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.
Unknown
DON'T BUY
Great company, but still expensive after this correction, with a PE around low-200x trading at 9x revenues, not earnings. Too expensive.
computer software / processing
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
BUY
Lots of room to expand. Reported excellent earnings last week, though there was an adjustment given their Rivian holdings. Still, impressive. They are growing into their earnings, so their PE is coming down. This happens with great companies like Apple and Facebook before.
specialty stores
BUY
He's excited about copper demand, given electrification--the green oil--namely in EVs. FCX trades at 5x enterprise value to EBITDA, so it's cheap. Balance sheet is fine as they pay off debt. He expects buybacks and dividend increases in the next quarter.
non-base metal mining
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