- Our quarterly updated focus growth stocks and focus dividend stocks.
- Several new additions made primarily for price performance reasons.
- See the updated buy zones, risk levels and 5-year X-Factors from the VSL which I am updating.
- Note Re VSL: I update those charts roughly quarterly as they are long-term charts. I will provide shorter-term charts in articles.
- Come back to this piece several times during the quarter. This is our primary stock shopping list.
“Plug & Play Stocks” present my top investment ideas for stocks this quarter. Most are at or near their buy zone. Those that are not are worth holding space for.
These are NOT model portfolios to be jumped into right now! Each of your risk tolerances and investment goals are different, so, these are stocks that can appeal to a great many different types of investors.
Monitor these stocks weekly. When they get close to buy points (oversold RSI), then monitor more closely until you have built your position. As always, scale in slowly and mind your asset allocation.
See charts, bottom fishing price, buy zone and ratings on the VSL.
Current Cash Levels
In the short-term, cash is your best hedge. Buying puts or using margin to hedge is very difficult because of how precise you must be. For short periods of time, cash can be a great asset allocation tool to avoid short-term risk.
|Investor Category||Defensive||Cautiously Optimistic||Pedal To The Metal|
|Current Cash % (Tactical)||60-40||40-20||20-10|
|Long-term Cash % (Strategic)||12-4||4-2||2-1|
I expect 2022 to see at least one, and more likely two, corrections of over 10%. In 2021 we already saw rotating corrections across multiple sectors, industries and small caps.
2022 could be a lot like 2018 on the large caps. Therefore, we continue to have high tactical cash levels.
You can be more fully invested with trailing stop if you do not want to hold as much cash as me. I generally recommend 12% trailing stop on stocks and 7% on ETFs.
Low Risk Stocks
These are stocks with very little intermediate price risk. While they can suffer corrections, the drawdowns are usually shallower and shorter, while the rebounds are usually quicker.
These stocks are good core holdings for any type of investor:
|Company||Symbol||Investment Quick Thought Note|
|Berkshire Hathaway||(BRK.B)||Mountain of cash provides “buyback” buffer on corrections making it a safer diversified proxy than the S&P 500.|
|Alphabet||(GOOG)||Has found yet another growth market in cloud and will be spinning of “baby googles” over time.|
|Amazon||(AMZN)||Amazon, Prime and AWS represent three different businesses that would all be top S&P companies.|
|Apple||(AAPL)||Probably the top franchise in the world and sitting on a mountain of cash for buybacks and increasing dividends.|
|Microsoft||(MSFT)||Growing cloud and enterprise businesses on top of Windows and Office franchises. Just a cash flow machine beast.|
For the “MAAA” tech contingent of Microsoft, Apple, Alphabet and Amazon using an ETF is a great solution if you want broad exposure to the group, along with other similar stocks. Here are two lower cost ETFs, you can use, that track closely most of the time with their approximate exposure to MAAA:
|ETF||Symbol||% in MAAA||Note|
|Invesco QQQ||(QQQ)||36||Nasdaq 100|
|iShares Evolved U.S. Tech||(IETC)||42||Includes non-Nasdaq|
I recommend starting any portfolio with one of the funds listed and building out from there. QQQ is exclusively the NASDAQ 100. IETC offers more diversification by including NYSE stocks (total 240 holdings) and might be slightly more suitable to retired investors.
Sustainable Growth Stocks
These stocks can be found across secular growth trends with long upward runways. Clean energy, cloud, IoT, AI, fintech, space, biotech, consumer discretionary and almost anything platform tech will be common here.
Market Level Risk Growth Stocks
This first batch have market levels of risk and are appropriate for people who do not want to take the risk of long-term or permanent losses. A basket of around 20 of these stocks are appropriate for growth investors who do not want to take substantial long-term risk. I only include Nasdaq 100 (QQQ) stocks when I think overweighting versus the ETF makes sense as QQQ is a our core large cap ETF.
|Company||Symbol||Investment Quick Thought Note|
|Azure Power Global||(AZRE)||Profitably growing in a huge and growing Indian power market. Will have some dilution and choppiness, pick your spots to scale in.|
|Coinbase||(COIN)||Leader in the emerging blockchain/crypto/NFT fintech space. Will be volatile, but will crush banks unless/until a giant bank or private equity firm buys them.|
|Discovery||(DISCA)||Global presence and the leader in “non-scripted” TV. Will merge with Warner Media to create biggest content library in the world. Can buy any share class as all will convert to new shares upon merger completion.|
|Enphase||(ENPH)||Enphase moved from products to energy management with those products and software. Not just a manufacturer, a clean energy platform.|
|Freeport McMoran||(FCX)||Freeport is the largest producer of copper in the world. They always come out hot of a correction that the Fed sprays money on.|
|Liberty Sirius||(LSXMK)||Majority owner of SiriusXM and other unvalued holdings. Accumulated the past couple years by Berkshire Hathaway.|
|MP Materials||(MP)||Millennial favorite is at the leading edge of the wave of EVs and other magnet needing devices. Stash of rare earths is the floor, the sky is the limit. Thing semiconductor company big with a materials foundation.|
|Planet Labs||(PL)||Symbiotic Google relationship. The least risky of our Satellite-as-a-Service stocks. 200 satellites, $100m+ revs, 90% recurring, 32% yoy growth. Super impressive investor list.|
|PayPal||(PYPL)||The leader of the online economy and getting hip deep in crypto. Staying on the right side of gubment.|
|Quidel||(QDEL)||Rock solid balance sheet, M&A on the mind and diagnostic testing isn’t going away – EVER.|
|Solar Edge||(SEDG)||See Enphase, slightly different products. They are essentially a duopoly with emerging competition.|
|SunPower||(SPWR)||Total Energies (TTE) is majority owner so great financial backing and in a leader in a huge growth market.|
|Square/Block||(SQ)||Surge in small business, consulting, online retail, fintech, blockchain & metaverse all speak well for their future.|
|Stone Co||(STNE)||A case of everything going wrong at the same time, from economic, to banking, to a key supplier. At these valuations, the long-term risk has been mostly wrung out. Similar model to Square and PayPal.|
|Teledoc||(TDOC)||Trading for a lower valuation than pre-Covid Meme rally and still looking at 25-35% year growth for an extended period.|
|Unity Software||(U)||A software platform for development of that metaverse thing. Seriously, developers use only a few systems to create, this is one of them.|
High Risk & Speculative Growth Stocks
These stocks can have long-term or permanent levels of loss and carry greater barriers to long-term success. Most of these companies are not profitable at this time.
Don’t buy these if you can’t take the time to learn the companies, follow them quarter to quarter and have years of patience. If you don’t have the time to learn and manage this type of basket, buy the ARK Innovation ETF (ARKK) or something similar for your aggressive sleeve.
That said, to be on my list, they also must have a 5-year X-Factors of 10 or higher (i.e. potential 10-baggers+). Think of this basket as your high risk, high reward personal ETF (if you want one of those).
Measure how much of your asset allocation you put into these types of stocks. You need a basket of about a dozen to manage the risk properly. Build to 10-20% of an aggressive portfolio incrementally over at least 2 quarters and more likely 2 years. Scale in slow and small: 1/4% to 1/2% to 1% to 2% (at the profitability tipping point) as the companies execute and move to a lower risk level.
These stocks can also be traded due to the higher volatility.
|Company||Symbol||Investment Quick Thought Note|
|Aemetis||(AMTX)||Not currently profitable, timeline/execution risks and government policy dependent. But, on the right side of big cleaner fuels and carbon capture trends.|
|AST SpaceMobile||(ASTS)||If their tech works, could be an S&P 500 company quick. Morgan Stanley estimates satellite broadband will be 50-70% of space based economic growth.|
|BlackSky||(BKSY)||Space the final frontier for spying on you. And, a lot of other neat stuff that might save the world.|
|Cazoo||(CZOO)||Cars, we need cars, lots of cars. Carvana (CVNA) clone in Europe with European sensibilities.|
|Ginko Bioworks||(DNA)||Biotech platform to help smart people without a ton of money find cures and treatments, and feed us. Ginko gets a cut.|
|Heron Therapeutics||(HRTX)||Trying to dramatically reduce the use of narcotic pain meds. Other stuff too. The stock has held up well as small caps got capped.|
|Jumia||(JMIA)||eMarketing within oligopoly in fast growing Africa market, similar model to Amazon.|
|OpenDoor||(OPEN)||I like the management, the tech and the market. I think they figure out how to make money in real estate and real estate services. They’re close.|
|Ontrak||(OTRK)||Interstingly, a topic at CES is mental health and how apps with AI can help. These guys are in the right place at the right time. If they execute and get some help from their new software partner, could be a massive rebound play. Or could be bought under for a few bucks.|
|Palantir||(PLTR)||Their AI uses Blacksky’s spy pictures and data to figure out who did what where with who when and when they’ll do the next thing somewhere else. Global intelligence for countries, companies and anyone rich enough to buy the info.|
|Spire Global||(SPIR)||Already a takeover target in the satellite-as-a-service space due to crash landing after IPO. Great tech. Just needs time.|
What I Subtracted
- WeWork (WE) Market risk but not enough upside for me with X-Factor of 3. If you own it, look to trim it somewhere in the $20s or if you really need the room for something else.
- Ford (F) moved to dividend list with reinstatement of dividend. One of my favorites, just a list switch.
Primarily dividend growth stocks and companies that can reduce share count with free cash flow. Shareholder Yield is the key measure.
|Company||Stock Symbol||Investment Quick Thought Note|
|American Tower||(AMT)||Cell towers and global exposure. Very worth owning on corrections for the conservative investor. Has a stake in ASTS if you don’t want to own that stock on your own. Own it with Crown Castle.|
|BlackStone||(BX)||Needs a pullback, but they own so much real estate and other valuable, but illiquid, assets. Buy the corrections for a piece of their hard assets and other private equity deals.|
|Crown Castle||(CCI)||Cell towers exclusive to North America across entire U.S. market. Own it with American Tower.|
|Compass Diversified||(CODI)||Private equity firm that’s really good at making deals and handling their loot. Variable payout.|
|Comcast||(CMCSA)||NBCUniversal is in play as streaming consolidates and moves towards higher profitability.|
|Cisco Systems, Inc.||(CSCO)||A fortress balance sheet and a lot of stuff that is so embedded in communications they’ll churn out cash for centuries probably.|
|Ford||(F)||An emerging leader in EVs and 4IR technology. Undervalued real estate.|
|Barrick Gold||(GOLD)||Exposure to Canada via one of the two leading gold companies in the world. Very good diversifier. Looks to start large 5th wave up soon (if Elliott Wave is a thing).|
|Intel||(INTC)||Poised to be massive winner as semiconductor supply chain moves back to America. Think (TSM) market cap.|
|HP||(HPQ)||Boring for a tech company and buying back gobs of shares. They have a good VR headset, so not so boring. Great shareholder yield and performance. Enough said.|
|KKR||(KKR)||Another private equity power, they issue periodic special dividends, a small regular dividend and are buying back a ton of shares. Leader in energy transition. Buy the corrections for a piece of the future you can only otherwise get by being in illiquid private placement.|
|Lockheed Martin Corporation||(LMT)||They’re in space too, in addition to being a big deal in defense and aeronautics. I think Space Force will wear a Lockheed ID to open their space forts. Secret sauce is so much intellectual property it’s really incomprehensible. Their 4IR tech is off the hook.|
|Newmont Mining||(NEM)||Gold in that thar stock. But only after S&P 500 corrections which it is a member of.|
|New Fortress Energy||(NFE)||On the right side of LNG and eventually hydrogen. Very levered balance sheet. Scale up as they execute and financial risk falls.|
|NRG Energy||(NRG)||A volatile way to bet on natural gas truly being a long-term bridge fuel. That said, management is excellent, although their balance sheet is stretched right now, which means a market surprise could cause a headache for a year or two. Bigger upside than most on this list, but could be a very choppy ride.|
|Nutrien||(NTR)||Largest and most important North American potash fertilizer producer which is essential in farming with increasingly extreme weather. Back door sustainability and water play.|
|Pfizer||(PFE)||With Covid set to be with us for a very long time, Pfizer appears to be a big winner. It’s Paxlovid pill already has a 20m order from US Gov. Future variations of Covid will mean a new shot every year or two. And, the RNA platform is proving to be powerful in other meds. Find a way to buy the dips if you’re a dividend investor.|
|Seagate||(STX)||Data storage titan in a world that’s going to have 5-6x more data in a decade. Can’t make it more simple than that.|
|STAG Industrial||(STAG)||Top industrial REIT benefiting from supply chains moving back towards America.|
|Store Capital||(STOR)||Retail strip mall REIT with highly flexible properties in quality locations. Strong financials. Favorite of Berkshire Hathaway.|
|AT&T||(T)||Management might have been bad in the past, but recent moves are all winners. Renewed focus on 5G & fiber and spinoff of Warner are right moves. Potential to become global 5G carrier if space tech works & Roku competitor are huge upsides that are not valued by investors.|
|Viacom||(VIAC)||In play as streaming consolidates and moves towards higher profitability.|
|Vici Properties||(VICI)||Casinos among only firms that paid their rent during Covid. About as recession proof as it gets.|
High Yield Dividend Stocks
By nature, high yield dividend stocks are higher risk or more cyclical. There are a few exceptions that can still beat the S&P 500 without taking on greater risk than the broad market. These should not compromise more than half of your dividend basket due to risks and slower growth.
On this list, I am looking for 4%+ dividend yields that can beat the S&P 500 by at least 4% without taking greater risk than that index.
Cautionary Note: Do not buy partnerships with a K-1 in an IRA.
|Company||Stock Symbol||Investment Quick Thought Note|
|Atlantica Sustainable||(AY)||Owns and manages global network of renewable energy, natural gas, transmission and transportation infrastructures, and water assets. At the right price will behave like a preferred stock. Better income than bonds and more upside, though will have to accept volatility.|
|Algonquin Power||(AQN)||Leader in transmission, as well as, natural gas, solar, wind and hydro. Slightly faster growing that most in this basket, but also suffers some dilution to grow. On the right side of secular utility trends.|
|BCE||(BCE)||Canadian telecom operating in oligopoly. Very low growth, but margins drifting positively. Use for Canada exposure if you are looking for it.|
|BHP Group||(BHP)||Iron and copper leader. Strong balance sheet. Play on a commodity bull market.|
|Icahn Enterprises, L.P. (K-1)||(IEP)||For non-qualified account only as issues K-1. Partially hedged portfolio. Useful if you have a taxable account that you take income from.|
|Kinder Morgan Inc||(KMI)||Largest natural gas pipeline company in America. Dramatically better finances than 5 years ago. Largest CO2 transporter. Backdoor play on hydrogen.|
|Lumen Tech||(LUMN)||Stable company, slowly improving balance sheet from ok to good, fat dividend that probably won’t grow much, more M&A coming, irreplaceable and valuable fiber 5G backbone. Still think it makes a ton of sense for Google to buy their fiber, which would leave Lumen as a no debt enterprise company that is probably tied to Google.|
|Vale||(VALE)||A top iron and other metals miner with a solid balance sheet. Facing China and Brazil challenges now to trade near bottom fishing prices. Variable dividend. Can rally hard during bullish cycles (be willing to take profits).|
|Williams Cos||(WMB)||Similar to Kinder Morgan. Northwest pipeline to Canada extremely strategic. Clear takeover target, already had one deal break up.|
What I Removed
- Spectrum Brands: Great rally, recent divestment to become more consumer staples driven is a meh to me. Great ride. Time to get off.
Sample Stock Rover Reports
I can’t include all of Stock Rover’s reports, but here are some samples. As you know, I use Stock Rover extensively to screen for stocks and ETFs, including some basic quant factors.