Here Come the Earnings
We are smack dab in the heart of earnings season for this portfolio. With the market sputtering along without much conviction, individual stocks are taking center stage, and earnings are a major part of that.
Quarterly and annual earnings will be reported this week from AbbVie Inc. (ABBV), Alexandria Real Estate Equities (ARE), American Tower Corporation (AMT), Marathon Petroleum Corporation (MPC), and Qualcomm Inc. (QCOM). The reports could be a hugely important factor in determining the near-term direction of these stocks.
Several stocks, including ABBV, MPC, and QCOM, are near the 52-week highs, and this week’s reports should determine whether the stocks break out to new levels or pull back from the recent moves. This can be a good time to sell calls on these stocks, as we’ve done with ABBV. But there is a strong chance of good news from QCOM, and MPC could get a bump from Middle East turmoil, so I’m holding off on those two for now.
It’s difficult to gauge the overall market. Stocks are still digesting the disappointing news that there probably won’t be a “soft landing” and rate cuts that begin as early as March. But a strong earnings season could overcome that disappointment and reignite the rally.
The news has been generally good as interest rates have likely peaked, the Fed is done hiking, inflation continues to retreat, and the economy is strong. It’s a good environment to buy stocks on weakness from consolidation or headline risk. Stay tuned.
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: 3.8%
ABBV is trading near the 22-month high. It is at the high point of the range in which it has traded since early 2022. The company reports earnings on Friday that could determine whether the stock breaks out into higher territory or pulls back again. The future for the company and the stock should be excellent as AbbVie has a strong pipeline of new drugs. But it may not be out of the Humira woods yet as more companies will launch biosimilars in 2024. The market likes that AbbVie is purchasing biotech company ImmunoGen (IMGN) for $10.1 billion Cerevel Therapeutics (CERE) for $8.7 billion. Both deals should enhance the already strong pipeline longer term. HOLD
Alexandria Real Estate Equities, Inc. (ARE)
Yield: 4.1%
ARE leveled off after a big move in November and December when it soared over 40%. REITs and other income stocks have had a hard time in the market so far this year and it’s a good sign that ARE still hasn’t given up much, especially after the big move at the end of the year. Meanwhile, the stock is still more than 40% below the all-time high. The company also has a highly reliable and growing business that should thrive in any economy. It’s cheap ahead of a period of likely strong performance as interest rates level off or abate. 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. But that 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: 2.1%
This oil refiner stock may be breaking out of the sideways funk it had been in since September. It is trading near the all-time high and above the recent range ahead of the earnings report that comes out later this week. The company has a strong record of positive earnings reports that please the market. It is also poised to rise on continuing tension in the Middle East, which tends to lift all energy stocks. While the environment can vary from quarter to quarter, it should remain an overall profitable environment for refiners over the next several years. But there are currently a couple of things that could lift the stock in the short term. BUY
NextEra Energy, Inc. (NEE)
Yield: 3.2%
The beleaguered combination regulated and clean energy utility reported strong earnings that exceeded expectations again last week. 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
Qualcomm Corp. (QCOM)
Yield: 2.1%
QCOM is catching fire. It went up about 10% in just a few days to a new 52-week high and is near the highest level since early 2022. The recent catalyst is that semiconductor companies that have reported earnings are confirming that the semiconductor industry may have double-digit growth this year after contracting last year. Leaders like Qualcomm should experience a much higher level of growth than the overall industry. Qualcomm reports earnings later this week. Hopefully, it will be good news that helps the stock break out from here. Qualcomm is introducing new AI chips for PCs and smartphones that could be big sellers this year. When QCOM moves it can make up for lost time. BUY
Realty Income Corp. (O)
Yield: 5.6%
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, in my view temporarily. 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. BUY
The Williams Companies, Inc. (WMB)
Yield 5.1%
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
ABBV touched the 52-week high last week when these calls hit the target price. As I mentioned above, the company probably is still not out of the woods with the Humira patent expiration as more companies will launch biosimilars in 2024. It was a good price level to sell a call and boost income. ABBV is perched near the 52-week high ahead of earnings later this week. It’s a risky situation that could go either way.
Current Recommendations
| Open Recommendations | Ticker Symbol | Entry Date | Entry Price | Recent Price | Buy at or Under Price | Yield | Total Return |
| AbbVie Inc. | ABBV | 7/25/23 | $141.63 | $164.40 | $150.00 | 3.77% | 18.35% |
| Alexandria Real Estate Eq. | ARE | 12/19/23 | $129.54 | $124.35 | $140.00 | 4.09% | -3.06% |
| American Tower Corp. | AMT | 1/23/24 | $202.26 | $197.29 | $220.00 | 3.45% | -2.46% |
| Marathon Petroleum Corp. | MPC | 10/24/23 | $149.45 | $160.52 | $155.00 | 2.06% | 8.59% |
| NextEra Energy, Inc. | NEE | 4/25/23 | $77.50 | $58.48 | $65.00 | 3.20% | -23.23% |
| Realty Income Corp. | O | 6/27/23 | $60.19 | $54.97 | $62.00 | 5.60% | -5.63% |
| Qualcomm Inc. | QCOM | 5/5/21 | $134.65 | $150.72 | $165.00 | 2.12% | 18.96% |
| The Williams Companies | WMB | 8/24/22 | $35.58 | $34.87 | $38.00 | 5.13% | 6.37% |
| Xcel Energy Inc. | XEL | 8/22/23 | $57.95 | $59.39 | $65.00 | 3.50% | 4.27% |
| Existing Call Trades | |||||||
| Open Recommendations | Ticker Symbol | Intial Action | Entry Date | Entry Price | Recent Price | Sell To Price or better | Total Return |
| ABBV Mar 15th $160 call | ABBV240315C00165000 | Sell | 1/10/24 | $7.00 | $7.94 | $7.00 | 4.94% |
| as of close on 01/26/2024 | |||||||
| SOLD STOCKS | |||||||
| Stock | 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% |
| Digital Realty Trust | DLR | Called | 7/18/23 | $117.31 | 1/19/24 | $135 | 17.16% |
| Intel Corporation | INTC | Called | 7/27/22 | $40.18 | 1/19/24 | $43 | 9.76% |
| 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 | 7/20/22 | $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% | |
| DLR $135 Jan 19th call | in-the-money | 11/22/24 | $6.00 | 1/19/24 | $6.00 | 5.11% | |
| INTC $42.50 Jan 19th call | in-the-money | 11/29/24 | $3.50 | 1/19/24 | $3.50 | 8.71% | |
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