The rally on February 15 sure looked like a speculative blowout of the kind that often signals a market top. For me, it was the last straw and I’m selling into the rally. This post tells you what I’m selling and how I arrived at these decisions. But first, a few words on Wednesday’s move.
As I noted in my Saturday Night Quarterback post, consumer spending on services is looking weaker by the day and consumers seem to be trimming plans for summer travel. Bookings are slowing at airlines and hotels, for example. And it looks like the summer travel rally that I’ve been looking for is going to be a damp squib rather than a Fourth of July rocket. So I’m beginning to sell some of the stocks that I added in anticipation of that travel rally.
When I bought Zebra Technologies (ZBRA) back on June 28, 2021, I thought the stock was moderately over-valued. But that, like many over-valued stocks with momentum, it would move higher. I set a target price then of $596 a share. Well, moderately over-valued has become more seriously over-valued. Morningstar calculates that the stock traded at a 37% premium before the 2.79% gain today, November 29.
When I added shares of Build-A-Bear Workshop (BBW) to my Volatility Portfolio on March 31, 2021, I was thinking that the stock would move up in price as pandemic restrictions that had forced the closing of most of the company’s stores eased. The company had made a huge and successful shift to online selling and I thought that Build-A-Bear would be able to continue that success as well as reap the revenue gains that would come from the reopening of its brick and mortar stores. But I certainly didn’t expect the stock to gain 103.91% from then until the close on May 26. The stock climbed another 39.31% today on the release of earnings and is now up 100.14% in the last three month; 78.10% in the last month, and 56.33% in the last week. I’m selling the shares today, May 27, on the great news in the earnings report for the quarter.
Shares of what was once Kensington Capital Acquisition (KCAC) and is now QuantumScape (QS) are up 203.3.7% since I bought Kensington back on October 13, 2020 in my Volatility Portfolio. But Quantumscape isn’t planning to have its solid state lithium ion battery in production until 2024. And most investors don’t understand the wave of dilution that’s about to hit the now public shares of QuantumScape. So I’ll be taking my profits tomorrow.
