Stock Opinions by Stephanie Link, Chief investment strategist, Hightower


Overall, she remains optimistic about the economy. Consumer spending, making up 70% of the economy, remains robust, even though the latest travel data shows a decrease in U.S. travel and retail data has been declining too.

Apple news of striking a chip deal with Qualcomm

It trades cheaply at 9x PE with earnings power of $12/share. They have a $30 billion backlog in auto. So, the Apple deal runs out in 3 years, then they can switch to supplying autos to drive revenues.

Apple Inc
Apple news of striking a chip deal with Qualcomm

Is underweight it. It trades at a high 29x PE and they reported -1% earnings decline as well as -5% in revenue and -2% in iPhone sales, -20% in iPad sales and -7% in Macs all in the last quarter. What are you getting with this? Well, the free cash flow, gross margin expansion, opex under control. But 29x is rich. Would buy on a pullback.

electrical / electronic
Tesla Inc
Tesla was upgraded today with 60% upside based on their new supercomputer, Dojo

Volatile, up 110% before today, now 120%, trading at 80x forward PE. Is this a car or auto company? Their gross margins are going down and lack pricing power (are lowering prices).

Consumer Products
Walt Disney Co.
Disney and Charter reach deal

Disney had no choice, because with a deal Disney's revenues would have been hit hit by 2-3% or 6-10% in EBITDA. And they have to bid for NBA and it have made it harder for DIS to restore their dividend. That said, she doesn't know the terms of the deal.

entertainment services
Keurig Dr Pepper

Sold it to buy Amazon but still likes KDP, which has a better long-term story than Pepsi or Coke, which trades around 23x forward PE (KDP is 19x). Likes KDP's 5% volume growth and M&A.

breweries / beverages

Today's data shows an easing in the labour market. We are a far cry from a recessionary level. Core PC was up 4.2%. The Fed may be done raising rates, but they won't ease, because their inflation target remains 2%. She's encouraged that the rally has broadened out recently, like energy beating tech. This reflects earnings coming in better than expected. Earnings have troughed. You still want to own tech and comm services, but don't make it 35% of a portfolio. That's too risky.


She bought more CDW on the Dell news today, because PCs were a $1 billion more than they expected and PCW has 30% exposure in PCs. They ahve a great business mix, changing to software and services which boast higher margins. Last quarter, it sounded like PCs were bottoming, so this is set up nicely. 

wholesale distributors
Broadcom Corp.

Broadcom re-rated like all AI names, trading at 14x PE to start the year and 21x (vs. peers' 25-29x). Yesterday, they raised guidance from 10% AI exposure to 25% or more in 2024. A huge move. Has long owned this. Down 6% today, which is a gift.

electrical / electronic
BUY, Inc.

Just bought it. Is down 25% from its high, so the PE is reasonable at 40x now. It's a compounder, and AWS's growth was 12% vs. 11% in the prior. They have easy comps. Margins are strong. Retail is accelerating after fixing supply chain problems and lowering operational expenses. Upside is coming.

specialty stores

They delivered a super quarter with China's revenue up 61% among other great comps. This confirms that China's consumers are coming back and reopening. Lulu didn't mention theft/shrinkage at all, which is notable.

household goods
Nike Inc

Nike has earnings power as freight costs decline and better inventory control. Nike is never cheap though. She likes their 15% exposure to China. Huge gross margins.

misc consumer products
Vale S.A.

Was upgraded today. She used to own it. The company isn't that transparent and iron ore is a tight market, but she prefers copper's supply/demand trend. Likes Vale's free cash flow and paying down debt.

other mines
American Express

Shocked that it trades below 15x forward PE. Constant-currency business is up 12%. Good mix of revenues and are managing operational expenses. US consumer growth is 13%, international is 23%. Much cheaper than Mastercard.

investment companies / funds
3M Co.

Are cleaning up their class-action lawsuits. Stock is cheap.

mngmnt / diversified
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