The November Rally Still Has Legs
The strong November rally slowed down last week but it’s still very much alive. The S&P 500 closed last week up 8.7% for the month and the good times might continue.
The current belief in peak interest rates and a “soft landing” has investors still in an optimistic mood. The VIX, known as the market’s fear gauge, hit the lowest level since January 2020 last week. Any piece of good news could ignite a further rally with the current kindling.
The big number expected this week is PCE inflation, which is due to come out on Thursday. It is the Fed’s preferred inflation measure. Indications from all other inflation readings are that it should be a good number, or at least not a bad one. Hopefully, that can start a rally that lasts for what is left of this year.
We’ll see if the optimism lasts into next year. As of now, most analysts see either no recession or a very mild one that will only cause a brief pullback. But anything is possible. Things look good for now.
The recent market rally has created the opportunity to sell calls on two current positions at high prices with the stocks at 52-week highs. The call on Digital Realty Trust (DLR) hit the targeted price last week. The call on Intel (INTC) has not yet hit the targeted price but the order will be left open in case it hits the price this week.
Past Month Activity
October 24th
Purchased Marathon Petroleum Corporation (MPC) - $149.45
November 21st
Sell INTC January 19th $42.50 calls at $3.50 or better – Pending
November 22nd
SOLD DLR January 19th $135 calls at $6.00
November 28th
SELL Tractor Supply Company (TSCO)
Portfolio Recap
AbbVie Inc. (ABBV)
Yield: 4.5%
The biopharmaceutical company has shrinking revenue and earnings this year because its blockbuster Humira drug is facing biosimilar competition in the U.S. But this has long been expected and the company’s new drugs and pipeline are well on pace to make the company a solid earnings grower in the years ahead.
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. The stock may seem like it’s dead money but once we get through this year things can improve dramatically. BUY
Digital Realty Trust (DLR)
Yield: 3.6%
This data center REIT continues to kick butt. It just made another new high on Monday. Despite the fact that REITS have been terrible this year, DLR has now returned over 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: 1.1%
Strong earnings, encouraging news about future business, and a much better market environment are turning INTC around. Intel received an analyst upgrade this month and rallied nearly 7% on the same day to a 17-month high. INTC is up over 27% in the last month and over 69% 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. But the recent surge has been huge and it could consolidate for a while. That’s why calls were targeted last week. BUY
Marathon Petroleum Corp, (MPC)
Yield: 2.2%
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, MPC has managed a better than 31% 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 had been riding high again until a couple of weeks ago. NextEra reported earnings that beat estimates and grew 10.6% from last year’s quarter. Management also reiterated previous growth projections and said the company expects to deliver earnings near the top of the expected range through 2026. NEE spiked over 8% the week of the report. NEE has also made a very convincing 26% move off the low. But the stock pulled back after that as solar power companies came under pressure as its subsidiary NextEra Energy Partners (NEP) was downgraded citing pressure from higher interest rates. NEE seems to be bouncing back from that too. HOLD
Realty Income Corp. (O)
Yield: 6.1%
This has been one of the longest periods of sustained lousy performance for this legendary income REIT in a long time. But the future prognosis should be a whole lot better. O sells at one of the cheapest valuations ever. Peak interest rates should be a huge benefit for the REIT sector that could prompt a sustained rally. And its retail staple properties, and new data center acquisitions, should produce reliable revenue in just about any economy. BUY
Rating change – “BUY” to “SELL”
Tractor Supply Company (TSCO)
Yield: 2.1%
I like this rural retail company stock and expect it to have a bright future. It has solid and consistent growth and generates solid revenues even in a slow economy with its strong array of staples products. That’s why it has managed to grow earnings for 31 straight years.
But the consumer, which had remained resilient, is starting to roll over. Big retailers’ earnings reports are indicating a weaker consumer. More importantly, the situation is likely to get worse in the quarters ahead. The market doesn’t seem to care that rural consumers already rolled over and Tractor Supply is still delivering solid results. As investors sour on the consumer, they will likely take down TSCO with the rest of the bunch. There is more downside risk than upside potential ahead. Maybe we will revisit this one in a different environment. SELL
Qualcomm Corp. (QCOM)
Yield: 2.5%
The struggling chipmaker stock got a big boost this month while the overall tech sector rallied on falling interest rates, Qualcomm was also helped by the earnings report. While results for the quarter still showed lower earnings and revenue, the future is looking increasingly bright, and investors took notice. 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 that phone sales have already bottomed. It’s looking like 2024 could be a very profitable year. BUY
The Williams Companies, Inc. (WMB)
Yield: 4.9%
The natural gas pipeline company reported strong earnings growth earlier this month. And it is now within pennies of the 52-week high. It also delivered good news in terms of acquisitions and expansions. It pays a well-supported 4.9% yield (with 2.38 times cash flow coverage) and is a business with steady demand even in tough times. Its 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
The stock remained strong and even moved higher during a week when the market pulled back slightly. Technology is strong and REITs are strong. But the stock and the market may have gotten ahead of themselves and offer a window in which to lock in a high income from call premiums. The current call price is more than the $6 target price. It’s a good time to sell these calls if you haven’t done so already.
Sell INTC January 19th $42.50 calls at $3.50 or better – Pending
INTC stopped going higher last week. The call prices cooled off and never reached the targeted $3.50 for this particular call. But it will probably only take one strong day or an up week of any kind to reach the targeted price. We will leave the $3.50 target price for now.
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 | $127.75 | $130.00 | 2.50% | 0.20% |
| Intel Corporation | INTC | 7/27/22 | $40.18 | $43.96 | $35.00 | 1.14% | 14.62% |
| The Williams Companies | WMB | 8/24/22 | $35.58 | $36.32 | $38.00 | 4.93% | 9.39% |
| NextEra Energy, Inc. | NEE | 4/25/23 | $77.50 | $57.55 | NA | 3.25% | -24.45% |
| Realty Income Corp. | O | 6/27/23 | $60.19 | $53.91 | $62.00 | 5.70% | -8.30% |
| Digital Realty Trust | DLR | 7/18/23 | $117.31 | $136.50 | $125.00 | 3.58% | 17.46% |
| AbbVie Inc. | ABBV | 7/25/23 | $141.63 | $138.67 | $150.00 | 4.47% | -1.11% |
| Xcel Energy Inc. | XEL | 8/22/23 | $57.95 | $60.52 | $65.00 | 3.44% | 5.36% |
| Tractor Supply Company | TSCO | 9/26/23 | $203.03 | $198.19 | $215.00 | 2.08% | -1.88% |
| Marathon Petroleum Corp. | MPC | 10/24/23 | $149.45 | $149.59 | $155.00 | 2.21% | 1.14% |
Existing Call Trades | |||||||
| Open Recommendations | Ticker Symbol | Intial Action | Entry Date | Entry Price | Recent Price | Sell To Price or better | Total Return |
| DLR Jan 19th $135 call | DLR240119C00130000 | Sell | $6.45 | $6.00 | 5.11% | ||
| INTC Jan 19th $42.50 call | INTC240119C00042500 | Sell Pending | $2.92 | $3.50 | 8.71% | ||
| as of close on 11/24/2023 | |||||||
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% |
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% | |