Quick Picks - September 9th 2020

Hi Seekers,

It is time for our weekly Quick Picks segment, which I usually send out on Tuesday, but being a holiday week I am sending it today. I like to see how the market reacts on Day 1 of the trading week.

As we saw yesterday, the technology sell-off continued with the Nasdaq now officially in correction territory. Therefore, it is imperative that you layer into positions due to the volatility in the market right now.

In this segment, my goal is to give you a look into some trades I am looking at during the week. As you are already aware, I am a long-term investor, meaning the majority of my positions are buy and hold type positions. However, I do set aside a portion of my portfolio for options and some short-term trades.

These positions I look at in this segment could be either short or long-term holds, but I will try to identify what I plan on doing with each trade mentioned.

Last week I gave the option contracts in WORK I had bought for $2.59/contract, of which 2 days later rose above $4/contract when I sold half of those contracts. Sold at a 50% increase! After the company released earnings yesterday, the company beat on the top and bottom, but the billings numbers were a disappointment. I do hold long term options, which are going to take a hit in trading today, but I intend to hold those as they do not expire until next year.

Let’s see what we can muster up this week!

Disclaimer: I am not a financial advisor and this newsletter is intended for informational and educational purposes only.

Let’s get started!

Quick Picks

#1 Lowe’s Companies (LOW)

Lowe’s has been crushing it during the pandemic. The company just reported same-store sales over 30% with Home Depot reporting same-store sales of 23%. The home improvement sector has been firing on all cylinders.

New CEO Marvin Ellison who is a former HD executive has been making all sorts of changes at the company to improve efficiencies and boost sales, which is exactly what the company has been doing. The staggering results are not only due to the pandemic with many consumers at home, but also one must give credit to Mr. Ellison and the Lowe’s team.

The stock is trading right near the 100 day EMA with the next support level being $146. RSI levels are 43, which dates back to the first few days of April.

The stock currently trades at a Forward P/E of 18.4x compared to their 5-year avg P/E of 21.2x. LOW is a Dividend King, which means they have increased their dividend for 50+ CONSECUTIVE years and now yield 1.56%.

#2 Cisco Systems (CSCO)

Cisco has been beaten down since releasing earnings a few weeks back, but is now trading at extremely low levels.

The stock is on the brink of trading below $40, but much of their business has been impacted by the pandemic, which has them trading at an extreme discount. This investment is a LONG TERM play.

Cisco maintains strong cash flows as it transitions to more of a software play, which is a boost to subscription revenues.

The company pays a 3.60% dividend and currently trades at a 11.9x Forward P/E multiple compared to a 5yr average P/E of 14.3x.

The chart has been ugly to look at of late, but it cannot be ignored. The stock currently trades at an RSI of 25.9 suggesting the stock is Oversold and trading at a discount. An RSI this low has not been seen since mid-March.

Disclosure: I am LONG shares of CSCO

#3 CVS Health Corporation (CVS)

CVS is a name I have been watching closely now as it looks poised to begin moving higher. The company reported solid earnings results in their most recent quarterly report, but they have not been getting the credit because investors believe it is due merely to COVID.

The company recently bought healthcare insurance provider Aetna, and will be a catalyst for further growth of the company.

In terms of valuation, the company trades at a Forward P/E multiple of 7.9x compared to a 5-year average P/E multiple of 13.8x. This is EXTREMELY low for CVS. The company pays a 3.36% dividend, which is well above the 5-year avg yield of 2.46%.

In terms of the chart, CVS trades at an RSI of 30 and trading right at $59 support level. I believe we could see further downside if it falls below this support level, but the current levels seem like a great entry point for LONG-TERM investors.

Thank you for Reading!

If you have any questions at all on the information above, please do not hesitate to email me at Dividend. [email protected] or DM me on Twitter.

Have a great week!