Stocks were trading higher on Monday, with the XLK technology ETF and broader S&P 500 both hitting records.
Four experts discuss what they’re watching now.
David Bailin, chief investment officer at Citi Private Bank, identifies areas of opportunity.
“Take a look back at the history of Microsoft. There was a period when, for five years, their earnings and cash flow trebled and the stock was relatively flat. And I think that’s indicative of what could happen here. You’re going to have companies that are very fully valued that are going to continue to perform well, and then other companies, these value-oriented companies but really these industrials and even smaller tech, are going to do much better over the course of the next 18 to 24 months. And that’s why you have to have the right amount of technology in your portfolio but not too much, and really expose yourself to what’s going to happen over the next 12 to 18 months. One of the areas we really like are foreign stocks, which are trading now at half the value that they were just about two years ago on a relative basis to the U.S. stock market. And we think that there are many companies and many industries that are going to benefit as the U.S. dollar weakens a bit and as the global recovery takes place.”
Stephanie Link, chief investment strategist at Hightower, sees growth potential beyond Apple.
“I think you could see a bit of a rotation maybe in some of the high flyers … maybe not so much Apple because that’s a 5G play, that’s another reopen play, so I think Apple can kind of hold its own in that environment. But I think you want to still have exposure to secular growth tech, because they really do have these amazing total addressable markets and this amazing growth potential, and I think that has only been helped by the fact that we’re stay at home and work from home and we’re never probably going back 100% to where we were.”
William Power, senior research analyst at Robert Baird, says Apple could continue to outperform.
“The bigger driver right now is fundamentals of [Apple]. This was a company to put up an epic quarter when we look back at fiscal Q3. In the midst of a pandemic, it grew year over year in every geography, every product line, and of course you’ve got the 5G cycle on tap.”
Jim Suva, managing director at Citi, says Apple will come out of the pandemic even stronger than before.
“Things are going to be stronger, there’s going to be more innovation, there’s going to be more new products coming out. Apple going into things like health care, additional projects they’re going to be having coming out in addition to the 5G upgrade cycle could potentially be quite meaningful, but simply put, you can no longer put Apple in the ‘deep value, it’s cheap’ bucket. … They’re going to be coming out of this recession and pandemic even stronger, hiring more talent and coming out with more products.”
