Please ensure Javascript is enabled for purposes of website accessibility
Income Advisor
Conservative investing. Double-digit income.

February 6, 2024

Wow! The economy is red hot! Both GDP and Jobs numbers came in much stronger than expected. But good news can also be bad news in the demented view of many Wall Street professionals.

Inflation is way down. The Fed is still unlikely to raise the Fed Funds rate again. The economy is surging despite the highest interest rates in decades. Ultimately, the economy is the most important driver of overall stock market performance. The economy isn’t weakening but strengthening after the recent malaise. And it’s a new bull market.

Download PDF

A Booming Economy and No Rate Cuts

Wow! The economy is red hot! Both GDP and Jobs numbers came in much stronger than expected. But good news can also be bad news in the demented view of many Wall Street professionals.

Inflation is way down. The Fed is still unlikely to raise the Fed Funds rate again. The economy is surging despite the highest interest rates in decades. Ultimately, the economy is the most important driver of overall stock market performance. The economy isn’t weakening but strengthening after the recent malaise. And it’s a new bull market.

But many on Wall Street were hoping for rate cuts, and soon. These people are obsessed with rate cuts. You could offer them peace and prosperity forever or rate cuts. They’d take the rate cuts. But not only are cuts unlikely soon but they may not even happen this year. The Fed is still worried about the inflation it helped cause. And, from the Fed’s perspective, who needs rate cuts when the economy is killing it anyway?

The economic strength is good news. But it also puts the kibosh on the rally in defensive, interest rate-sensitive stocks. That’s unfortunate because I have been touting those stocks for a long time. I still don’t think those stocks have much downside after the past two years, but they may not rally as strongly as I had hoped if the economy remains strong.

It’s earnings season and several portfolio stocks reported last week including AbbVie Inc. (ABBV), Alexandria Real Estate Equities (ARE), Marathon Petroleum Corporation (MPC), and Qualcomm Inc. (QCOM). While the reports were generally positive, most of them haven’t rallied as I’d hoped, at least not yet.

We’ll see how the market digests the increasing possibility of a strong economy and still-high interest rates. There could be a big rally in some of the cyclical stocks. And there may be stocks added to the portfolio later this week or next. Keep an eye out for “Trade Alerts” in your email.

Past Month Activity

January 10th
SOLD ABBV March 15th $160 calls at $7.00 or better

January 19th
DLR January 19th $135 calls at $6.00 – Expired
Digital Realty Trust, Inc. (DLR) stock – Called
INTC January 19th $42.50 calls at $3.50 – Expired
Intel Corporation (INTC) stock – Called

January 23rd
Purchased American Tower Corporation (AMT) - $202.26

Portfolio Recap

AbbVie Inc. (ABBV)
Yield: 3.7%
ABBV has moved slightly higher since reporting fourth-quarter results that beat expectations last week. The company beat estimates on revenue and met them on earnings. Of course, earnings fell 22.5% and revenues were down 5.3% from last year’s quarter because of falling Humira revenues from increased competition after the patent expiration last year. However, that was expected, and the company raised guidance for the star immunology replacement drugs Skyrizi and Rinvoq.

Management expects combined sales to be $16 billion this year (Humira peak sales were $21 billion) and $27 billion in 2027. The company further expects to return to modest earnings growth this year and robust growth next year. The report indicates that AbbVie is closer to turning the corner than analysts expected. The market tends to anticipate six to nine months into the future and may start pricing in the robust growth expected next year before long. HOLD

Alexandria Real Estate Equities, Inc. (ARE)
Yield: 4.2%
The life science property REIT is slightly lower after reporting earnings last week. The quarter beat revenue estimates and missed earnings by a penny. Alexandria also guided slightly higher than previously expected for 2024. Earnings grew 6.5% and revenues were up 13% versus last year’s quarter. Revenues also increased 11.5% for the full year. But the stock price is still down over 20% from a year ago as ARE got plundered from rising interest rates and being lumped with office REITs. The stock sells at a compelling valuation with reliable earnings and should have a solid year as interest rates peak and perhaps trend lower. BUY

American Tower Corporation (AMT)
Yield: 3.5%
This newly added cell tower property REIT had a very big move at the end of last year. Rising interest rates had been holding it back, along with the rest of the REIT sector, but the peaking and falling of interest rates reignited AMT more than its peers. That’s because it was dirt cheap with growing earnings and a lot of upside. The company also recently sold its India properties to Brookfield Infrastructure Partners (BIP) which eliminates some problems and provides $2 billion to firm up the balance sheet. Interest rate volatility has been pressuring the stock lower so far this year. Recent weakness provides a good entry point to buy the stock. BUY

Marathon Petroleum Corp, (MPC)
Yield: 2.0%
This oil refiner stock moved down slightly after reporting earnings that beat expectations last week. Despite the beat, earnings and revenues were significantly lower than last year’s quarter, which was expected as historically high margins from a year ago were never going to last. Yet, earnings and revenues remain very solid by historical standards. And despite falling slightly after the report, MPC is still up over 9% YTD. It is also poised to rise on continuing tension in the Middle East, which tends to lift all energy stocks. BUY

NextEra Energy, Inc. (NEE)
Yield: 3.2%
The beleaguered combination regulated, and clean energy utility reported strong earnings that exceeded expectations again last month. It grew earnings 9.3% over the previous year in 2023 and reiterated its growth projections for this year, near the top of the estimated range. NEE only got a very slight boost from the positive report even though the stock has lost nearly a third of its value over the past year. But NEE is still way up from the low and trending in the right direction. This stock is still very oversold. It had been a market superstar that investors loved because it offered both defense and growth. It will rise again. BUY

Realty Income Corp. (O)
Yield: 5.7%
This is a legendary monthly income stock that has historically been a fantastic holding for income investors. It had a lousy two years as interest rates rose. But it soared at the end of last year after interest rates peaked. And O has had a crummy start to this year as the interest rate trade has reversed for the time being. It is still a great stock at a cheap price. Receding inflation and interest rates remove 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. The sun will shine on this income stock again at some point. BUY

Qualcomm Corp. (QCOM)
Yield: 2.3%
The chipmaker reported earnings and revenues that soundly beat expectations with 5% revenue growth and 16% higher earnings over last year’s quarter. It marked a return to earnings growth after four straight quarters of declines and the company guided slightly higher than expectations for the current quarter. But the stock fell 5% on the day of the report as investors worried about the strength of the smartphone recovery, even though handset chip sales grew 16% in the quarter.

The decline is more about the absence of exciting news rather than bad news. QCOM has still rallied 35% since mid-October and expectations were quite high. But the news is still positive for the stock. The Semiconductor Industry Association is forecasting 13% growth in worldwide chip sales this year after a decline of 8.2% last year, despite a strong second-half recovery. Leaders like Qualcomm should experience a much higher level of growth than the overall industry. Qualcomm is introducing new AI chips for PCs and smartphones that could be big sellers this year. The dip presents a buying opportunity as shares are likely to be a lot higher by the end of the year. BUY

The Williams Companies, Inc. (WMB)
Yield: 5.5%
Returns have been solid and just what you hope for in a high-dividend stock in a challenging market environment. The natural gas pipeline company has been very bouncy in an upward trend that began more than six months ago. It’s a stable high-yield stock and the company should deliver solid and dependable earnings in just about any economy. 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. BUY

Xcel Energy Inc. (XEL)
Yield: 3.5%
Utilities are still remarkably reliable revenue generators in any economy. Alternative energy is still the wave of the future. A combination of safety and growth is still highly desirable. But XEL has been a dog. It had a rotten two years until November and December when it turned sharply higher. But January has seen a return of ugliness as investors walked away from interest rate-sensitive stocks. But Xcel reported solid earnings on lower operating expenses. 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. BUY

Existing Call Trades

Sell ABBV March 15th $160 calls at $7.00 or better
Despite being up over 10% YTD and 20% in the last three months, ABBV leapt another leg higher after reporting better-than-expected guidance. ABBV made a new 52-week high and is very close to the all-time high. We’ll see if the breakout continues. The stock tends to consolidate after surges like this. That should be the case unless a new era has begun already for the stock.

Current Recommendations

Open RecommendationsTicker SymbolEntry DateEntry PriceRecent PriceBuy at or Under PriceYieldTotal Return
AbbVie Inc.ABBV7/25/23$141.63$168.67$150.003.68%21.43%
Alexandria Real Estate Eq.ARE12/19/23$129.54$121.46$140.004.18%-5.31%
American Tower Corp.AMT1/23/24$202.26$193.51$220.003.52%-4.33%
Marathon Petroleum Corp.MPC10/24/23$149.45$166.33$155.001.98%12.52%
NextEra Energy, Inc.NEE4/25/23$77.50$58.15$65.003.22%-23.67%
Qualcomm Inc. QCOM5/5/21$134.65$141.69$165.002.26%11.83%
Realty Income Corp.O6/27/23$60.19$54.19$62.005.68%-6.53%
The Williams Companies WMB8/24/22$35.58$34.80$38.005.46%6.16%
Xcel Energy Inc.XEL8/22/23$57.95$59.82$65.003.48%5.02%
Existing Call Trades
Open RecommendationsTicker SymbolInitial ActionEntry DateEntry PriceRecent Price Sell To Price or betterTotal Return
ABBV Mar 15th $160 callABBV240315C00165000Sell1/10/24$7.00$10.95$7.004.94%
as of close on 02/02/2024
StockTicker Symbol ActionEntry DateEntry PriceSale DateSale PriceTotal Return
Innovative Industrial Props.IIPRCalled6/2/20$87.829/18/20$100.0015.08%
U.S. BancorpUSBCalled 7/22/20$36.269/18/20$383.42%
Brookfield Infras. Ptnrs.BIPCalled6/24/20$41.9210/16/20$458.49%
Starbucks Corp.SBUXCalled8/26/20$82.4110/16/20$886.18%
Visa CorporationVCalled 9/22/20$200.5611/20/20$2000.00%
AbbVie Inc.ABBVCalled6/2/20$91.0412/31/20$10012.43%
Enterprise Prod. Prtnrs.EPDCalled6/24/20$18.141/15/21$2015.16%
Altria GroupMOCalled 6/2/20$39.661/15/21$407.31%
U.S. BancorpUSBCalled 11/25/20$44.681/15/21$451.66%
B&G Foods Inc,BGSCalled10/28/20$26.792/19/21$284.42%
Valero Energy Inc.VLOCalled8/26/20$53.703/26/21$6011.73%
Chevron Corp.CVXCalled12/23/20$85.694/1/21$9612.95%
KKR & Co.KKRCalled3/24/21$47.986/18/21$5514.92%
Digital Realty TrustDLRCalled1/27/21$149.177/16/21$1555.50%
NextEra Energy, Inc.NEECalled2/24/21$73.769/17/21$8010.00%
Brookfield Infras. Ptnrs.BIPCalled1/13/21$50.6310/15/21$5511.65%
AGNC Investment CorpAGNCSold1/13/21$15.521/19/22$155.92%
ONEOK, Inc.OKECalled5/26/21$52.512/18/22$6019.62%
KKR & Co.KKRSold8/25/21$64.522/23/22$58-9.73%
Valero Energy Inc.VLOCalled11/17/21$73.452/25/22$8315.53%
U.S BancorpUSBSold3/24/21$53.474/13/22$51-1.59%
Enterprise Product Ptnrs EPDCalled3/17/21$23.214/14/22$2411.25%
FS KKR Capital Corp. FSKCalled10/27/21$22.014/14/22$2313.58%
Xcel Energy Inc. XELCalled10/12/21$63.005/20/22$7012.66%
Innovative Industrial Props.IIPRSold3/23/22$196.317/20/22$93-51.23%
One Liberty PropertiesOLPSold7/28/21$30.378/24/22$25-12.94%
ONEOK, Inc.OKECalled5/25/22$65.141/20/23$652.66%
Xcel Energy, Inc.XELCalled10/26/22$62.571/20/23$654.67%
Realty Income Corp. OCalled9/28/22$60.372/17/23$635.41%
Medical Properties TrustMPWSold1/24/23$13.223/21/23$8-38.00%
Brookfield Infrastructure Cp.BIPCCalled11/9/22$42.437/21/23$458.72%
Star Bulk Carriers Corp.SBLKSold6/1/22$33.308/8/23$18-31.38%
Visa Inc.VCalled12/22/21$217.168/18/23$2359.16%
Global Ship Lease, Inc.GSLSold2/23/22$24.968/29/23$19-13.82%
ONEOK, Inc.OKECalled3/28/23$60.989/15/23$659.72%
Hess CorporationHESCalled6/6/23$132.2510/20/23$15517.87%
Tractor Supply CompanyTSCOSold9/26/23$203.0311/28/23$200-1.02%
Digital Realty TrustDLRCalled7/18/23$117.311/19/24$13517.16%
Intel CorporationINTCCalled7/27/22$40.181/19/24$439.76%
SecurityIn/out moneySell DateSell PriceExp. Date$ returnTotal % Return
IIPR Jul 17 $95 callout-of money6/3/20$3.007/17/20$3.003.40%
MO Jul 31 $42 callout-of-money6/17/20$1.607/31/20$1.604.03%
ABBV Sep 18 $100 callout-of-money7/15/20$4.609/18/20$4.605.05%
IIPR Sep 18 $100 callin-the-money7/22/20$5.009/18/20$5.005.69%
QCOM Sep 18 $95 callin-the-money6/24/20$4.309/18/20$4.304.82%
USB Sep 18 $37.50 callin-the-money7/22/20$2.009/18/20$2.005.52%
BIP Oct 16 $45 callin-the-money9/2/20$1.9510/16/20$1.954.65%
SBUX Oct 16 $87.50 callin-the-money10/16/20$3.3010/16/20$3.304.00%
V Nov 20 $200 callin-the-money9/22/20$10.0011/20/20$10.004.99%
ABBV Dec 31 $100 callin-the-money11/18/20$3.3012/31/20$3.303.62%
EPD Jan 15 $20 callin-the-money11/23/20$0.801/15/21$0.804.41%
MO Jan 15 $40 callin-the-money11/25/20$1.901/15/21$1.904.79%
USB Jan 15 $45 callin-the-money11/25/20$2.001/15/21$2.004.48%
BGS Feb 19 $27.50 callin-the-money12/11/20$2.402/19/21$2.408.96%
VLO Mar 26 $60 callin-the-money2/10/21$6.503/26/21$6.5012.10%
CVX Apr 1 $95.50 callin-the-money2/19/21$4.304/1/21$4.305.02%
AGNC Jun 18 $17 callout-of-money4/13/21$0.506/18/21$0.503.21%
KKR Jun 18 $55 callin-the-money4/28/21$3.006/18/21$3.006.25%
USB Jun 16 $57.50 callout-of-money4/28/21$2.806/18/21$2.805.24%
DLR Jul 16 $155 callin-the-money6/16/21$8.007/16/21$8.005.36%
AGNC Aug 20 $17 callout-of-money6/23/21$0.508/20/21$0.503.00%
OKE Aug 20 $57.50 callout-of-money6/23/21$3.508/20/21$3.506.67%
NEE Sep 17 $80 callin-the-money8/11/21$3.509/17/21$3.504.75%
BIP Oct 15 $55 callin-the-money9/1/21$2.0010/15/21$2.003.95%
USB Nov 19 $60 callout-of-money9/24/21$2.3011/19/21$2.304.30%
OKE Nov 26 $65 callout-of-money10/20/21$2.2511/26/21$2.254.28%
KKR Dec 17 $75 callout-of-money10/26/21$3.5012/17/21$3.505.42%
QCOM Jan 21 $185 Callout-of-money11/30/21$9.651/21/22$9.657.17%
OLP Feb 18 $35 Callout-of-money11/19/21$1.502/18/22$1.504.94%
OKE Feb 18 $60 Callin-the-money1/5/22$2.752/18/22$2.755.24%
USB Feb 25 $61 callout-of-money1/13/22$2.502/25/22$2.504.68%
VLO Feb 25 $83 callin-the-money1/18/22$4.202/25/22$4.206.13%
EPD Apr 14th $24 callin-the-money3/2/22$1.254/14/22$1.255.69%
FSK Apr 14th $22.50 callin-the-money3/10/22$0.904/14/22$0.904.09%
XEL May 20th $70 callin-the-money3/30/22$3.005/20/22$3.004.76%
SBLK July 15th $134 callout-of-money6/1/22$1.607/15/22$1.604.80%
OKE Oct 21st $65 callout-of-money8/24/22$3.4010/21/22$3.405.22%
OKE Jan 20th $65 callIn-the-money11/25/22$3.701/20/23$3.705.68%
XEL Jan 20th $65 callin-the-money11/25/22$5.001/20/23$5.007.99%
O Feb 17th $62.50 callin-the-money12/28/22$3.002/17/23$3.004.97%
QCOM Sep 16th $145 callout-of-money7/20/22$11.759/16/22$11.758.73%
V Mar 17th $220 callout-of-money1/24/23$12.003/17/23$12.005.51%
OKE May 19th $65 callout-of-money4/11/23$2.705/19/23$2.704.43%
V Jun 2 $230 callout-of-money4/21/23$10.506/2/23$10.504.82%
BIPC $45 July 21st callin-the-money5/23/23$3.257/21/23$3.257.66%
V $235 Aug 18th callin-the-money7/11/23$9.008/18/23$9.004.13%
GSL $20 Aug 18th callout-of-money7/11/23$1.258/18/23$1.255.00%
OKE $65 Sep 15 callin-the-money9/15/23$3.207/25/23$3.204.92%
INTC $35 Oct 20th callout-of-money9/8/23$3.7810/20/23$3.789.41%
HES $155 Oct 20th callin-the-money9/8/23$9.0010/20/23$9.006.81%
DLR $135 Jan 19th callin-the-money11/22/24$6.001/19/24$6.005.11%
INTC $42.50 Jan 19th callin-the-money11/29/24$3.501/19/24$3.508.71%

Copyright © 2024. All rights reserved. Copying or electronic transmission of this information without permission is a violation of copyright law. For the protection of our subscribers, copyright violations will result in immediate termination of all subscriptions without refund. Disclosures: Cabot Wealth Network exists to serve you, our readers. We derive 100% of our revenue, or close to it, from selling subscriptions to our publications. Neither Cabot Wealth Network nor our employees are compensated in any way by the companies whose stocks we recommend or providers of associated financial services. Employees of Cabot Wealth Network may own some of the stocks recommended by our advisory services. Disclaimer: Sources of information are believed to be reliable but they are not guaranteed to be complete or error-free. Recommendations, opinions or suggestions are given with the understanding that subscribers acting on information assume all risks involved. Buy/Sell Recommendations: are made in regular issues, updates, or alerts by email and on the private subscriber website. Subscribers agree to adhere to all terms and conditions which can be found on and are subject to change. Violations will result in termination of all subscriptions without refund in addition to any civil and criminal penalties available under the law.