- 2023 Plug & Play Update.
- Several new Additions & Subtractions.
- Our Very Short Lists stocks are based on 5+ year profit potential.
- The Plug & Play, derived from the VSLs, are based on a 1-2 year price appreciation outlook, i.e. focused on finding buy prices soon.
- Getting a margin of safety comes from buying valuable assets when the market does not recognize that value.
Welcome to the this quarter’s Plug & Play Stocks – which are your focus stocks for this quarter. Lists are roughly rank ordered.
Read Stocks Of The Week for company and chart updates, as well as, game plans. Trade Alerts as needed. Follow my alerts to get bottom fishing price alerts and a note on Plug & Play stocks when triggered.
Read our Getting Started piecesbefore building your portfolio. Use the “VSLs” – Very Short Lists for our semi-annual long-term charts.
Note that bottom fishing prices are not inclusive of the Armageddon Zombie Apocalypse scenarios which are lower. So, mind your asset allocation with your real risk levels in mind.
Plug & Play Stocks
The Plug & Play Stocks remains largely the same from Q4, however, I have added a few new names that should do well in a growth oriented rebound. The long-term charts on the VSL anticipate a new bull market beginning sometime in 2023 – see My 2023 S&P 500 Futile Forecast (SP500).
The past year was difficult, despite starting the year cash heavy, as many cheap stocks became cheaper and turned into falling knives. That feels discouraging over the course of a short period of time.
For those who scaled in slowly and at wide price points, you should have very attractive cost basis for the intermediate to long-term. For those who rushed to be buyers, well, time does indeed heal old wounds.
I reiterate: scale in slowly and at wide price points.
- During bear markets, target your buying around and below the bottom fishing prices.
- During bull markets, you can “buy the dips” at higher prices marked by the more frequently updated, top of the buy zone, orange line.
A lesson to consider is that prices can move fast or slow. After the Covid Crash I gave a list of stocks and ETFs to buy all at once. Those stocks rose in furious fashion and we were sellers by late 2021.
It is more usual that stocks rise in more of an “S” shape after a bear market. I think that will be the case for the next bull market.
The stocks we have been buying the past year have a great future in aggregate and I believe that once again, as has been the case following past bear markets, that my stocks will handily outperform the S&P 500 index.
That does not mean they are buy and hold forever. While my basket of stocks is loaded with potential, sometimes management does not execute, circumstances are bad and I will turn out to be wrong on several.
And, while we will own most of our stocks for years, at some point, as the market catches up and then FOMO overbids our stocks, our margin of safety will disappear and it will be time to sell.
To manage our portfolios, we need to maintain a disciplined approach and control our emotions. Over time, even though we know striving to be perfect is doomed to failure, we can reach excellence.
S&P 500 Growth Stocks
A combination of growth and value with strong intermediate term runways. Of note, there are not many “growth” companies on the S&P 500 as few have growth rates over 20% because they are already large. Most of the S&P 500 companies worth owning pay a dividend and appear in the S&P 500 Dividend Stocks below. I’m only including stocks here with a dividend below 1%.
|Berkshire Hathaway(BRK.B)||270||One of the safest stocks due to balance sheet and cash flows. Diversified across dozens of companies, much like an ETF or mutual fund. Roughly 20-25% of value is Apple holdings.|
|Alphabet(GOOG)||75||Still a dominant search and ad company, but moving more to cloud, entertainment and baby googles. Some pushback on content moderation, but very fixable.|
|Amazon(AMZN)||66||Preeminent retail, tech, services and cloud company. Recent buildout leaves them with excess capacity and lower capex going forward. Expect earnings to grow by 2024.|
|Nvidia(NVDA)||90||Top AI platform plus leader in other smart chips. Still some downside, but unique products make it a leader during next tech expansion.|
|Warner Bros Discovery(WBD)||13||Expense and debt cutting is ahead of schedule, DCU reboot looks smart and promising, multiple new potential hit shows, great library, great franchises. Dramatically undervalued versus future cash flows.|
|Freeport McMoran(FCX)||13||Copper and other metals are heading towards shortages in coming years, but new supply has driven up smelting costs, i.e. similar to too much oil for refineries. Time and a recession might give us a lower price later.|
|Generac(GNRC)||78||Generac has positioned themselves well for the energy transition by using their generator business to make them into energy storage and monitoring. Very well managed. I like the combination of the clean energy ETFs on our Global Trends ETF lists + Generac.|
|Tesla (TSLA)||50||The entire EV industry is going to make money as EVs replace oil based cars though the 2030s. With the fleet age so old due to supply chain issues the past couple years, growth will be higher than normal. In addition, the tie in with solar and energy management sales will be big too. Musk is Musk which means so many things. But, from a market cap around $200 billion, Tesla has a lot of upside again. Ugggh.|
- Subtracted Enphase (ENPH) on price & valuation. I can get my exposure via the Invesco Solar ETF (TAN) in a safer basket.
- Subtracted SolarEdge (SEDG) on price & valuation. I can get my exposure via the Invesco Solar ETF (TAN) in a safer basket.
- Added Tesla on its deep dive. I can get Tesla exposure via (QQQ) and (QCLN) so I need a price near bottom fishing to buy it individually (since ETFs do a lot of the asset allocation lifting for us.)
Mid Cap Growth Stocks
$3b to $20b, or $20b+ but not on the S&P 500. Higher growth potential than the large caps in most cases.
|Square/Block(SQ)||61||Small business leader and I want the Bitcoin exposure. High safety ratings, but was overvalued. Currently under valued and in the technical buy zone. Looking for full 3-4% position eventually.|
|Unity(U)||30||Unity CEO on CNBC: I do think the metaverse is part of the future, says Unity Software CEO I have a starter from $85. At recent prices it is a steal.|
|SunPower(SPWR)||14||SunPower’s backing by Total is why I stay on this one. It has a very legit margin of safety that other solar plays don’t. I’d buy more near BF, already have a 1/2 position and sell puts when I can get a net price near BF if assigned.|
|Shopify(SHOP)||20||A global ecommerce platform that rivals Amazon. It was a Covid darling and has now deeply corrected. It is as the point where capex can fall and revenues can start to pile up into profits. Global ecommerce still has a lot of growth.|
|Palantir(PLTR)||7||Two businesses in one. Their software business and the investment holding company which makes tons on the next bull market with stakes in over a dozen small caps. It’s a buy around BF, at least a starter. I’m also selling puts.|
|MP Materials(MP)||18||The base of creating a rare earth metals supply chain in the U.S. Very tied to EVs, defense and advanced tech. Their emerging magnet business is high margin and high demand. Currently in the capex heavy buildout, but close to finishing, thus, it’s time to get into position.|
|Uber(UBER)||22||Just becoming profitable which is criteria for S&P 500 inclusion. Deals with cab companies globally is new money. About to become transportation and delivery “platform app.” Should earn around $3/share a few years out.|
- Added Shopify which is a global leader in ecommerce solutions from websites to fintech and technology management. Waiting a long time to add, but it’s a top long-term play that’s finally cheap.
Small Cap Growth Stocks
Under $3b or not regularly profitable yet. Here’s where you will find a bit more “high risk” in our lists. Not all small cap stocks are high risk though. Some are just more volatile. There is a difference. Many of these are market risk, though some are indeed high risk. See the VSL for risk ratings.
This where we could see 10x stock moves or better. You must decide how much of your portfolio can hold high volatility and/or high risk. In general, buy starters or 1/2 positions until companies demonstrate execution and/or start to move off of a technical bottom. Long basing patterns are interesting.
|Aemetis(AMTX)||5||The government has said “YES” to biofuels and carbon capture. Their biofuel process is carbon NEGATIVE in many cases, not just carbon neutral. The tax incentives in the U.S. will likely make it the highest margin company in America for biofuels. The company blew by their 5-year $5 billion estimate for contracted biofuels and hit $7 billion, largely for jet fuel at San Francisco airport. The company’s biofuel plant in India is paid for and can generate 50 million gallons of biofuel per year – I believe it could be sold if need be, i.e. provides a margin of safety. The stock is under short-selling pressure, I believe likely because of perceived risk in 2024 debt maturities. Institutional investors continue to accumulate. It seems inevitable there will be a short squeeze.Aemetis Is My Top Growth Stock Of 2023 (NASDAQ:AMTX)|
|Ginko Bioworks(DNA)||3||Long-term outlook for becoming biotech platform is enhanced by barriers to new entries. Huge TAM. Recent scientific announcements regarding proteins and antibiotics has expanded their market potential again. Generating revenues via multiple partnerships and streams of income. A true platform company in its infancy imo.|
|Enovix(ENVX)||9||A significant performance and safety upgrade vs current lithium ion batteries will give it a 3-5 year runway to build its business before new tech comes. Great management I would expect will continue to evolve the company.|
|Heron Therapeutics(HRTX)||3||TAM to replace up to half of opiate usage is massive. ZYNRELEF for pain is currently discounted due to slow uptake as Covid reduced operations. Rest of the company is unvalued by market, but has some value.|
|AST SpaceMobile*(ASTS)||5||Millennial fav due to the massive upside in space based 5G. American Tower (AMT) owns 5%. Deployment hurdles of constellation are being overcome, including hardware, software, launches and government rules. Recent agreement with NASA. Rare high risk/super high reward.|
|Rocket Lab*(RKLB)||5||Is a leader in rocket launches, but the unsung business is its solar panels for space which NASA recently contracted. With the thousands of expected launches the balance of this decade and next, whether Rocket Lab is carrying the payload or simply has solar panels on the ride give it two revenue sources. A leader in the developing multi trillion space industry.|
|Planet Labs*(PL)||5||Geospatial imaging leader. Similar to Maxar which was bought for over $4 billion recently. Crossed $100m in annual recurring revs in 2022. Planet has deep and meaningful relationship with Google. Takeover target imo.|
|BlackSky*(BKSY)||2||Thrives on government and defense contracts. The new “spy satellite” company. In bed with Palantir AI on data analytics. Takeover or merger (SATL makes sense to me which I’ll cover in an article) target from these prices.|
|Satellogic*(SATL)||4||Satellogic might have the best satellite tech for imaging. Already stacking revenues. Also working with Palantir AI on data analytics. Can build satellites for private companies who want their own constellations.|
|Spire Global*(SPIR)||2||Global leader in maritime surveillance and data services. Already crossed $100m in annual recurring revenues. Has cash to outlast capex period of additional launches. Clear takeover target.|
|Stone Capital(STNE)||8||Brazil is an ecommerce growth leader and expanding rapidly toward fintech for consumers. EM exposure. Just turned profitable again after a failed attempt to get into more lending as Covid hit. Berkshire Hathaway holding.|
|Jumia(JMIA)||4||Massive upside in Africa. EM Exposure to fast growing India. Deal with UPS is harbinger of growth, but expect volatility. Already on Amazon AWS platform and a takeover target by Amazon which has stated it wants more Africa exposure.|
* Space basket. Own them all as a group in 1-3% increments imo.
- Subtracted Opendoor (OPEN) as I sold it for tax purposes. I do think they could improve materially going forward, but want proof of management execution.
- Subtracted Azure (AZRE) due to their reliance on government and difficulty getting information. Could very well be a great stock, I just can’t tell.
- Added Rocket Lab (RKLB) which is doing more than the launches that capture people’s imagination, including the solar panels that go on satellites whether theirs or not.
S&P 500 Dividend Stocks
Looking for strong dividend growers and hidden value. Value usually comes from hidden future growth, ability to pay down debt often quickly (often by reducing capex) or company assets the market is not assigning enough value to (or in many cases no value).
|Microsoft(MSFT)||142||Small dividend, big cloud. Both will grow. About as rock solid financially as your find. Maybe the safest operating company on the planet.|
|Apple(AAPL)||80||Rock solid, everything you look for in a franchise, but I’m looking for a bottom fishing price as I have exposure via (BRK.B) and (QQQ). I worry a bit Google Pixel, regulation and app store pressure slows Apple down.|
|Ford(F)||11||Getting a great opportunity to buy, especially if you missed it before. EV leader, massive freed up real estate due to EVs taking less floor space and amazing 4IR tech.|
|Intel(INTC)||28||Chips for EVs and not from China. Massive growth potential and government help. Will converge market caps with Taiwan Semi (TSX). Absurdly cheap here. Insider buying which rarely happens at such big companies.|
|Pfizer(PFE)||38||Their legacy business is funding dynamic research using mRNA and protein based therapies which were just mapped by AI. Destined to be a trillion dollar company.|
|American Tower(AMT)||156||Global leader in 5G communications and broad exposure to emerging markets where most future growth is. Owns 5% of ASTS Spacemobile as solution to gaps in global systems.|
|Kinder Morgan(KMI)||15||Super valuable and irreplacable natural gas pipeline network. First in carbon transport. Backdoor on future hydrogen. I get it, some folks “got dey dividend takeneraway” but it’s a new day and now, Richard Kinder is buying as much KMI as he can. I think a clear takeover target at some point. Maybe by an Omaha company or Chevron.|
|Paramount Global(PARA)||18||Fast growth, expanding margins and M&A likely. Like Warner, is cutting expenses and adding recurring revenues. I think ad revenue won’t collapse long-term. Pays 5%+ from absurdly low prices now.|
|AT&T(T)||17||Capex slowly coming down as recurring revenues slowly go up equals debt slowly decreasing as well. Wildcards in space based 5G which could take company global, and an on-the-wire competitor to Roku (ROKU) is very possible. Little downside, some fairly big potential upside, fat dividend.|
These are all worthy of being on the list, but I decided to limit by removing these 4 tech stocks. Qualcomm was not on list, but was going to be before I decided to limit.
- Added, then removed, Qualcomm (QCOM): Their chips and technology are in almost everything. Huge growth coming from IoT. Leader in AR/VR which also stands to grow tremendously. I will likely own (SOXX) instead.
- Subtracted Broadcom (AVGO): Another leader in AI chipsets which is growing fast from small numbers. Also a leader in Wi-Fi and communications solutions where growth is slowing a bit. Holding up well in semiconductor correction. I will get exposure via (QQQ) and likely own (SOXX) for position trades as well.
- Subtracted HP (HPQ): Great income generator. We bought it just before Berkshire Hathaway (BRK.B) did. So, I’ll get exposure that way.
- Cisco Systems (CSCO): slow growth despite exposure to 5G and IoT. Low risk due to industry and fortress balance sheet. Maybe I’ll come back to it, but I’ll get my exposure via (QQQ)
- I also subtracted AbbVie (ABBV) which held up as Humira competition comes to market this year and Androgel hype might have, ummm, maxed out. Still a good company, but seems a pullback is due finally.
Non S&P 500 Dividend Stocks
A lot of special stories here that could yield large gains, including special dividend payouts.
|New Fortress Energy(NFE)||33||Unique on the water technology for FAST processing and loading LNG onto ships. Profitable, paying down debt, huge demand for what they are doing now and a backdoor play on hydrogen.|
|Permian Resources(PR)||7||Excellent cost of Permian oil and gas assets. Company is result of merger between Colgate and Centennial. Merger synergies lowering costs over 1/2 billion dollars over next several years. Fixed plus variable dividend targeting 50% of free cash flow.|
|BlackStone(BX)||60||They own so much real estate, energy, clean energy and other valuable, but illiquid, assets that they are a buy on pullbacks. Leader in energy transition, including fossil fuel runoff. Also, a real estate vulture investor.|
|KKR(KKR)||31||They own so much real estate, energy, clean energy and other valuable, but illiquid, assets that they are a buy on pullbacks. Leader in energy transition, including fossil fuel runoff. Also, a real estate vulture investor.|
|VICI(VICI)||25||Casinos among only firms that paid their rent during Covid. About as recession proof as it gets. As debt falls, dividends and buybacks will rise.|
|Innovative Industrial Properties(IIPR)||78||The weed growth leader. If you don’t want YOLO or MSOS, this is a good one to pluck from the weeds. Surprises in marijuana industry, i.e. banking, are likely to be positive going forward. IIPR has secondary opportunities, i.e. margin of safety in food growing.|
|STAG Industrial(STAG)||24||Top industrial REIT benefiting from supply chains moving back towards America. Great management. Can conceivably buy a few industrial REITs similar to STAG to build a basket.|
|Digital Realty Trust(DLR)||80||A rare opportunity to get one of the premier REITs on the market. High digital growth leads to higher fee collection. Real estate gradually paid off. Great equation. 5%+ dividend and investment grade.|
Closing Investment Thoughts
I have noticed money flows up for a few weeks, but not most stock prices. Something has to give. I think we see a downturn soon. I think some investors are selling into the seasonal cash flow in from retirement plans. Earnings starting in a bit over a week could be the catalyst with downward revisions.
If you have positions to right size that are around even, I think get to right sizing. On up days if possible.
And, if you own the S&P 500 or anything highly correlated in retirement plans, just sell it.
Stick to bottom fishing prices that have trended sideways for a month or more if you are looking to be a buyer.
Here’s my current aggregate holdings across all accounts. This is where I will post this each quarter.
Note: I traded (CMCSA) for a small profit. I can’t get 100% behind it without bottom fishing and some inkling the could make a deal with Netflix, Amazon or Google. Those are the deals I think make sense, but, not so sure Comcast CEO will do it as it’s largely a family legacy.
Also, a few stocks are inherited legacy positions or came in with new accounts. If the position is not on our lists, or looks tiny, I’m not and have not been buying it.