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COMMENT
No, the years-long bull market isn't in trouble. This is a typical, healthy and needed correction. We had years of great returns, but we don't want to disconnect between fundamentals and prices. 24% of the Russell 2000 index is down significantly from their peaks. The momentum and meme stocks got carried away. Rising rates could limit growth, but it could also indicate an existing strong economy. We're not slamming on the brakes, but just taking off a little pressure off the gas pedal. We're in good shape, especially later this year, but don't expect 25%+ returns again like last year.
BUY
Continues to like it. Is economically sensitive, and he foresees continued economic expansion. A low-PE stock trading at a discount to the market. E-commerce deliveries are skyrocketing and work in their favour. They are controlling labour costs, base don their last report. Also, electrifying vehicles and drone deliveries will also control costs. UPS reported last week very positive results, which could bode well for FedEx when it reports later this quarter.
Transportation
BUY
FAANG meltown concerns? The FAANG sell-off is a knee-jerk reaction to higher interest rates. It's short-sighted. These companies are growing faster than the market, which justifies their higher-than-market PEs. He continues to really like Apple for doing well in their phone and services businesses. The latter allows their PE to creep up (he's not worried), but it delivers steady revenues. Also, 5G is a future tailwind.
electrical
electronic
PAST TOP PICK
(A Top Pick Feb 18/21, Up 16%) The recent US infrastructure bill plays right into their business. Their backlog extends into 2023 and order books will be quite full. They're also into big data after recently buying a data analytics company; this tech will help manage traffic flow into urban areas.
contractors
PAST TOP PICK
(A Top Pick Feb 18/21, Up 10%) The banks will do well with rising rates. Also, JPM is strong in capital markets. Note that earnings from US banks this year over last will decline slightly, due to the effect of loan-loss provisions from 2020, which were mostly unused. Overall, he's positive the US banks.
Financial Services
PAST TOP PICK
(A Top Pick Feb 18/21, Up 24%) He couldn't understand why this was trading in the mid/low teens in PE. It's growing well within the semis revolution. It helps that they rely on Apple. The street is realizing that their other businesses are growing at a far faster pace. So, when the Apple deal expires in 2023, Apple will comprise under 20% of QCOM's business. QCOM is supplying EVs, 5G and the internet of things. Exciting. Despite rallying QCOM is trading around only 15x earnings.
Telecommunications
STRONG BUY
What's the difference between the two Alphabet shares? Simply more voting rates in one type over the other. He buys the L shares. No other difference, really. He likes the company very much. They report strong earnings last week. Trades at a decent multiple. He projects $120 in 2022 earnings or low-20's PE, and yet their growth rate in revenues and earnings are a multiple higher than the average company.
Technology
BUY
Healthcare stock outlook Healthcare stocks haven't done that well, so certain sectors hold potential. Careful with biotechs which have been hit hard by this correction, down over 50% from their peaks. CVS he likes--it owns Aetna, a health insurer, and are transforming their storefronts into mini-health hubs. All good. Also, he likes their pharma business. A well-rounded company.
specialty stores
COMMENT
Do you use stop losses? He doesn't use them. Look at a stock price with fresh eyes each day to determine whether it's a buy or sell. Stop losses can get you into trouble. Say a company doing well falls 10% in a correction while the market falls 15%. The company is doing well, but it pulled down by wider forces.
BUY
It's done extremely well for him, but he's watching this carefully. Trades under 10x earnings and pays a 4% dividend. It's been growing well on their very successful Humera drug, but that goes off-patent in 2023. So, ABBV is working hard to fill that gap. They have a few promising drugs ramping up, but they will need to ramp up to the $10 billion range to fill Humera's shoes. A few years ago, they bought Botox which long-term will be good for ABBV, despite a slowdown during Covid. He still likes ABBV, but is keeping an eye on it in case earnings stall.
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