I'm Cautiously Picking Up This Stock, Eyeing Another

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If you are a trader who thrives within a market environment with extreme volatility, the last several trading sessions have been Nirvana. Watching the minute-by-minute movements in oil prices is enough to give one a bad case of motion sickness. Personally, I prefer being much more incremental and selective in my trading.

Right now, the U.S. economy is like living in an old house in a good neighborhood. The U.S. is certainly less impacted by the surge in crude prices than Europe or Asia. The foundation of this house also is solid, provided the massive AI-related tech spending surge continues to power gross domestic product growth.

However, like an old house, it seems new problems are cropping up on a weekly basis. The conflict in Iran being the latest issue that needs to be resolved. Job growth is starting to flatline, inflation remains sticky, the housing sector remains moribund, equity valuations are concerning, and more cracks have started to appear in the credit markets. That said, just about every dip in the market is bought immediately. However, this largely could be a function of passive investing as over half of market volume is driven by index exchange-traded funds, rather than investor conviction.

As equities have been a roller coaster this week, I continue to be patient putting some dry powder to work. I took a long, hard look at taking an initial stake in KKR & Co. (KKR) earlier this week. The shares are down 40% from their highs late last summer. The company has avoided some of the negative headlines in the funds it manages unlike Blackrock (BLK) , Apollo Global Management (APO) or Blue Owl Capital (OWL) .

The stock trades at a reasonable 14-times forward earnings. The equity has seen some notable purchases (over $35 million) by its CEO and a couple of insiders over the past few weeks as well. In the end, I passed on taking a starter position because it just feels like there are more cockroaches out there that will continue to cast a pall across the entire sector. That said, the stock is now on my radar for a potential future investment.

I took a new position in Disney (DIS) on Tuesday via covered-call orders after Doug Kass stated he was nibbling in the shares in the high $90s on Monday. The stock is down 11% year to date. The entertainment company announced a new CEO last month and also beat top- and bottom-line expectations slightly with its fourth-quarter results in early February. Revenue growth was slightly above 5% year-over-year, but video subscription sales did rise 13%. The stock is reasonably valued at 15-times forward earnings given Disney should increase profits by a bit over 10% annually in the coming years. The shares also pay a small dividend of 1.5%. It is a small position for now, but I will add to that stake if the stock drifts to the $90 level.

At the time of publication, Jensen was long DIS.