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Sticking To My Knitting

|Includes: AIR, INTC, INTC, The Coca-Cola Company (KO)

As the market hugged the flat-line after rallying on the FOMC announcement, I started conducting a portfolio review, to see if there were any changes I should be making.

I started by sorting by forward PE. As a group, the stocks I own are at about 13.5 on this metric, some higher, some lower. Coke (NYSE:KO) was the highest, but after reviewing its history it's priced pretty much where it has always been, with management making encouraging remarks and pulling on various of the levers. My position, LEAPS covered calls, reflects my opinion, I'm happy to sell at $43.

Next up was Altera (NASDAQ:ALTR). After adjusting for excess current assets, forward PE is 13.9, and this situation possibly has a lot of pop.

PepsiCo (NYSE:PEP) is also expensive on that basis. Looking at my position, I added to it back in February when it unaccountably tanked on very decent earnings. I have a nice profit on the additional shares controlled, and elected to bring it back to normal size, booking a profit.

That got me looking at position size, and Intel (NASDAQ:INTC) had gotten a bit oversize, due to the stock making a move and I have been bullish on it, calling for $35 when it stood at $24. So at $30 I took some profits, and brought it back to normal size.

Finally, I bought an in the money vertical call spread on AAR Corp (NYSE:AIR). It comes up on a screen I have for the strategy, where I compute adjusted PE (or forward PE) based on excess current assets. It's cheap on that basis, and has enough volatility to make the options potentially profitable.

Disclosure: The author is long KO, ALTR, INTC, AIR.