Google, Applied Materials, Japan among early picks at Barron's Roundtable
- The first line goes to Jeff Gundlach, who at last year's Barron's Roundtable predicted the election of Donald Trump. This year: "The history books will say that interest rates bottomed in July 2012, and double-bottomed in July 2016. At some point, the backup in rates will create competition for stocks."
- He notes commodity prices look to have bottomed and the Atlanta Fed's wage-growth tracker is now up 4% Y/Y. The valuation argument for equities becomes "problematic" once the 10-year yield hits 3%, which could happen this year.
- Making his last appearance at the confab, Felix Zulauf thinks stocks will struggle and end the year in negative territory, but that's mostly an H2 issue. For now, he wants to stick with what's doing well, and recommends the Vanguard Value ETF (NYSEARCA: VTV), the Russell 2000 ETF (NYSEARCA: IWM), and the Financial Sector SPDR (NYSEARCA: XLF).
- He's also bullish on Japan, where a dovish BOJ and government has shown no sign of caution. Expecting a tumbling currency to occur alongside rising stocks, he's a fan of WisdomTree's Japan Hedged Equity Fund (NYSEARCA: DXJ).
- Sooner or later, cash is going to be distributed, says Epoch Investment Partners' Bill Priest, giving a big part of the reason he's recommending Alphabet ( GOOG, GOOGL). The free-cash-flow yield is about 7%.
- Applied Materials (NASDAQ: AMAT) is in the "sweet spot" of the technology revolution, says Priest. He thinks it will generate $3 per share in cash flow in fiscal 2019.
- Other picks: Universal Display (NASDAQ: OLED) and Hexcel (NYSE: HXL).
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