Yahoo Finance Stay away from Netflix and Amazon, GE and IBM are cheap: fund manager
Investors are jumping back into stocks after experiencing one of the ugliest opening selloffs on Monday. A corrective bounce is technically underway but Kim Caughey, senior equity analyst and portfolio manager at Fort Pitt Capital Group is advising her clients to “expect a bumpy ride” for the rest of the year.
Despite the note of caution, Caughey, who’s firm manages $1.8 billion, believes, “correction equals opportunity.” The investment manager is adding more exposure to stocks including General Electric (GE), IBM (IBM) and VF Corp. (VFC). “We like these big worldwide companies and they look undervalued at this point,” she said.
Amazon (AMZN) and Netflix (NFLX) are big momentum stocks the firm is staying away from, “people might be piling back into them because they were winners this year… especially trading at the price to earnings ratios that they trade at, it’s flashing a big caution to us,” said Caughey. Shares of both stocks are recovering after Monday's crash that left Neflix to close 6.8% lower, after losing nearly a quarter of its value last week. But as value managers, those are names that “probably won’t be in our portfolio anyhow,” Caughey said.
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Risk still remains high in the markets and Caughey noted several factors that could sway the wild swings on Wall Street beyond China, the main driver behind recent moves.
“We think the Fed, that’s a big question mark,” she said. The equity analyst also cited the next earnings season coming up in October, “it’s always a tough quarter because, a lot of industrial companies sell to people who are on vacation at this time.”
The market’s dramatic moves may bring fear to some investors but she reminds her clients, “that’s opportunity, isnt’ it?”
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