/1/21 | $4.30 | 5.02% | |
| AGNC Jun 18 $17 call | out-of-money | 4/13/21 | $0.50 | 6/18/21 | $0.50 | 3.21% | |
| KKR Jun 18 $55 call | in-the-money | 4/28/21 | $3.00 | 6/18/21 | $3.00 | 6.25% | |
| USB Jun 16 $57.50 call | out-of-money | 4/28/21 | $2.80 | 6/18/21 | $2.80 | 5.24% | |
| DLR Jul 16 $155 call | in-the-money | 6/16/21 | $8.00 | 7/16/21 | $8.00 | 5.36% | |
| AGNC Aug 20 $17 call | out-of-money | 6/23/21 | $0.50 | 8/20/21 | $0.50 | 3.00% | |
| OKE Aug 20 $57.50 call | out-of-money | 6/23/21 | $3.50 | 8/20/21 | $3.50 | 6.67% | |
| NEE Sep 17 $80 call | in-the-money | 8/11/21 | $3.50 | 9/17/21 | $3.50 | 4.75% | |
| BIP Oct 15 $55 call | in-the-money | 9/01/21 | $2.00 | 10/15/21 | $2.00 | 3.95% | |
| USB Nov 19 $60 call | out-of-money | 9/24/21 | $2.30 | 11/19/21 | $2.30 | 4.30% | |
| OKE Nov 26 $65 call | out-of-money | 10/20/21 | $2.25 | 11/26/21 | $2.25 | 4.28% | |
| KKR Dec 17 $75 call | out-of-money | 10/26/21 | $3.50 | 12/17/21 | $3.50 | 5.42% | |
| QCOM Jan 21 $185 Call | out-of-money | 11/30/21 | $9.65 | 1/21/22 | $9.65 | 7.17% | |
| OLP Feb 18 $35 Call | out-of-money | 11/19/21 | $1.50 | 2/18/22 | $1.50 | 4.94% | |
| OKE Feb 18 $60 Call | in-the-money | 1/5/22 | $2.75 | 2/18/22 | $2.75 | 5.24% | |
| USB Feb 25 $61 call | out-of-money | 1/13/22 | $2.50 | 2/25/22 | $2.50 | 4.68% | |
| VLO Feb 25 $83 call | in-the-money | 1/18/22 | $4.20 | 2/25/22 | $4.20 | 6.13% | |
| EPD Apr 14th $24 call | in-the-money | 3/2/22 | $1.25 | 4/14/22 | $1.25 | 5.69% | |
| FSK Apr 14th $22.50 call | in-the-money | 3/10/22 | $0.90 | 4/14/22 | $0.90 | 4.09% | |
| XEL May 20th $70 call | in-the-money | 3/30/22 | $3.00 | 5/20/22 | $3.00 | 4.76% | |
| SBLK July 15th $134 call | out-of-money | 6/1/22 | $1.60 | 7/15/22 | $1.60 | 4.80% | |
| OKE Oct 21st $65 call | out-of-money | 8/24/22 | $3.40 | 10/21/22 | $3.40 | 5.22% | |
| OKE Jan 20th $65 call | In-the-money | 11/25/22 | $3.70 | 1/20/23 | $3.70 | 5.68% | |
| XEL Jan 20th $65 call | in-the-money | 11/25/22 | $5.00 | 1/20/23 | $5.00 | 7.99% | |
| O Feb 17th $62.50 call | in-the-money | 12/28/22 | $3.00 | 2/17/23 | $3.00 | 4.97% | |
| QCOM Sep 16th $145 call | out-of-money | 7/2/22 | $11.75 | 9/16/22 | 11.75 | 8.73% | |
| V Mar 17th $220 call | out-of-money | 1/24/23 | $12.00 | 3/17/23 | $12.00 | 5.51% | |
| OKE May 19th $65 call | out-of-money | 4/11/23 | $2.70 | 5/19/23 | $2.70 | 4.43% | |
| V Jun 2 $230 call | out-of-money | 4/21/23 | $10.50 | 6/2/23 | 10.5 | 4.82% | |
| BIPC $45 July 21st call | in-the-money | 5/23/23 | $3.25 | 7/21/23 | $3.25 | 7.66% | |