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Financial & Industrial Stocks - YouTube
Channel: TD Ameritrade Network
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we want to talk about a few sectors to
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keep in mind for your portfolio going
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forward brandon pazuro is with us
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portfolio manager guidestone capital
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management glad you're with us brandon i
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know you're watching financials and
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industrials
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these are good possibilities i guess for
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our portfolios first start with the
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financials explain is this a good play
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from now through 2022 how would you
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suggest looking at this group
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yeah good afternoon thanks for having me
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um certainly when you look into the
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financial sector there's a lot more than
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just that top line financials you know
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when people think about financials they
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tend to gravitate towards banks
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we tend to actually
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guide away from banks in fact thinking
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there might be better opportunity inside
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insurance globally in fact there's a lot
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of strong demand for insurance from the
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emerging middle class and emerging
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markets there's a lot of strong demand
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for insurance just even domestically we
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also like a lot of the capital markets
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plays there's wide moats you think about
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exchanges right there's not too many
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exchanges just cropping up out of
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nowhere these days uh these are
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well-established institutions that act
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as the pipeline for all the financial
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plumbing that we have so there's a
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couple different ways to play that
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overall you see a lot of undervalued
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plays inside of financials and for those
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where you do get to operate inside some
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of the areas of banking that you find
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interesting you do of course have
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potential rate rises on the future which
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should benefit margins there but there's
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a couple different ways to play it but
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as always you got to be nuanced when
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you're looking at any individual sector
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you didn't mention fintech
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is that something that you like or you'd
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stay away from that
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yeah fintech definitely sits in between
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the two i mean we would take fintech
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over banks there's a lot of
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commoditization that's taking place
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within the banks fintech of course is
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the number one absorber away from banks
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when you're thinking about that
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opportunity set so there's certainly
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some opportunity there as well
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you also don't have as much regulation
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as you're going to have with just kind
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of the state banking naturally you're
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still in financial space there is
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regulation but staying away from just
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kind of the the old stalwart banks that
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have a lot of those heavier regulations
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applied to them
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yeah is there something with specific
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within infrastructure as the bill is now
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seeing it seems to be moving along as
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it's passing the house
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is there a specific area within
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infrastructure that you seem to find
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more attractive industrials
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infrastructure
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materials
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yeah certainly so yeah we did get that
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passage over the weekend we still have a
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couple more hurdles to make it all the
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way through
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but good to see the house passing that
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that you're certainly seeing a lot of
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names uh getting bit up that are kind of
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in connection with this infrastructure
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package so specifically within
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industrials you're certainly seeing some
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of those names bit up air freight
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logistics
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you're seeing a lot of that continue
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with the reopening trade within
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industrials but you're even seeing some
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of these kind of heavy machinery
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equipment manufacturers those are doing
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well on the back of this kind of
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infrastructure news so we see
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opportunity there we also see from a
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valuation standpoint the entirety of the
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sector is generally a little bit
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undervalued when you're talking about a
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market that's just generally overvalued
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across the board it's good to see some
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areas where on the margin you can see a
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little bit of value so industrials offer
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some of that and they also offer a
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little bit of lift on the back of this
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news from over the weekend
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yeah i see what you're saying i'm
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interested to know too as you talk about
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the areas that you do like maybe some
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things that you might avoid or that
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might be out of favor today consumer
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discretionary utilities consumer staples
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uh real estate communication services
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are among the lagging groups is there
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are any of those or anything else that
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you would say hey you know i might stay
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away from that group for a while
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yeah i think of those when you think
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about consumer discretionary that's
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going to ebb and flow just based on this
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overall reopening trade you see some
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pretty large swings there of course
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during lockdown era you saw those names
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just get obliterated whenever you have
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these kind of peaks and valleys of the
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the peak of course when you're talking
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about reopening i use do see some of
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these names continue to trade pretty
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high cruise lines hotels uh you of
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course had some of the the mean stock
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insanity going on with some of the car
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rental companies last week but by and
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large that's a very volatile area so
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there's opportunity there
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but by and large i think those are some
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of the areas where you need to stay away
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from if you don't have the high appetite
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for some of that vol
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from a real estate perspective you
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mentioned that as well i think top line
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a lot of people are still thinking they
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want to stay away from kind of brick and
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mortar retail
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which we would agree with but there's a
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lot of great opportunity inside real
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estate you have data centers which of
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course are just kind of the backbone of
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the world in which we live in
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their cell towers that continue to get
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proliferated with 5g
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you have even things like student
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housing and some areas like that that
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are interesting underneath real estate
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but again from a headline sector
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perspective real estate has been left
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off from a lot of this upswing because
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of these headwinds and concerns
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we talked earlier about obviously we've
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had supply chain issues and it's been
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constraining and restraining businesses
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and and people getting what they need
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when they need them that we could in
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turn then see a glut
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too much of everything and maybe not
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even the demand maybe prices will come
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down inflation will be less of a worry
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what will the fed do have you been
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talking about this in the office at all
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certainly yeah you can't have a monday
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macro meeting without talking about all
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these issues
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maybe to unpack a few of those right i
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mean inflation initially this whole
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transitory story was one that was really
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taking hold amongst the street for quite
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a while now it seems even that the fed
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has elongated their definition of what
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transitory means uh we've long been in
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the camp that these things aren't going
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to untangle themselves any time soon so
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transitory i guess on a long enough time
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frame can be certainly anything
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but we believe that we'll have these
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issues persist well into 2022. um so
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that's something that we're talking a
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lot about and then also of course the
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fed has to thread the needle with
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how much inflation are they going to
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allow before starting to raise rates you
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know markets and futures based markets
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have been um thinking that we're going
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to have two almost three rate hikes next
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year settled around two as we start off
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this week but the fed has been very
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specific in telegraphing that they want
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to wait until we see the labor market
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recover and we're not having too much
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inflation so you kind of have to balance
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those two issues but yes supply chain
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logistic issues are here to stay in fact
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we were just talking this morning at our
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team meeting that there's a a retailer
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that decided to buy a logistics company
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themselves and this is just a clothing
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retailer so people are taking matters
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into their own hand looking to keep that
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margin right
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makes sense doesn't it great to see you
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thank you so much brandon pizzero nice
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to chat with you looking at our
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portfolio into next year guidestone
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capital management thank you very much
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you
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