Stock Portfolio Updates: Buy the Dips – Rally Resumes Mid-Month By: Christopher Mistal | December 12, 2024 | Email | Print

This December has gotten off to the choppy start that we noted in the November 26, email Issue. On the heels of yesterday’s inline CPI report, today’s warmer than expected PPI caused the opposite response from the market today. Despite today’s market weakness and the warm PPI report, the Fed is still widely expected to cut its key lending rate next week. Likely, even more important, the Fed will also be providing an update to its Summary of Economic Projections. This update could shed some additional, much needed, light on where the Fed thinks the economy and interest rates may be headed in 2025. The timing of this year’s December Fed meeting also happens to line up rather nicely with the historical trough in December. Provided the Fed does not upset the market, it could easily be the catalyst that sparks the typical second half of December rally.

 

 

 

 

Over the past five weeks through yesterday’s close (December 11), S&P 500 advanced 2.6% while Russell 2000 inched 0.1% higher. Over the same period the entire stock portfolio gained 1.8% excluding dividends, interest from cash, and any trading fees. Delving deeper into the stock portfolio, Large caps were responsible for all the portfolio gains, advancing 3.0% while Mid- and Small-cap positions both slipped modestly lower on average.

 

Gains were spread fairly evenly across the majority of Large-cap stocks. AT&T (T), Asurant Inc (AIZ), Sterling Infrastructure (STRL), Comfort Systems (FIX), Garmin (GRMN), and ICIC Bank (IBN) all advanced over the last five weeks. STRL, FIX, GRMN and IBN can all still be considered on dips. As a reminder, this is not a new trade recommendation. If you do not have a position, please consider utilizing existing and updated buy limits to establish positions.

 

SPX Technologies (SPXC) is the lone large-cap position in the red and can still be considered at or near its current price up to its buy limit. SPXC is still in a long-term uptrend, but price action has become increasingly volatile since July. Its solid share gains year-to-date have been driven by strong growth from its HVAC business. This trend is likely to continue as the demand for/from data centers, healthcare and residential markets is likely to remain firm.

 

Mid-cap performance was not as robust. Silvercorp Metals (SVM) was stopped out on November 11 when it closed below its stop loss. SVM was sold at its stop loss of $3.97 resulting in a 17.8% loss. Shares have tumbled even further as interest in gold and silver has waned since shortly after Election Day. It is also a reminder that the seasonally bullish period for gold and silver mining stocks has historically ended in December.

 

Offsetting the negative performance of SVM, Amstrong World Industries (AWI) traded above $160.96 on November 25, triggering our profit taking rule of selling half the original position when it first doubles. AWI has since modestly retreated and is on Hold. Even after doubling in just over one year, AWI’s valuation remains reasonable suggesting further upside is likely.

 

Another mid-cap performer worthy of attention is OSI Systems (OSIS). Since breaking out in mid-November, it has stormed higher nearly everyday going from around $150 to briefly over $189 today. Beyond logging multiple new 52-week highs, it is also at new all-time highs. OSIS can still be considered on dips but remain patient and refrain from chasing at this point. It would not be surprising to see OSIS pause and consolidate some of its recent, hefty gains. Being patient also applies to GRMN and Carnival (CUK).

 

Per last update, Universal Stainless (USAP) has been sold and closed out of the portfolio. USAP was sold on November 8 at $44.00 resulting in a fractional gain of 0.3%. USAP is being acquired in a deal that values it at $45 per share but the deal is not expected to close until sometime in Q1 of next year. There are better opportunities available.

 

Crexendo (CXDO) and Wildan Group (WLDN) have retreated and are currently in the red. WLDN has had a good year and it appears that it is currently enduring some profit taking. CXDO weakness could be the result of some tax-loss selling by longer-term holders. CXDO and WLDN can be considered at or near current prices.

 

With natural gas prices trending higher, Navigator Holding (NVGS) can be considered on dips below a buy limit of $15.30. NVGS is the second longest holding in the portfolio and it has been treading water for most of this year. Should natural gas continue higher and/or the export market resume growing, NVGS could finally break out of its trading range.

 

Please see the table below for updated advice, stop losses and buy limits where applicable.