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Stock Opinions by Rob Sechan, Managing Partner, New Edge Capital

COMMENT
Today's hot jobs report He's now cautiously optimistic. The market was too bearish until this current rally. But now this is stalling before serious resistance levels. The bond market has already priced in the good news, but is starting to pivot. Today's hot employment number changes the outlook over the Fed's rapid accommodation; the Fed doesn't want today's data. There will be ebbs and flows in this bear market bounce and the S&P could rise to 4,300, but at valuation will act as a ceiling. The Fed is still tightening and the economy is slowing.
Unknown
BUY
Oil is back to pre-Ukrainian invasion levels. So, there's no geopolitical risk priced into oil today. Energy is a cheap way to hedge against geopolitcal issues. Supply is constrained. OPEC did a laughable increase this week of only 100,000 barrels (the smallest ever). There are strong outflows from energy ETFs, so people are giving up on energy. He likes energy, especially EOG which reported this week--they are the Apple of this industry. They are not doing what other companies are, which is raising capex to drive production. EOG has better technology which proves they are best in class. They are returning their cash to shareholders with a special $1.50/share dividend. You're getting a 9% yield on this company this year.
oil / gas
COMMENT
July was the best month in a year. The Fed's remarks this week were a soft pivot that the market liked. MSFT, Google and Amazon reported this week and missed topped and bottom lines. Yet, stocks went up. We haven't seen the capitulative flush in markets to bottom, but it has happened in tech, so he prefers tech going forward. He prefers oil stocks. Also, the 10-year yield was moving up, but is now declining. He is cautiously optimistic.
Unknown
BUY on WEAKNESS
He's bullish energy. EOG remains a big holding. It's the elite name in oil production, the Apple of E&P. They have incredible proprietary technology and have low debt, generate tons of cash even if oil falls to the $80's. EOG has sold off from its highs, so buy it now.
oil / gas
BUY
Healthcare is his favourite defensive sector. AbbVie needs to provide clear guidance about the erosion curve in Humira, its top drug (that will go off-patent next year). A popular drug going generic isn't necessarily a death sentence for the stock. He thinks management can pull this off. Sales declined only slightly, despite a 40% drop in Humira. Today, they announced a $2.2 billion settlement in opiod litigation (the opiod epidemic) which removes that overhang. It's probably a pretty good buy here.
0
BUY
Snap released a poor quarter, but should Alphabet shares be impacted? Yes, there is an economic slowdown happening, and small business reduces ad spend whenever that happens, and that reduction starts with Snap. This doesn't always transfer to Alphabet, though, unless there's a recession (which he doubts will happen). He isn't worried about Alphabet.
Business Services
COMMENT
Snap reports poor quarter, weaker revenues Disney last week announced a record $9 billion ad sale on Disney+. In digital ad spending now, it is a mixed picture and not a disaster across the digital board (like Snap last quarter).
entertainment services
BUY
He is generally not positive on tech. Earnings estimates for tech have gone up, not down. But he does own Microsoft, Apple and Alphabet, because they can manage their businesses and have incredible moats with little competition. GOOD trades at 18x earning and a 7% premium to markets (generally 25%). Do not trade these big tech stocks, but buy on weakness. These stocks compound over time.
Business Services
DON'T BUY
Missed earnings and was downgraded today. Much prefers Taiwan Semi and Samsung which are behemoths compared to Seagate.
computer software / processing
BUY
There will be more plantings in Europe, therefore more precision agricultural equipment. Deere is a no-brainer.
machinery
BUY
Be very selective in consumer; this is how he plays this sector. These car suppliers should see continued demand from an again car fleet. Stock is not overly expensive, while business is phenomenal.
wholesale distributors
BUY
Be very selective in consumer; this is how he plays this sector. These car suppliers should see continued demand from an again car fleet. Stock is not overly expensive, while business is phenomenal.
Automotive
COMMENT
He's buying 6-month treasuries with his cash to be cautious. You get a nice yield in a short run.
Unknown
BUY
Owns Wells Fargo and JPM. Citi did very well with new branded card revenues up 18%, but WF's mortgage banking revenues down 80%. This means that small-ticket items are still intact, while big-ticket is faltering. Consumers are spending with their credit cards. JPM's capital market investment banking revenues were down 32%. The banks are all building big reserves against mortgage defaults. Wells remains a turnaround story, but it trades at less than 1x book, so its metrics are attractive. It's not a value trap; management is good.
banks
BUY
The street expects strong numbers, because in a weak environment, the rails usually outperform. They are the lowest cost provider. Trades at a cheap 18x at Covid levels.
Transportation
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