Comcast is another stock that has been absolutely crushed, but now they're breaking apart their entities. And I think Comcast as a company getting back to their core competencies of broadband.
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Lastly, have you seen Comcast is another stock that has been absolutely crushed, but now they're breaking apart their entities. And I think Comcast as a company getting back to their core competencies of broadband.
small cap financials companies like Glacier Bancorp in Montana, FNB Bancorp in Pittsburgh, they have great relationships with their clients, great cash flow and a great book value.
small cap financials companies like Glacier Bancorp in Montana, FNB Bancorp in Pittsburgh, they have great relationships with their clients, great cash flow and a great book value.
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we're avoiding parts of consumer staples. We think they're very expensive. ... So, like the Pepsis of the world, the General Mills, the Kellogg's, these stocks are expensive and they're not growing.
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we're avoiding parts of consumer staples. We think they're very expensive. ... So, like the Pepsis of the world, the General Mills, the Kellogg's, these stocks are expensive and they're not growing.
Joining me now, Brian Belski, CEO and chief investment officer
at Humilis Investment Strategies. Brian, first time on. Great to have. You. It's so exciting. I got a lot of like, letters
after my name on a loan. We, we're excited to have you on. Let's kick things off with your price
target because I was taking a look. S&P 7500 to 8000 this year, and S&P 500 is actually at 7566. So is this it
or are you going to boost it from here? No, I mean, we've been publishing,
price targets on the S&P 500, I think is the person on the top
of the piece of paper since 1998. Believe it or not. And we typically like to under promise
and over deliver. We I think in my career since doing that,
I've had to downgrade the market twice, in terms of being wrong, and not,
in being two, two bullish. But at the end of the day, we think this is going to be
a pretty broad range between now and the end of the year,
because we do think we're going to get some sort
of a correction. Correction will be positive in earnings
driven markets. Markets are usually more volatile. And we've had some of that volatility. But the more people right now
that are talking about a correction, more means
that we're not going to have one. So what I love it
that more people are getting more and more bullish
and more and more bullish on earnings. So the the less amount of people
that are talking about corrections, the more likely they're going to have one. And it happens when you least expect it. And you're saying
that a correction would be positive because you would be looking at it
as a buying opportunity. Correct? Correct. Because we've had this
we've had this really weird market this year where everything has been
very binary and very, very focused. All of a sudden we like the memory stocks. Everyone's buying the memory stocks
and they kind of forget about everything else in tech. So I think there's going to be
an opportunity. The market is already showing you
that we're broadening out across all sectors and industries
and asset classes, which was at our call
the beginning of the year, that we're going to have
a broadening out of the market. So we're glad
that we're right there at least. But at the end of the day, we think
that's very fundamentally positive about the US stock market. So let's talk
about what looks attractive right now. Even if we don't see a correction. Where would you be comfortable
putting money to work today. We love the financials. We're overweight
financials. We're over at Communication Services. We think tech being well over
30% of the market has to be much more selective or neutral. There were underweight to make seven. But we have
we have overweight positions and names like Apple, Microsoft and Vidya and Google
of course. But Google is not a tech stock by the way. It's a communication services stock. So, Wait, stop there for a second. Underweight mag seven. But overweight all of those names
you essentially just don't like Tesla. And well, I'm not. I can't tell you all my secrets,
but we don't own meta, okay? We don't matter. We haven't owned it for a long time, so
that's a big part of the makes seven that, makes us in totality, underweight. The next seven, you follow me. Okay. So, remember too that in the Mac seven, you've got Tesla,
which is a consumer discretionary stock. You've got Amazon
which is a consumer discretionary stock. You've got Google which is a communication
services stock by the way. Communication services
just been rocked this year so far because a weakness in Netflix
which we think is way overdone. Weakness in AT&T
which we think is exceedingly overdone. And Spotify, which is not in the index,
but a lot of people put it in the communication
services space. So we think, a place that people aren't
thinking about right now for the second half of the year
is communication services, the sector. We think that that's going to rocket back,
led by Google, a recovery in Netflix. And I think people coming back to Spotify. So a recovery in Netflix. What else do you like in that space? If someone says, okay, communication
services, that's under the radar, how do I add exposure? Well, we like Nexstar Media, which is a
they own a television, a bunch of television stations,
primarily in Texas. We like the Paramount,
the new Paramount, company, especially with the integration of,
Warner Brothers. Now, we think that that company, in the really the theme for communication
services is content. And we think the race for content is on. We're going to see more consolidation. I think communication services, the thing about Netflix is it's
been in the penalty box first because they were going after Warner Brothers, secondly,
because they didn't get Warner Brothers. And if you take a look at that company,
I think the move more of the move to live events and more the move to sports
is really going to be very beneficial for that. Lastly,
have you seen Comcast is another stock that has been absolutely crushed, but
now they're breaking apart their entities. And I think Comcast as a company
getting back to their core competencies of broadband. And on the business side
I think it will be very positive. Much of the same tune as AT&T has done. So I think a lot of the money actually has come out of communication services
in Chase, more of the areas within tech. So I think the market with the markets
doing is kind of rotating into some of the areas
that have been underperforming. I was taking a look
at your midyear outlook, and you said today's valuations aren't
actually as stretched as many believe. Yeah. What are investors missing
that think that this looks expensive. They it looks expensive because they see
the price performance of the market. You can't just look at price. You have to look at what's underneath
that from a valuation perspective. So you have a P and an E right. In terms of valuation on the east side
of the valuation continues to grow. The market right now
is cheaper than it was a year ago. And look
how much the market's up over 20%. So that means market earnings are growing
faster than the market. That's very very positive.
That's kind of number one. Number two we get we've become very binary
in our investing I'm going to buy Micron and SanDisk because it's going up
and everyone's really excited about it. But but guess what. The stock
market is a market of stocks. And the more diversified
we think in a market like this that is broadening, you're going to be way ahead of the curve
in terms of small mid-cap stocks, value stocks, dividend growth stocks, not just the ones
that are on the headlines every day. So as you think about your picks
with a value lens, what are the best
values out there? Right. And But names I because you say financials and JP Morgan
Goldman Sachs. Well I would say within the well okay. Back in the. Yeah. Yeah. Just because the stock is up
doesn't mean it's a great value. You're like, Jamie Dimon is the godfather. He's the godfather
of the financial industry in this country. That's the gold standard. But I think from a valuation perspective
you take a look at Wells. Now we own Wells and Citigroup. Jane Frazier came in in 2021. Had a hard time implementing her plan. Nobody believed her. We doubled our position in 2023
and our value portfolio because we thought this is a stock
that's going to execute their broad and fantastic leadership
in the management side. And that they executed. Look at the earnings were fantastic okay. We think Wells
Fargo is going to be the next one. They they've kind of bumped along the road
to shaft came along. But about a year and a half ago
they started executing their plan. The stock is trading two multi 2
to 3 multiple points lower than Citigroup. So we think from a value perspective
Wells makes sense I think the the private equity companies
are a little bit more of a value trap right now. Not that we wouldn't
be diving into Blackstone or Apollo. Yeah.
We've owned Blackstone traditionally. We think it's
we're getting closer to that. But not insurance. Companies like Traveler's Unum look very, very interesting
from a value perspective. And then small cap financials companies
like Glacier Bancorp in Montana, FNB Bancorp in Pittsburgh,
they have great relationships with their clients,
great cash flow and a great book value. What are you avoiding right now? We're avoiding parts of consumer staples. We think they're very expensive. I think a lot of people in the beginning
of the year when they got worried about, what's happening in the Middle East,
Middle East, excuse me, were swayed toward the more traditional areas in the market,
which are so-called defensive. So, like the Pepsis of the world,
the General Mills, the Kellogg's, these stocks are expensive
and they're not growing. And, oh, by the way, habits are changing in terms
of how we're eating and what we're buying. I think that's that's, one of the,
one of the bigger issues, energy, looks great kind of longer term. But if you think about energy
as a commodity, it's probably the most volatile
of the commodities. And just because energy prices
have gone up doesn't mean inflation is going to go up, because,
oh, by the way, when energy if you look at the price of WTI, it's
very volatile. It will reverse and go lower. And we are the United States of America is the largest producer of oil
in the world. We forget about that. And so I think production
is going to continue to go up. And once we kind of move
past this malaise in the Middle East, I think that we'll start to see oil
prices lower. And, oh, by the way, I think that's why
the markets just kind of food pouring. What's happening over there. That yeah,
I mean S&P 500 sitting very close all time highs,
despite the fact that we haven't seen any sort of resolution
there and is sitting near 80. So at what point does
the market have that wrong? I think it has it wrong. If we see some sort of very protracted, positioning their boots on the ground or something,
God forbid, what happened to American forces that we don't see
coming, some sort of a surprise. And again, God forbid that would happen. I think that could shock places. Shock, shock the market. But again, shocks in the market like this
are buying opportunities. And you that's
why you have to be diversified and not just be in the high fliers. Because, oh, by the way,
the stocks that are off the most are going to be hurt the most. We are getting some dips in the market
though, even on up days. And we're seeing,
you know, the memory stocks, for example, which had been huge high fliers off
double digits this week. Are you finding value in those. We don't buy stocks
because they're valuable. You buy stocks
because they're fundamentally working. And you're in our approach to
to the way that we run our our eight separately managed comp
portfolios, five of which are us, is that you can't own everything. So we run a 46
stock US focused opportunities portfolio. We don't own any micron. And the reason is, is because
you can't own every semiconductor stock. You have to be properly diversified
across the tech space and across other areas
that we think are more consistently growing, including communication services,
including financials. So you can't own every tech stock. So that's why we've made our bets
with Microsoft and Oracle and Palantir and Palo Alto. And on the semiconductor side Nvidia,
Broadcom AMD and a little bit of Qualcomm. Those are our stalwarts. You can't own everything. But some might say. Some might say. If you owned micron you would have been
doing much better than owning Oracle. Palantir. Sure. For one quarter. Microsoft for one quarter, we don't
we don't invest money for one quarter. So you think it's fantastic? I think again, you can't just say that. Should have coulda woulda investor. Good luck with that. I mean, at the end of the day, you have to be a longer term investor
with a process and a discipline. And I think it's amazing. Yeah,
it would have been great on my way to go. Congratulations. But we missed it. And with much humility, we missed it. But at the end of the day,
we can't own everything. Yeah. So we're going to remain
convicted in the names that we own. If someone owns nothing
but index funds right now, what's the first area
that you would add around the edges? I think S&P 500 type product. I would certainly be looking
at small mid-cap because I don't think, small mid-cap. I know small mid-cap is not owned
very well much across market cap spectrum. You know that the entire small mid-cap,
publicly traded market cap spectrum, the United States of America,
if you take the SML, which is the small cap 600 in the S&P 400, mid cap mid, you add them together. You know what? The market cap is smaller
than the total market cap of Apple. Think about that. So if you if you if you talk to investors
about that you got to be a stock picker. That it really excites me
that you can find individual names there. And people say just buy Apple. Well that's not part about being investing is again,
the market is a market of stocks. And you want to be involved in stories
and and own names for the longer term. And so that's what really excites me
about small mid-cap. More upside than large caps I. Think. So I think small caps
are going to outperform principally because of earnings. Earnings
growth and cash flow are a lot stronger in small mid-cap than they are
the large cap stocks. Okay, I think this is a great time to pivot to our rapid fire game
if this is your first time playing. So we have quick questions.
Quick answer is no hedging. Are you ready. Oh hedging more likely S&P
7500 or 8000 8000. Aggressive buying or strategic. Wait and see. Wait and see. Wait and see what? Wait and see. Wait for the dip.
You never want it. You're never going to pick the bottom. So wait till it begins to turn. Equal weight or market cap. Wait big. Always more upside
in second half financials or industrials. Financials tech or financials. Financials. Big banks or regional. Regionals. Growth or value. Value. Small caps or large caps. Small caps. Small caps are mid caps. Small caps
mag seven or the rest of the market. The rest of the market. One mag seven. You would buy here. Google. One you'd avoid. Meta. Semis are software. Software. Best software pick right? Not Microsoft. Palantir. Team Elon Musk or Sam Altman. Musk all the way. All they are SK Hynix. SpaceX. Space X here.
Are you waiting for Laura? I'm waiting. I have a rule. Six months,
two quarters of publicly traded. Then I'll look at it. Two quarters of publicly traded
but not profitability. Correct. All right. One word to describe how you are feeling about the market
for the rest of this year. Positive. That is Brian Belski, CEO and chief
investment officer at Humilis Investment Services. Thanks so much. Strategies Brian Belski, CEO and Chief Investment Officer, Humilis
Investment Strategies, thank you so much. Thank you. If you enjoy this interview, check out
our Street talk with Kevin Mahn. He gives over a dozen names
that he'd buy right now. So.
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