Jamie Murray, portfolio manager and head of research at Murray Wealth Group
Focus: North American equities

MARKET OUTLOOK

We believe markets will continue to be bifurcated in the short term with stay-at-home equities like technology, home improvement and healthcare seeing strength while cyclicals (industrials, travel, financials) remain volatile until coronavirus concerns abate. The market could see a big shift in sentiment at that time, with heavy repositioning into cyclicals which typically perform well in the early stages of a recovery. An elevated VIX (currently at the 28 to 32 range) is indicating that the market is not out of the woods yet and there will be additional chances to build positions in names to own for the long term.  Stay invested in reasonable priced mega-cap internet technology and build positions in strong franchise cyclicals that will benefit from a rebounding economy and weakened competitors.

TOP PICKS

MASTERCARD (MA NYSE)

As the move to cashlessness accelerates, Mastercard is further cementing its position as the plumbing for financial transactions. Unquestionably, the use of cash for physical transactions in developed nations will continue to recede as online shopping and contactless checkout grows rapidly. Cross-border shopping transactions have been impacted with COVID-19 concerns, but should resume when international travel picks up. The company continues to grow its free cash flow and generate high rates of return on its investments, an attractive set-up given extremely low interest rates.

NIKE (NKE NYSE)

We like to own strong retail brands. Nike’s shift to e-commerce and direct-to-consumer is still in early stages and should provide a tailwind in both revenue and earnings as retail recovers from COVID-19. Direct-to-consumer sales are a higher margin contribution and provide Nike additional data insights to better design and sell athletic wear to customers. The company still has a large opportunity in China where Nike is considered a local brand as well as further penetration into women’s apparel.

BOSTON SCIENTIFIC (BSX NYSE)

The medical device sector has been impacted by reduced procedures in hospitals as patients remain averse to unneeded public interaction. However, most of Boston Scientific’s device catalogue is non-elective and while procedures will be deferred, demand should recover. The trading multiple has been impacted due to a couple of quarter revenue misses and a surprise equity raise, but we believe management should meet its growth targets (amongst the highest in the sector) through new product launches and deliver on its margin improvement initiatives. A couple of strong quarters and rebound in patient procedures could provide a quick rebound in the shares.

PAST PICKS: AUGUST 19, 2019

AMAZON (AMZN NASD)

• Then: $1816.12 
• Now: $2996.71
• Return: 65%
• Total Return: 65%

AIRBUS SE (EADSY OTC)

• Then: $34.45
• Now: $18.56
• Return: -46%
• Total Return: -46%

INTUITIVE SURGICAL (ISRG NASD)

• Then: $495.50
• Now: $567.76
• Return: 15%
• Total Return: 15%

Total Return Average: 34%

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Personal Twitter: @MWG_Jamie

Website: https://murraywealthgroup.com/