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Pandemic Portfolio: Update #31

This is an update to a series. See Starting a Portfolio from Scratch to learn how it started.

Has the market REALLY bottomed??

July provided a decent amount of volatility, and, while it was nothing like June, there were some exciting fireworks (not just those on the 4th of July).

However, the excitement really started during the last week of the month when the Federal Reserve raised the benchmark interest rate +0.75% (instead of the feared 1.00%) and Chair Jerome Powell announced that the Fed might be slowing its rate hikes in light of the changing economic conditions.

While Powell’s comments do not necessarily indicate that the economy has healed and inflation is over, the stock market does tend to bottom in advance of a recovery as it serves as a future-discounting mechanism. Regardless, the positive comments provided a much-needed relief rally going into the end of July.

Let’s take a look at how the Pandemic Portfolio’s positions changed since the last update…

Barrick Gold (GOLD): Added to Position

Current Price: $15.74
Per-Share Cost: $19.45 (-2.261% since last update)
Profit/Loss: -19.07%
Allocation: 6.408%* (-0.314% since last update)
Next Buy Target: $13.25

The goldminers continued to take it on the chin for the remainder of June with Barrick Gold (GOLD) triggering my next buy order at $17.65 which filled on Thursday, June 30. In July, the selling really started in gold with Barrick triggering my next buy order on July 14 at $15.79, giving me an average $16.41 buy price.

The combined buys lowered my per-share cost -2.261% from $19.90 to $19.45, and also locked in a whopping -36.35% discount replacing shares I sold for $25.78 back on April 11.

From here, my next buy target is $13.25, slightly above GOLD’s low from the pandemic selloff in March 2020. My next sell target is $20.95 where I’ll start peeling off profits and reducing the allocation size once more.

GOLD is $15.74 as of this update, down -4.08% from my $16.41 average buy.

Costco (COST): Strategy Update

Current Price: $541.30
Per-Share Cost: $203.92 (Unchanged since last update)
Profit/Loss: +165.45%
Allocation: 4.812%* (+0.466% since last update)
Next Buy Target: $411.90

Costco (COST) remains the undisputed and ironic King of Retail (ironic because Costco makes the vast majority of its profits from membership dues, not the products it sells). Since the past month, COST reported sales numbers that shocked analysts to the upside as their seems to be no slowing in consumers shopping at the bulk retailer.

All of this good news results in a boring time for the Pandemic Portfolio, though, as I have no additional sell targets on the stock, and my next buy target is slightly above COST’s 2022 low at $411.90, much lower than where the stock is trading now.

Crown Castle (CCI): Dividend Reinvestment

Current Price: $180.66
Per-Share Cost: $142.53 (-0.773% since last update)
Profit/Loss: +26.75%
Allocation: 7.872%* (+0.235% since last update)
Next Buy Target: $146.55

Crown Castle (CCI) paid out its quarterly dividend on Thursday, June 30, lowering my per-share cost -0.773% from $143.64 to $142.53. From here, my next buy price target is $146.55, above a past point of support, and my next sell target is $191.65, just under the high of CCI’s last 2022 bull rally.

Digital Realty Trust (DLR): Dividend Reinvestment

Current Price: $132.45
Per-Share Cost: $121.97 (-0.918% since last update)
Profit/Loss: +8.59%
Allocation: 7.608%* (-0.365% since last update)
Next Buy Target: $116.75

Digital Realty (DLR) paid out its quarterly dividend on Thursday, June 30, lowering my per-share cost -0.918% from $123.10 to $121.97. From here, my next buy price target is $116.75, above a past point of support, and my next sell target is $150.10, just under the high of DLR’s most recent 2022 bull rally.

Microsoft (MSFT): Strategy Update

Current Price: $280.56
Per-Share Cost: $213.35 (Unchanged since last update)
Profit/Loss: +31.50%
Allocation: 6.381%* (+0.242% since last update)
Next Buy Target: $231.90

Microsoft (MSFT) serves as the example of a stock that may have bottomed. Toward the end of July, MSFT reported a very disappointing quarter where the company missed all of its targets, and the stock… rallied. 

Professionals will point out that a stock or market has bottomed when bad news causes a stock to head higher rather than lower, indicating that all of the negative catalysts have already been “priced-in” and there are no sellers left.

Could this be the case for Microsoft or will does my $230.90 price target lower than 2022’s low and slightly above support stand a chance of getting filled? Only time will tell.

Pepsico (PEP): Dividend Reinvestment

Current Price: $174.96
Per-Share Cost: $118.04 (-0.682% since last update)
Profit/Loss: +48.22%
Allocation: 4.840%* (+0.233% since last update)
Next Buy Target: $149.60

Pepsico (PEP) paid out its quarterly dividend on Thursday, June 30, lowering my per-share cost -0.682% from $118.85 to $118.04. From here, my next buy price target is $149.60, above a past point of support, and my next sell target is $176.75, just under PEP’s all-time high set earlier in 2022.

UnitedHealth (UNH): Dividend Reinvestment

Current Price: $542.34
Per-Share Cost: $265.18 (-0.305% since last update)
Profit/Loss: +104.52%
Allocation: 5.060%* (+0.407% since last update)
Next Buy Target: $436.90

UnitedHealth (UNH) paid out its quarterly dividend on Tuesday, June 28, which, after being reinvested, lowered my per-share cost -0.305% from $265.99 down to $265.18.

Like I say so many times, that might not seem significant, but getting free shares just to hold on to a position is the closest to a “free lunch” any of us are likely to see. Yum!

From here, my next buy target is $436.90, above a past point of support.

Waste Management (WM): Strategy Update

Current Price: $164.56
Per-Share Cost: $127.03 (Unchanged since last update)
Profit/Loss: +29.55%
Allocation: 5.294%* (+0.413% since last update)
Next Buy Target: $128.10

Waste Management (WM) continues to outperform despite the slowdown in cyclical industrial stocks. WM surprised to the upside when it reported earnings in July, causing the stock to continue rallying off its June lows.

Given that the $138-139 support level has served as the jumping-off point for Waste Management twice this year, it is possible that the stock will head for higher-highs from here. If it does, I will be waiting with another sell target at $170.10, slightly below its all-time high.

If its current level of support fails should the market sell off again, my next buy target is $128.10, above a past point of support from April 2021.