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COMMENT
He doesn't believe much change in society, but accelerated existing trends like poor demand at shopping malls and more buying online, as well as video--conferencing impacted travel and the office market. There's already diversification of production away from China, like in Vietnam and Mexico, the latter seeing a shift of production to the western hemisphere. China is also less competitive in terms of quality, not just costs.
DON'T BUY
Likes the company, but the stock may not be timely now. They make electronic test equipment. He sold his shares early this year, worried over excessive pre-buying by China who have since been banned by the U.S. government--an uncertainty. Also, the adoption of 5G may happen slower than expected. But it's a fine company with growth ahead, but short term there are better ideas out there.
BUY
They produce consumables for drug production, a great company. For the discovery and production of drugs. They're in a unique situation, because their filtration systems also apply to industrial production.
David FingoldOwned
machinery
DON'T BUY
What is BAC's exposure to CLOs and is it risky? CLO: https://en.wikipedia.org/wiki/Collateralized_loan_obligation Doesn't know if they have an above-average exposure to CLOs, but why own any US bank now? What will happen to loan losses and low interest rates? Banks don't do well with low rates, unless the rates rise, but he doesn't see that happening, at least not much higher than present.
banks
COMMENT
Their stock buyback as their stock price is high He has owned this before. It's doing well recently and he watches it. They supply information to the insurance industry in order to price insurance and manage the claims process. Clients have little choice but to use VRSK's services; can't do it themselves. There's some upside in the oil industry--VRSK provides information on oil and gas reservoirs, so this segment could benefit from a cyclical upside in the wider market. They are in a cash-generating business. Their buybacks have never been excessive. He doesn't own it, because there are better ideas out there with better upside in an improving economy now.
DON'T BUY
A strong company with strong reserve life of aggregates in their quarries. But it's not a timely stock. There's confusion about why the home building industry is busy, but not the home aggregates. To explain, when people are building homes, the infrastructure for those homes are already complete. For an aggregate company to benefit, they need to get involved when say a former industrial or agricultural land to convert it into a subdivision when they build roads and other infrastructure--that's when the aggregates do well. Then, there's infrastructure; governments with lower tax revenues can't afford to spend on infrastructure like building roads now. Also with oil and gas in a slump, there's another source of demand gone.
INDUSTRIAL PRODUCTS
PAST TOP PICK
(A Top Pick Aug 02/19, Down 13%) They make defence electronics and a strong performer since their last acquisition. He's holding this long term. A headwind is the market moving towards cyclical businesses instead of defence stocks. But ESLT still has strong long-term prospects.
David FingoldOwned
0
PAST TOP PICK
(A Top Pick Aug 02/19, Up 22%) A defensive, not a cyclical, stock. Okay to own now, but as we exit this recession (this shortest ever), it's better to own cyclicals. They're an auto insurer and diversifying into commercial. They have a low cost base, a tailwind, and are diversified nationally in the U.S. But doesn't see this outperform the market in the next 12 months.
insurance
PAST TOP PICK
(A Top Pick Aug 02/19, Up 26%) They have cyclical upside in their medical technology business, so pent-up demand from hospitals in a tailwind. Same goes with their eyeglass division as people now get their eyes examined after the lockdown.
David FingoldOwned
Healthcare
DON'T BUY
It's not cyclical enough to thrive. They're diversified in pharma (drugs) and medical devices. The former benefited from the lockdown from a stockpile in meds they were able to still sell, but now he doesn't know if medical devices can fully benefit from the backlog of surgeries that is being addressed now. Doesn't know if JNJ leads in medical devices. Also, JNJ isn't cyclical, which is where should be flowing. JNJ is trying to respond to the rise of robotic surgery by Intuitive Surgical, which he prefers. This take time and research for JNJ, which means Intuitive will still be ahead of JNJ. JNJ as a defensive will underperform cyclicals, which is where the market is heading as we exit this recession.
biotechnologypharmaceutical
DON'T BUY
A good portfolio here, but the problem is it's an industrial company and investors are shifting to cyclicals as this economy improves. He likes LHX's managers and can see growth, but it's not timely. It's not a cyclical where we should be shifting our money. This is defensive, great to be when an economy slows.
Technology
DON'T BUY
A good company he used to own. However, it suffers from a decline in tobacco consumption, and vaping is a serious challenge with low barriers to entry. He doesn't know when it will next outperform. Rising interest rates will be a negative, since their dividend will be less attractive. Just because this is cheap, doesn't mean the stock price will rise. Doesn't see cyclical upside here.
tobacco
TOP PICK
They currently have an effective business plan to reduce costs and close their profitablility gap with Home Depot. Also, they are driving volume to their website, and making more attractive their offerings to professional builders and renovators. The neighbourhoods they service are seeing the most robust economic performance, which is a big change. Historically, Home Depot used to benefit from its exposure to big cities, which has suffered from recent lockdowns. Therefore, Lowes offers better upside than Home Depot given store locations. (Analysts’ price target is $181.44)
David FingoldOwned
misc industrial products
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