By Barbara Kollmeyer
Critical information for the US trading day
2022 may be remembered as the year investors stopped loving tech stocks.
While the Nasdaq Composite is up around 5.3% this quarter, that’s after three dismal ones, and a 28% loss for the year so far leads it to the worst annual return since 2008.
But don’t completely turn your back on technology, says our call of the day from Nancy Tengler, CEO and chief investment officer of Laffer Tengler Investments, which manages about $1 billion and whose Equity Income and Dynamic US Inflation strategies have returned five – star ratings at Morningstar.
“If the tech trade is over, we’re all going to have problems because the workforce isn’t growing…you see the participation rate going down and the productivity is terrible,” said Tengler, who is part of the financial markets since the 1980s – said MarketWatch in an interview. “We need technology to solve labor shortage problems.”
It may seem odd, as layoffs have been made by tech names including Amazon.com (AMZN) and Meta (META), but Tengler wants investors to keep an eye on what lies ahead when thinking about tech. .
“I think the theme is more about embracing digitalization, the digital revolution of the economy and picking the best old economy companies that are doing it, and then the companies that are providing the digital solutions,” she said. declared.
They also need to tick the quality, cheap, and dividend-paying boxes for Tengler. In this target area, she likes CVS Health (CVS), which now has 46 million and counts digital relationships. “I get a text, they send me the prescription and I pick it up,” she said.
Public Storage PSA (PSA) gets a nod as it is an old economy company benefiting from digitalization. The company raised its guidance on its third-quarter earnings call, with operating margins now above 80%, and its portfolio is growing through acquisitions, it notes. “Customers are staying with their storage units longer because of the cost of housing,” and the interaction is all digital, Tengler said.
Tengler loves Honeywell (HON) – an industrial conglomerate providing solutions for the digital revolution. A beat and higher guidance over the past quarter suggests Honeywell will be actively looking at acquisitions, and a weaker dollar will also be a plus, she said.
Of the Big Tech lot, Tengler says they picked up beaten shares of Microsoft (MSFT). “If the fundamentals of the business are strong, if the management team is great, if they’re an industry leader and good operators, which Microsoft is, then this has historically proven to be the kind period where you want to add names like that,” she said.
“It’s a company that investors will come back to because they have reliable earnings growth,” she said, referring to a key quality that she believes will protect investors as the overall economy slows.
Goldman Sachs (GS) is also mentioned, its favorite financial group headed for a downturn that has “embraced digital”. The stock trades at 11x forward earnings, with a price-to-book ratio of 1.2x, well below that of JPMorgan (JPM), and should benefit from advisory, underwriting, trading and retail banking, and any increase in transaction flow, she said.
As for Tengler’s 20,000 foot vision, she’s worried about deficit spending and the Fed slowing the economy, but even amid 2023 earnings uncertainty, she says she’s starting to add portfolio risk.
“I think investors may not be thinking enough about what can happen in 2023,” Tengler said, in a nod to the extreme pessimism among investors and institutions this year. “Because when the Fed shuts down, or if earnings aren’t as bad as expected…we’re in a position for stocks to rally pretty strong and there’s a lot of people who are going to get caught.”
The best of the web
They Withdrew Money From FTX At Last Minute Before Bankruptcy: ‘Thank God I Dodged It Twice’
One of the most violent nights of protest in Iran leaves a 9-year-old boy and 15 others dead.
Ukraine scrambles to keep the lights on as precision missiles hit key infrastructure as winter approaches
Some GOP megadonors feel less generous when it comes to former President Donald Trump’s 2024 race
Things to think about before housing data:
Read all of @nickgerli1’s thread here
New Zealand homeowners are launching a free Tesla to entice buyers as house prices plummet across the country.
The astronomer excluded himself from Twitter for months after sharing a meteor strike.
Danish journalist forced off the air while covering the World Cup in Qatar
Need to Know starts early and updates until the opening bell, but sign up here to get it delivered to your inbox once. The email version will be sent around 7:30 a.m. EST.
Hear the best new ideas i
(END) Dow Jones Newswire
Copyright (c) 2022 Dow Jones & Company, Inc.