Stock Opinions by Sarat Sethi, Managing Partner, Douglas C. Lane & Assoc.

PARTIAL SELL
First Republic Bank

Down 25% this morning and shares halted. The situation is changing constantly. He's watching it. Depositers are safe. Who will the bank merge with, etc? He has sold part of his position to a small holding. He will eventually decide whether to keep it or dump it.

Financial Services
DON'T BUY
Amazon.com, Inc.

They're different from other megatechs, because they have many pressures on them--cloud and retail. This is not a cheap stock, close to 40x PE. This is a pure show-me story in a decelerating economy. AWS's market share in 2016 was 74% but 51% today. There will be margin pressure.

specialty stores
BUY
PepsiCo

They sell snacks and not just the drinks. Are raising prices as input prices decline. A tailwind will be the USD when it eventually weakens. Well-run company and defensive that you need in this market.

food processing
BUY
Morgan Stanley

Well-capitalized bank. Boast a great management business.

investment companies / funds
BUY
Apple Inc
Goldman upgraded it

In this market, fundamentals matter and Apple has good fundamentals and can increase earnings. This upgrade is a positive signal for the wider market. You can be safe in Apple, but fundamentals will determine where the market goes.

electrical / electronic
BUY
Johnson & Johnson

Stock is down 12% this year. They will spin off their consumer business. It pays a 3% dividend. The lawsuit is an overhang (https://www.forbes.com/sites/korihale/2023/02/07/appeals-court-clears-the-way-for-38000-johnson--johnson-baby-powder-lawsuits/?sh=45077c8ed7fc). But the valuation is cheap, good balance sheet, and catalysts lie ahead. Likes it.

biotechnology / pharmaceutical
BUY
American Express

Gas prices are coming down and consumer spending remains strong.

investment companies / funds
BUY
Chevron Texaco
He owned it when people hated it. There's not enough supply, so even if there's a recession these oil companies will do well. Has a solid balance sheet. Defensive.
integrated oils
BUY
Microsoft Corp
Next week, FAANG reports. Even if they report positively, will the market believe it, because their PE's are above the S&P's. That said, he likes MSFT for its recurring revenues from enterprise cloud, a high-margin business.
computer software / processing
BUY
American Express
It's a well-run business. Management is already absorbing a potential economic slowdown in its growth projection; they know it's happening. They said that consumers are out and about (and spending). Trades at only 13x earnings. Earnings will accelerate and they have a diversified consumer base.
investment companies / funds
BUY
Mastercard Inc.
Same tailwind as Visa: spending is up. Likes it.
other services
BUY
Trades at 9x earnings. Has a great pipeline of drugs. Pays a great dividend.
biotechnology / pharmaceutical
BUY
Their report will be interesting: they'll talk about supply. The last two years they couldn't meet demand and now where is it given borrowing costs and higher rates? It trades at 6x earnings. Demand needs to improve.
Automotive
COMMENT
The S&P may not break 4,200, but parts of it like financials and energy are up today because rates are going up. He feels that the Fed will keep raising rates.
Unknown
BUY
Chevron Texaco
Just reported solid Q2 earnings and the price target rose Energy demand will still be strong (even though crude oil prices have been declining). Majors like Chevron make a lot of money even if oil is at $60. He likes it and has not been trimming his shares. In fact, he would add to it. You have staying power in Chevron especially with their strong balance sheet.
integrated oils
Showing 1 to 15 of 29 entries