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COMMENT
US market hitting records day after day touching unreality? S&P is up over 55% since the low. Economic numbers continue to surprise. Housing numbers, consumers, and dovish monetary policy are helping. Risks remain. Possible resurgence of Covid, escalating US-China tensions. Possibility of disputed US election. In 2000 when this happened, the S&P fell 6.5%. Only 45% of the S&P index consituents are in positive territory YTD. The relative strength index is at overbought levels.
COMMENT
What are you looking for in the markets? Still likes growth over value. In a low interest rate environment, growth is favoured. Healthcare, tech, communications seem to be benefiting from the post-pandemic environment. Themes of work from home, e-commerce, health sciences, retail consolidation. Stocks like Wayfair and Peloton are moving higher, and that's where you want to focus.
BUY
Healthcare is one of his top 3 sectors in his portfolio, along with tech and communications. Concern about a Democrat sweep. With what's happened in the world, there will be a refocus on healthcare and health sciences. Long-term, demographics in its favour. Pretty good valuation at 22x, 12% earnings growth. Yield is about 1.6%.
Stan WongOwned
medical services
BUY
DON'T BUY
Surge in Mac and iPad sales is helping. 34x earnings, overbought at 80 on the RSI. Last 5 years, revenue growth is only around 6%. He wants more than this when you're paying a premium. He questions whether people are going to continue to pay the high prices for its devices.
electricalelectronic
DON'T BUY
Decent dividend at 2.66%. But the dividend is not why you buy a tech company. Not expensive at 11x earnings, with a 6-7% growth rate. A share buyback will help the EPS, but doesn't help the business itself. Only a 5-10% revenue growth rate at most. Mature names tend to have slowing growth. Instead, look at names like Nvidia, AMD or TXN. Technically, below the 200 day MA, which is rolling over.
computer parts mnfctr
COMMENT
Do you look at relative strength index, RSI, of the index before buying a particular stock? Certainly. Most indices are overbought right now. Markets and stocks can remain overbought for some time. So it's a matter of how much capital you want to commit when they're up that high. Now, the S&P has an RSI of 75.5, so it's definitely overbought.
COMMENT
What broader Chinese index ETFs make sense? FXI, the iShares China large cap ETF, is one of the best known. It has Tencent, China Mobile, and Alibaba. Broader would be the AIA, iShares Asia 50 ETF, with 37% in China, plus Taiwan (19%) and Hong Kong (17%). For higher octane, consider KWED, which invests in internet companies in China. You can start to nibble away at these names.
PAST TOP PICK
(A Top Pick Sep 11/19, Up 8%) Still likes it. Data usage in the US is doubling every 2 years, and he expects that to continue. Lots of runway in developing markets. Nice combination of a nice dividend and decent growth long term.
Stan WongOwned
Telecommunications
PAST TOP PICK
(A Top Pick Sep 11/19, Up 6%) In his favourite sectors of bio and pharma. Strong in oncology. Diversified pipeline. Trading at a bit of a discount, 15x forward earnings, 2.9% dividend. Compelling story for the dividend and growth in the sector.
Stan WongOwned
biotechnologypharmaceutical
PAST TOP PICK
(A Top Pick Sep 11/19, Up 43%) Online dating provider. 10M paid subscribers. 4 of the 5 largest brands in North America. Pandemic has created an additional catalyst. Secular growth area. 20% earnings and 15% revenue growth rate.
Stan WongOwned
computer software
BUY
Still likes it. Slowly moving higher. You have to be very patient in the travel and leisure space. Lots of liquidity. In 18 months, more people will be flying. Watch your weighting, don't put 30-40% into the space. Downgrade to single B credit rating by S&P does not overly concern him.
Stan WongOwned
Transportation
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