We call them “up” stocks, stocks that go up all of the time and barely go down. On the rare occasion when there is a pullback, you have to pounce on an up stock and buy aggressively.
In this kind of market, where the darned thing has a hard time staying down even on weak employment numbers, even when the president is unstoppably seeking re-election — a potential black swan event if there ever were one — the up stocks never quit.
I know it seems a little soporific, talking about up stocks, but every year at my old hedge fund, where I did compound at 24 and without fees for 14 years, I would sit down with my staff right about now and say “OK, give me your best stocks, the up stocks, the ones that never seem to go down. I want the unstoppable ones. I don’t even want to know why, I just want them.”
My staff would always look so incredulous. “An ‘up’ stock, you mean a stock that always goes up? That’s nuts.”
Now, during that period I had adopted a “No more Mr. Nice Guy” stance, like I had ever been nice, and I just demanded that they give me their up stocks or they should go home and don’t let the door hit ’em on the way out.
Once I got the list, I would buy deep in-the-money calls out until January that mimicked the common stocks. If the common stock soared, I might sell common stock against the deep in-the-money calls. That was my tactic.
But the strategy? It made a ton of sense, because we are now rounding the corner to the end of the year and the market has pretty much decided what are 2020’s big winners. These are the stocks you want to show you own, so that you can brag that you had the great ones. These are the ones where no one wants to sell them, because what’s the point? Why sell something that has an invincible aura, something that has an inevitability about. Why not buy it and then buy more if it goes down?
You aren’t at my hedge fund and you deserve to be treated with the respect of my clients, whom I constantly said were geniuses and whom I always shared the “up” stocks, with a short-hand explanation why they were so anointed.
So, without further ado, here are the 10 up stocks that you should buy for a year-end rally. Don’t buy all at once, leave some room. Buy deep-in-the-money calls, if you like. But recognize that these are the big cap winners in the bizarre year that is 2020.
Let’s start with the less abstruse.
First is Square (SQ) , the payments company; I know that small business, the natural users of Square’s register, are hurting. It’s why I want that stimulus package so badly. But Square has a cash app that’s a competitor to PayPal’s (PYPL) Venmo, and it takes bitcoin. Yes, it is a derivative of bitcoin, which is, once again, unstoppable. You think I am off base here? Consider the title of this piece of research from Mizuho: “Square, Why not $300?” Square’s only at $192. I like that big thinking.
Second, Paypal, the online democratizer of money that has become the youthful way globally to transact. It’s got Venmo to move cash to each other with emojis, of course. And, yet, it takes bitcoin.
Third, Tesla (TSLA) . I don’t think a T-34 Soviet tank could stop this one from going higher. Remember when it was bigger than Ford (F) ? Then bigger than General Motors (GM) ? Then bigger than Ford and GM together? And then double that? And then? And then people stopped caring at all about the relationship of this technology vehicle vs. whatever they heck it sells. It’s too loved to stop now.
Fourth, Roku (ROKU) . Younger people like to find things they love and then buy the stocks of them. Younger people like to cut the cord and proudly use Roku, instead. So every time Roku’s stock comes down, they sit there and buy it. As long as they don’t like cable and think it costs too much, they will keeping buying Roku no matter what.
Fifth is Amazon (AMZN) . No don’t you dare say that Amazon is a stay-at-home stock and when the vaccine comes people will stop using it. Amazon always gains adherents when there are storms that keep you out of the store. The pandemic is the ultimate storm. You want into Amazon, as long as people proudly don’t wear masks and stores close all over the place.
Sixth is ServiceNow (NOW) . Ever since Bill McDermott took control of ServiceNow, the stock’s been a total horse. This amorphous information technology company that helps the nuts and bolts of tech run well, keeps blowing the numbers away. As incredible as Bill and his team are, the stock’s even better.
Seven is Okta (OKTA) . I joke that Okta is always the first stock that turns up in a Nasdaq led rally, but it’s totally true because Okta is your passport to the web, it knows you and therefore it knows you are not an intruder or a bad guy. You have to have Okta. Don’t trust the congenial, boyish looks of Todd McKinnon: he’s like Liam Neeson in “Taken,” a nightmare for his competitors.
Eight is RingCentral (RNG) . Don’t ask me how this one got in the 10. It’s a company that allows companies to communicate like Zoom (ZM) , except it’s really a business product. I almost never see RingCentral down, ever since it tied up with AT&T (T) giving them a massive installed base. This one now acts better than Zoom.
Nine is Twilio (TWLO) , which helps businesses get in touch with customers like Lyft (LYFT) stays in touch with you. It’s a way to push your info to those who signed up for it, and so much more.
Finally, there’s a new one, Target (TGT) . When you see a stock go up huge once after a quarter is reported and then go up huge again the next day, that smells of being anointed. Some retailers had great brick-and-mortar numbers. Others had great online numbers. Target had them both, and that puts them tightly into the “Up” stock pantheon.
I know some might say it is too soon, that I should pick Palo Alto Networks (PANW) , or Shopify (SHOP) or Adobe (ADBE) or even Lululemon (LULU) , but here’s what I say to that. It’s my game, just like it was my hedge fund, you don’t like it? Don’t let the door hit you on the way out.
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