This week’s Alpha Trader podcast features hosts Aaron Task and Stephen Alpher speaking with LPL Financial’s Ryan Detrick and Eddy Elfenbein, editor of the Crossing Wall Street blog and portfolio manager of the AdvisorShares Focused Equity ETF (CWS).
Before getting into the outlook, Detrick (who was bullish on stocks at the March bottom) puts last year’s remarkable rally in perspective: The reversal from down more than 30% to up in the teens is unprecedented. While some may be tempted to view things as overdone to the upside, Detrick believes the strength we’ve seen is consistent with the beginnings of a years-long bull market.
In addition to the positive technical signs he’s seeing, Detrick reminds that even more fiscal stimulus is likely on the way, and the Fed looks to be on hold at zero for quite some time. Given all that, Detrick does acknowledge some bubbly signs in things like IPOs, cryptocurrencies, and certain stocks. He reminds that his long-term bullishness doesn’t mean there won’t be sizable setbacks along the way, but investors ought to consider those downdrafts to be buying opportunities.
Elfenbein’s 25-stock Buy List has consistently topped the S&P 500 over the past 15 years (though it did trail by a handful of basis points in 2020). Each year, Elfenbein discharges five names from the list, and adds five others.
Out this year, are Becton, Dickinson (BDX), Eagle Bancorp (EGBN), Globe Life (GL), Hormel Foods (HRL), and RPM International (RPM). Four of the names were notable underperfomers in 2020, so like any good portfolio manager, Elfenbein isn’t shy about cutting losers (and letting his winners run).
Maybe more interesting are the additions: Abbott Labs (ABT), HEICO (HEI), Miller Industries (MLR), Thermo Fisher Scientific (TMO), and Zoetis (ZTS). Peter Lynch said to look for companies that do something dull, says Elfenbein introducing perhaps everyone to Miller Industries. Based in Ooltewah, Tennessee, Miller makes and sells towing and recovery equipment. The company experienced a Covid-related slowdown in business in 2020, and the stock was similarly punished. Its recovery bounce since has been limited. Elfenbein likes management, likes the business’ “moat,” and likes that exactly zero sell-siders cover the name despite the company’s strong long-term success.
There’s plenty more, including a discussion of the 10-year yield rising above 1% for the first time since March, whether the dollar is set up for contrarian bounce higher, and why it’s always a better idea to look for good stocks to own rather than trying to time a bubble.
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