- Priest favors consumer staples, health care, some tech stocks
- Delphi's Black picks Townsquare, Foot Locker, U.S. Bancorp
The stock market’s January rout may have been painful for investors, but it’s opened the door to bargain hunters looking for cheaply valued companies able to weather a global economic slowdown, a panel of money managers told Barron’s.
A “blowup” in emerging markets, particularly China, is “a real risk” and is one of the biggest worries for investors right now, said William W. Priest, chief executive officer of Epoch Holding Corp., in the last part of a January “Roundtable” discussion series published in Barron’s Feb. 1 issue.
“Money managers focused on emerging markets are hemorrhaging assets, and the bottom in these markets isn’t near,” he said. Those concerns will make it difficult for stocks to post positive returns this year, he said.
Weak growth, prolonged low oil prices and fears of a slump in emerging markets and China contributed to the worst January for stocks in seven years. The Standard & Poor’s 500 Index lost as much as $2.5 trillion from American shares. The Federal Reserve’s Open Market Committee said last week that it’s closely monitoring global economic and financial developments, leaving the door open for a slower pace of interest-rate hikes.
Investors should position their portfolios defensively, sticking to companies that generate free cash flow in areas such as consumer staples, health care and even technology, while avoiding the materials, energy and industrial sectors, Priest said. His top picks included CVS Health Corp., Synchrony Financial, NorthStar Realty Europe Corp. and Vodafone Group Plc.
Other investors, including Scott M. Black, founder and president of Delphi Management, said they’re looking for companies with accelerated earnings growth. It’s a stock-picker’s market, Black told Barron’s in a previously published part of the discussion series. He recommended Townsquare Media Inc., Foot Locker Inc., Lam Research Corp., Mylan NV and U.S. Bancorp.
Meryl Witmer, general partner of Eagle Capital Partners, touted specialty paint manufacturer Axalta Coating Systems Ltd., chemical manufacturer Tessenderlo Chemie NV and liquefied petroleum shipping company Navigator Holdings Ltd.