All Eyes on 2024
The rally that began in November is slowing down, but not dying.
Things are still good. Inflation is falling, the Fed is probably done hiking rates, longer-term rates have peaked, and the economy is still strong. But it’s that time of year. The holidays have a way of taking investor focus away from the market. Stocks tend to do whatever they were doing when investors stopped paying attention, which in this case is edging higher ever so slowly.
All eyes are on 2024. Most analysts appear to be optimistic about stocks for the new year, although about half of economists are calling for a recession. But most see a very mild recession. The major market impediments of inflation and rising rates appear to have gone away, and next year should be positive even with a mild recession.
But anything is possible. There are still risks. Inflation could reignite and rates could move higher again. There could be a recession that turns out worse than expected. Geopolitical things could get ugly and trump everything else for a time. And 2024 is a big election year.
Anything is possible. But the risks seem more toward a slowing economy and recession rather than still-rising inflation and interest rates. That sets up well for the beleaguered defensive stocks. At the same time, AI isn’t going anywhere. Companies will continue to spend big on the technology regardless of the economy, the Fed, or who is President.
Looking ahead to 2024, I like the battered defensive stocks. Despite the recent impressive move off the bottom, they are still very cheap, and the major obstacle has been removed. It should also be another good year for technology.
Past Month Activity
November 22nd
SOLD DLR January 19th $135 calls at $6.00
November 28th
SOLD Tractor Supply Company (TSCO) - $199.92
November 29th
SOLD INTC January 19th $42.50 calls at $3.50
December 5th
NextEra Energy, Inc. (NEE) - Rating change “HOLD” to “BUY”
Portfolio Recap
AbbVie Inc. (ABBV)
Yield: 4.1%
The biopharmaceutical company had a nice move higher in the last few weeks. AbbVie announced it is buying biotech company ImmunoGen (IMGN) for $10.1 billion in cash in a deal slated to close early next year. ImmunoGen is a cancer therapy specialist that fits nicely with AbbVie’s pipeline. Seven days later, AbbVie announced the purchase of Cerevel Therapeutics (CERE) for $8.7 billion.
Both deals should enhance the already strong pipeline longer term. But its current pipeline should lift the stock sooner. Its two new biosimilar drugs Rinvoq and Skyrizi grew sales over 50% in the last quarter and the company expects these drugs alone to eventually surpass Humira’s peak sales. The stock sells at a low valuation and investors sense that it might turn the Humira corner sooner ahead of a very bright future. BUY
Digital Realty Trust (DLR)
Yield: 3.6%
This data center REIT has pulled back from the recent new high. Even though REITs have been terrible this year, DLR has now returned about 40% YTD. It looks like REITs have bottomed out and are on their way higher as interest rates have likely peaked. Digital also has the additional catalyst of increasing AI spending and is getting a boost from the AI craze. DLR tends to pull back after a surge higher and the calls were sold when it hit a new high. HOLD
Intel Corp, (INTC)
Yield: 1.2%
As expected, INTC is bouncing around after the recent surge. The chipmaker recently hit a 17-month high and was up over 27% in a month and about 70% YTD. Earnings indicate that Intel’s turnaround is well on track. It has promising new chips coming out in high-growth areas and its foundry business could be huge. The stock got dirt cheap, and investors are increasingly willing to bet on the company’s future. I believe in the company’s future. But the stock is likely to take a breather. That’s why calls were targeted near the high. BUY
Marathon Petroleum Corp, (MPC)
Yield: 2.3%
This newly added oil refiner has blown away the performance of its peers and the overall market for several years. Even though the energy sector is negative YTD and last week was a big down week, MPC has managed a better than 25% return. While the environment can vary from quarter to quarter, it should remain an overall profitable environment for refiners over the next several years. It’s good to have something in the portfolio that benefits in case the economy continues to be stronger than expected. BUY
NextEra Energy, Inc. (NEE)
Yield: 3.2%
NEE has been bouncing around. But the stock is still in a strong uptrend that began in early October and it’s up over 25% from the 52-week low. The clean energy utility delivered solid earnings, and management reiterated previous growth projections and said the company expects to deliver earnings near the top of the expected range through 2026. This stock is still very oversold, especially considering interest rates have likely peaked. BUY
Realty Income Corp. (O)
Yield: 5.7%
The legendary income stock should be a great buy right now. It’s cheap. O sells more than 30% below the all-time high set before the pandemic. There is upward momentum. It has moved 20% off the bottom set in October. And interest rates have likely peaked, removing the main downside catalyst that has been in place for the past two years. And its retail staple properties, and new data center acquisitions, should produce reliable revenue in just about any economy. BUY
Qualcomm Corp. (QCOM)
Yield: 2.4%
QCOM has severely lagged the overall tech sector his year. But the catch-up may have already begun. It’s up over 30% in the past few months. Qualcomm is introducing new AI chips for PCs and smartphones that could be big sellers next year. Also, strong smartphone sales in China are indicating a bottom. It’s looking like 2024 could be a much better year and QCOM may have already started to ascend. BUY
The Williams Companies, Inc. (WMB)
Yield: 5.0%
The natural gas pipeline company reported strong earnings growth and moved to within pennies of the 52-week high. But WMB has pulled back this month along with the rest of the energy sector as oil prices fell below $70 per barrel. But business remains solid and not dependent on commodity prices. It pays a well-supported dividend (with 2.38 times cash flow coverage). Recent acquisitions and expansions ensure more solid growth going forward all the way out to 2028. This should be a solid holding in any environment. BUY
Xcel Energy Inc. (XEL)
Yield: 3.4%
This clean energy utility stock has been trending higher since the beginning of last month. The low may be in. XEL had a convincing 13% move off the low. But, like NEE, XEL came under pressure last week as analysts expressed concern about the solar energy business amid the current high interest rates. But this is one of the best utility stocks to own and the recent debauchery may prove to be very temporary. XEL still sells near the lowest levels of the past several years and now has positive momentum. BUY
Existing Call Trades
Sell DLR January 19th $135 calls at $6.00 or better
Both technology and REITs have been strong performers over the last month. DLR certainly benefited and hit a new high at the beginning of this month. But the stock has been pulling back and may have peaked in the near term. The share price has already moved below the strike price and the timing for the calls looks good at this point.
Sell INTC January 19th $42.50 calls at $3.50 or better
INTC pulled back a lot but then got strong again. So far, the stock is leveling off and bouncing around after the recent high. But it is still looking like a near-term high when we sold these calls. The stock rose on Monday on news of government largess to chip companies.
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 | $132.97 | $130.00 | 2.41% | 4.95% |
| Intel Corporation | INTC | 7/27/22 | $40.18 | $42.70 | $35.00 | 1.17% | 11.33% |
| The Williams Companies | WMB | 8/24/22 | $35.58 | $35.52 | $38.00 | 5.04% | 8.36% |
| NextEra Energy, Inc. | NEE | 4/25/23 | $77.50 | $59.70 | $65.00 | 3.13% | -21.63% |
| Realty Income Corp. | O | 6/27/23 | $60.19 | $53.86 | $62.00 | 5.70% | -7.95% |
| Digital Realty Trust | DLR | 7/18/23 | $117.31 | $134.81 | $125.00 | 3.62% | 16.01% |
| AbbVie Inc. | ABBV | 7/25/23 | $141.63 | $149.38 | $150.00 | 4.15% | 6.45% |
| Xcel Energy Inc. | XEL | 8/22/23 | $57.95 | $60.91 | $65.00 | 3.41% | 6.04% |
| Marathon Petroleum Corp. | MPC | 10/24/23 | $149.45 | $143.02 | $155.00 | 2.31% | -3.25% |
| Existing Call Trades | |||||||
| Open Recommendations | Ticker Symbol | Initial Action | Entry Date | Entry Price | Recent Price | Sell To Price or better | Total Return |
| DLR Jan 19th $135 call | DLR240119C00130000 | Sell | 11/22/23 | $6.00 | $4.08 | $6.00 | 5.11% |
| INTC Jan 19th $42.50 call | INTC240119C00042500 | Sell | 11/29/23 | $3.50 | $2.90 | $3.50 | 8.71% |
| as of close on 12/08/2023 | |||||||
| SOLD STOCKS | |||||||
| x | 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 | 4/14/22 | $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% |
| Star Bulk Carriers Corp. | SBLK | Sold | 6/1/22 | $33.30 | 8/8/23 | $18 | -31.38% |
| Visa Inc. | V | Called | 12/22/21 | $217.16 | 8/18/23 | $235 | 9.16% |
| Global Ship Lease, Inc. | GSL | Sold | 2/23/22 | $24.96 | 8/29/23 | $19 | -13.82% |
| ONEOK, Inc. | OKE | Called | 3/28/23 | $60.98 | 9/15/23 | $65 | 9.72% |
| Hess Corporation | HES | Called | 6/6/23 | $132.25 | 10/20/23 | $155 | 17.87% |
| Tractor Supply Company | TSCO | Sold | 9/26/23 | $203.03 | 11/28/23 | $200 | -1.02% |
| 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./01/2021 | $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 | 7/20/22 | $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 | $10.50 | 4.82% | |
| BIPC $45 July 21st call | in-the-money | 5/23/23 | $3.25 | 7/21/23 | $3.25 | 7.66% | |
| V $235 Aug 18th call | in-the-money | 7/11/23 | $9.00 | 8/18/23 | $9.00 | 4.13% | |
| GSL $20 Aug 18th call | out-of-money | 7/11/23 | $1.25 | 8/18/23 | $1.25 | 5.00% | |
| OKE $65 Sep 15 call | in-the-money | 9/15/23 | $3.20 | 7/25/23 | $3.20 | 4.92% | |
| INTC $35 Oct 20th call | out-of-money | 9/8/23 | $3.78 | 10/20/23 | $3.78 | 9.41% | |
| HES $155 Oct 20th call | in-the-money | 9/8/23 | $9.00 | 10/20/23 | $9.00 | 6.81% | |