It's a nervous time for all investors: removing the monetary stimulus (free money) that has fueled the bull market. Suddenly, central banks are boosting rates to tame hot inflation, and throw in the Russian war. Is this all being discounted already in the market? He doesn't see a recession this year, there will be a slowdown. Consumers remain pretty flush from money saved up during the pandemic. They're still buying cars (inventories can't keep up), for example, and jobs are plenty. Consumer discretionary stocks are now priced like there is a recession. He still like energy stocks and financials are getting interesting. Semis, cars and tech payment stocks look interesting, too. The market has corrected a lot so that valuations have declined to reasonable levels. The few exceptions are megatech, which have fallen, but when they completely capitulate, then we could see the market turn a corner.
He can see the temptation in buying it after the sell-off. But no. There's so much competition in streamers, and Netflix must continue spending. NFLX is not cheap in terms of cash flow and valuation, though the stock is overdue for a bounce. He prefers Disney and Paramount which trade at better valuations.
He'd buy more, because the valuation is so low. The short-term big risk is the change in the Apple devices that stop Meta from tracking Apple users, which impedes online advertising, which drove Meta's growth ever since it went public. Now, that's being challenged, because Apple has removed the ability. Will this impact their mobile advertising? Meta and Alphabet dominate mobile advertising (he likes both). Watch for their report tomorrow.
We've seen an historic demand spike for fertilizer because of the Russian war, which has cut off supplies from eastern Europe. He likes this stock and space long term, though he took profits recently (the valuation got extended). Don't dump shares nor add. Wait. The price can rise again. Supply constraints will continue for a while, and there aren't many companies in this space. A good company and long-term growth story.
Prefers it to Linamar because of the valuation and they have more plays on batteries for EVs, which offer growth potential. These stocks move as a group, though it's been a bloodbath for this sector over recession fears. Semis shortages have been an overhang longer than he expected. But car demand remains high with inventories low. They will do well as we transition to e-cars. Also likes Magna.
metal fabricators
He may add more. He likes it short- and long-term. Well-positioned for the reopening and are tilting towards freight too, which is good.
(A Top Pick Apr 19/21, Up 118%) The 7 Generations buy was great. Natural gas prices boosted shares after lagging last year. He lightened his holding as nat gas spiked, and is migrating more to crude oil. Not sure if the nat gas boom can sustain.
oil / gas