We're Snatching Up More Shares of These Holdings Amid Market Pullback

Symbol	Transaction Type	# Shares Traded	Recent Price $	Shares Owned After Trade	% Portfolio
AXP	Buy	115	$299	250	1.5%
NOW	Buy	35	$1,026	145	3.0%
OLED	Buy	65	$147	1,290	3.85%
URI	Buy	25	$725	240	3.5%

After you receive this alert, we will make the following trades:

Buy 115 shares of American Express AXP at or near $299. Following the trade, the Portfolio will own 250 AXP shares, roughly 1.5% of the Portfolio.
Buy 35 shares of ServiceNow NOW at or near $1,026. Following the trade, the Portfolio will own 145 NOW shares, roughly 3.0% of the Portfolio.
Buy 65 shares of Universal Display OLED at or near $147. Following the trade, the Portfolio will own 1,290 OLED shares, roughly 3.85% of the Portfolio.
Buy 25 shares of United Rentals URI at or near $725. Following the trade, the Portfolio will own 240 URI shares, roughly 3.5% of the Portfolio.

Following the weaker-than-expected December Producer Price Index (PPI) readings for both the headline and core figures, we are taking advantage of the recent market pullback and other factors to scoop up more shares of the AXP, NOW, OLED and URI.

We recognize that we still have Wedensday's December Consumer Price Index report ahead of us, but the December PPI suggests the recent markup in inflation expectations may have been excessive. To be clear, the December year-over-year figures of 3.3% for headline PPI and 3.5% for core PPI still indicate inflation pressures are sticky and mean the Fed will not be in a hurry to loosen monetary policy, but it’s enough to quell those calling for further rate hikes. It’s that relief we are seeing unfold in the market.

American Express and ServiceNow

With AXP shares, the stronger labor market and real wage growth offer support for continued consumer spending among the company’s membership. We’re also encouraged by recent travel comments from Delta Air Lines DAL and others that play into American Express’s strengths.

Turning to ServiceNow, we’ve used retreats in the shares to prudently build out the Portfolio’s position size and we see this move as doing more of that. What we’re looking to capture with NOW shares is the rising shift in AI spending in the enterprise, which should drive favorable pricing, margins and earnings for ServiceNow.

We would also note that, for members who are underweight Elastic N.V. ESTC shares, the current share price is a very nice entry point.

Universal Display

We laid out the case on Monday for picking up more shares of Universal Display, and to that we can add reports that Samsung will begin mass production of the world’s first rollable organic light-emitting diode display for laptops in April.

Samsung will launch this product with its ThinkBook Plus G6 Rollable laptop, which it showed at CES last week, in June. This application is another example of connected device manufacturers expanding the screen size to drive a richer consumer experience. Much like we are starting to see in smartphones and tablets, we are likely to see other device companies follow making this another growth avenue for organic light-emitting diodes and Universal Display.

As we make this addition, we will inch our current panic point for OLED shares to $135 from $145 but aim to raise it as the shares move higher.

United Rentals

We have a few reasons for adding to the Portfolio’s position in United Rentals today that go beyond the shares recently being oversold.

The biggest is the rosy outlook for non-residential construction, which continues to benefit from infrastructure spending as well as other building efforts. A new report from JLL found that global data center demand is expected to surge this year, no surprise given the elevated spending we’ve seen by Big Tech.

That continued spending has JLL forecasting baseline growth of 15% on a compound annual basis (CAGR) through 2027, but even the firm shares it could reach a 20% CAGR figure. We see this offering stronger prospects than the housing market, which will still be impacted by interest rates and mortgage rates being higher for longer, sapping housing affordability.

To that favorable non-residential outlook, we can add the eventual rebuilding as California recovers from the current wildfires and Monday night’s announcement that United will acquire competitor H&E Equipment Services HEES in a $4.8 billion transaction. Much like United, H&E provides a general rental fleet including aerial work platforms, earthmoving equipment, material handling equipment and other general and specialty lines of equipment. The acquisition is expected to increase URI's rental fleet by almost 64,000 units as well as roughly $230 million of non-rental fleet.

When we look at H&E’s adjusted EBITA margin near 45%, it’s a few points below that for United, which suggests there are some costs to squeeze out of H&E over time. United expects to realize approximately $120 million of annual revenue cross-sell synergies by year three and deliver $130 million in annualized cost synergies in the first two years. That will lead us to nudge our URI price target to $900 from $850 as well as upgrade our rating to a One from Two.

Other Thoughts

As we make these moves, we will see the Portfolio’s cash move back below 10%. While that still offers us ample firepower, it also means we will continue to be very selective putting cash to work as we move through the December quarter earnings season. Other positions we are watching closely include Eaton ETN, Meta META and Trade Desk TTD.

We will continue to monitor new mortgage origination data, and should we see a sustained rebound and upturn from December’s sharp rollover, we may consider another entrée into the housing market. But let’s remember, such a move would also benefit our URI, Vulcan Materials VMC and Eaton positions.

More Pro Portfolio

At the time of publication, TheStreet Pro Portfolio was long AXP, NOW, OLED, URI, ETN, META, TTD and VMC.