With the stock market deeply oversold this week, we strategically invested our cash in various sectors, such as energy, technology, and materials. Additionally, we added a former Club chipmaker to our Bullpen and upgraded a premium beer brand to a buy rating. The market’s Friday reversal allowed us to fulfill our commitment to trim a previously struggling healthcare stock. Here’s a day-by-day breakdown of our portfolio moves during this tumultuous week of trading, driven by investor concerns over the economy and rising bond yields.
Monday
At the start of Monday’s session, we purchased 200 shares of Coterra Energy (CTRA), increasing our position in this oil and gas producer for the first time in approximately two months. Given the oversold market condition, as indicated by the S&P 500 Short Range Oscillator, our investment strategy compelled us to identify any opportunities within our portfolio. Coterra stood out because its stock price did not adequately reflect the recent rally in natural gas, which continued to gain momentum throughout the week. On Friday, natural gas futures surged 5% to around $3.33 per million British thermal units (MMBtu).
Tuesday
Since the market was at its most oversold since March, we once again searched for strategic investments. This led us to Starbucks (SBUX), a prominent coffee chain facing concerns about its business in China. Additionally, we added Advanced Micro Devices (AMD) to our Bullpen, a collection of stocks under consideration for our portfolio. As market declines intensified, we also acquired shares of Broadcom (AVGO). While China’s slower-than-expected post-Covid economic recovery posed risks for many US stocks, we saw an opportunity in Starbucks as its stock price already reflected this challenge. Furthermore, we revisited AMD because of our improved understanding of its role in the semiconductor industry. Despite the ongoing pressure on tech stocks, we bought shares of Broadcom to lower our average cost and boost our position before its anticipated acquisition of VMWare (VMW).
Thursday
Since Wednesday saw a rally fueled by positive job gains from ADP, we refrained from making any moves. However, the market returned to a bearish state on Thursday and remained significantly oversold. We made two separate purchases in this scenario, starting with 65 shares of DuPont de Nemours (DD), a major chemicals company. Later, we returned to the tech sector and acquired 75 more shares of Oracle (ORCL). Additionally, we upgraded Constellation Brands (STZ), a beer manufacturer, to a 1 rating, indicating our intention to buy at current levels. Despite Constellation Brands’ better-than-expected quarterly results and raised guidance, the stock experienced a 3% decline. This marked our first increase in our DuPont position since August and reaffirmed our confidence in Oracle’s cloud business despite its recent post-earnings performance.
Friday
A stronger-than-anticipated September jobs report initially caused a decline in the stock market as bond yields rose. However, a midday market reversal led to significant gains in all major US stock benchmarks. This upward momentum prompted us to sell 15 shares of Humana (HUM) after its stock crossed the $500 threshold. We had been closely monitoring this level as Humana rebounded from an 18% dip earlier in the summer due to concerns about healthcare costs. Despite the stock not yet reaching its previous highs, it made sense to secure profits. We also downgraded Humana to a 2 rating, indicating a preference for a future buy opportunity. (Jim Cramer’s Charitable Trust holds positions in CTRA, SBUX, AVGO, ORCL, DD, HUM, and STZ. See here for a full list of the stocks.)
