VIDEO: Our Take on the Holdings Making Big News Today

In today’s Daily Rundown video, Chris Versace discusses the market’s rebound but cautions multiple events could shape its moves during this abbreviated trading week.

We also discuss reports about American Express AXP gearing up for its largest card refresh, Meta META looking to finally monetize WhatsApp and Alphabet’s GOOGL acquisition of cybersecurity company Wiz being scrutinized by the Justice Department. 

Chris also shares his view on Eaton’s ETN aerospace acquisition but explains why the key driver behind our owning the shares remains the growing electricity pain point. 

Transcript

CHRIS VERSACE: Hey, folks, Chris Versace. It is Monday, June 16 and stocks are moving higher today amid reports that Iran may be looking for a face-saving event as it looks to back off enriching uranium and de-escalate the conflict. If we see that turn around, that would definitely tamp down recent geopolitical tensions. But remember, folks, we still have the G7 summit and what it may or may not bring either on the trade deal and tariff front. We also have the Fed's policy meeting and updated set of economic projections to go this week. So we do have a lot going on.

We have shared our thoughts with you on both. And as of now, our positions really haven't changed. But we will continue to update our thinking as fresh information on trade deals, tariffs becomes available this week, emanating either during the G7 summit or soon thereafter. And as far as the Fed goes, we all know that at 2:00 PM on Wednesday, the Fed will release its latest monetary policy decision. No rate change is expected, but we will be very interested in those updated set of economic projections and the verbiage, the tone that Fed Chair Powell uses during the post-policy decision press conference.

While we wait for those developments, let's turn to some portfolio news that's giving some rise to some of our positions. First, American Express. Today, the company said that a major change is coming to its consumer and business platinum cards later this year. It's "looking to do the largest ever investment in card refresh".

What we're likely to see is an extended list of perks, whether it's travel, dining, experiences, and this is the important part for us as shareholders of American Express, potentially higher annual fees. When we think about American Express, we like the membership business model, how sticky it is, how predictive it is in terms of revenue, earnings, and cash flow. So we'll be following these developments. We're not expected to hear anything until later this year.

But when American Express reports its June quarter results, we'll be looking for more information on this, including the types of perks that it might be bringing. As I've said many, many times, when you tick up the number of benefits that you can use, if you're either an American Express card, whether it's green, gold, or platinum, it's very easy to offset the membership fee, provided you, of course, use those perks and services. But we'll have more on that as things develop.

We also want to talk a little bit about Meta. We know that when the company changed its name from Facebook to Meta, that we were going to see the management team lean into other businesses, whether it was Instagram or some of the things that it's doing in the wearables, whether it's Oculus or the Ray-Ban glasses. Now, we're seeing that CEO Mark Zuckerberg plans to integrate online ads into WhatsApp.

Now, this is a move we've seen before, and it's been very strong for the company, both from a revenue perspective, earnings perspective, whether it was at Facebook or I think the real example of this was when it sought to finally monetize Instagram. And that's exactly what they'll be doing with this initiative, with WhatsApp, looking to further monetize the platforms that it has. And it is a sizable platform.

According to Statista, WhatsApp had over 3 billion monthly active users in March. So if this is successful, and there's reason to think that it will be, it will be another growth driver for the company and its bottom line, and a positive catalyst for the shares. As we see signs of this happening, we will look to revisit our Meta price target. Let's turn to Alphabet.

We're also seeing today that the Justice Department is doing a review-- no surprise-- of Alphabet's planned $32 billion buy of cybersecurity company, Wiz. What are they looking to determine? Would it possibly limit competition in the market. From our perspective, let's remember Google is buying Wiz and it plans to integrate it into Google Cloud to better compete with Microsoft, Amazon, and Oracle.

Candidly, given the size of the acquisition of Wiz, and let's be honest, it's between the DOJ and Google, we are not surprised about this development. We will follow it. Candidly, we don't think it's going to be a big issue, but if it persists and we have to make some changes to our thinking, we will do so.

Finally, Eaton. Eaton has signed an agreement to acquire a UK based ultra PCS firm for $1.55 billion. This is going to bolster Eaton's aerospace business, which accounts for around 15% of total revenue or so. All in all, a good move shoring up a very good business. But let's remember that the primary driver of Eaton shares, and our reason for owning them in the portfolio, is the rising demand for electricity.

Now, if you missed this weekend's Signals Alert, it contained one signal that really reaffirmed our thinking about the energy pain point. I'm referring to the US Energy Information Administration upping its electricity consumption expectations for this year and next year, citing a spike in power demand from commercial sectors, especially data centers as a key driver. To us, that reaffirms the energy pain point thesis behind owning Eaton shares in the portfolio.

Finally, folks, if you haven't reviewed our updated table of consensus EPS expectations, RSI levels, panic points, pick up points for the portfolio, please be sure to do so. We also have a new cybersecurity CIBR target for that ETF, which I know some folks have been asking about. We also address our price target for Microsoft and share, or I should say, remind, that with Palantir, recognizing that it's moved past our 140 target, the next event we are looking forward to to revisit that 140 Palantir price target is the next AIP CONT event or a specific unknown company development that might emerge.

For now, we do want to remain long-term holders of Palantir. We are still in the relatively early innings of AI adoption, both in the government and in the enterprise sector. So we will continue to be owners of Palantir. And as we talk about in that alert with the updated figures and facts for the table of the portfolio's holdings, we do say that if we see Palantir move into overbought territory, we may have to do some prudent portfolio management.

Let's close out today's video with a reminder. Folks, we have our office hours today between 4:00 and 5:00 PM in the portfolios forums. You bring your questions. We'll bring your answers. And we'll try to get to as many of those questions as time permits.

Thanks for watching today's video. We have a very, very busy week despite the holiday that has the markets closed on Thursday. So please be sure to check your emails, check your alerts. If we make any moves with the portfolio, we want to make sure that you are right there with us.

At the time of publication, TheStreet Pro Portfolio was long AXP, META, GOOGL and ETN.