John O'Connell, chairman and CEO of Davis Rea
Focus: North American large caps
MARKET OUTLOOK
There’s a real dichotomy in the marketplace these days. We had the initial panic and now we got a bifurcated market in the sense that you got certain companies that are obviously immune from the economic downfall that we’re all experiencing – the Amazons of the world, the Facebooks, the Apples, grocery store companies – that are doing pretty well. And then you look at the heartbeat of the economy, a lot of retailers obviously having a difficult time, but one that has been really catching my attention has been the financial sector … I think it really does show you that while there’s a liquidity-induced rally taking place from the Fed and the fiscal stimulus that we’re seeing all around the world, the dilemma still does exist that all the stimulus in the world doesn’t make consumers go out there and be able to shop and that’s a huge part of the economy.
TOP PICKS
VISA (V NYSE)
Visa is a perennial grower, benefiting from the gradual rollout of international payments to an ever-growing population hungry for electronic shopping methods. The company recently warned of a drop in the number of transaction because of COVID-19. While we are uncertain of the timing of recovery, we feel those with a long-term horizon can safely assume that a return to normalcy will arrive and Visa business will quickly snap back.
MICROSOFT (MSFT NASD)
Microsoft is the world’s backbone for office productivity tools. The company is also rapidly gaining in the cloud computer battles. We are keen to see how the company may leverage its gaming and cloud platforms, its artificial intelligence expertise and its early innovator virtual reality and AR technologies to work with sports leagues to bring live entertainment to your home.
FACEBOOK (FB NASD)
Facebook is the world’s second-most profitable advertising-driven business, with arguably the best properties (Facebook, Instagram, Facetime and Messenger) for targeting to consumers. We are intrigued by the company’s recent moves into India, where they may be setting the table to enter into the online shopping experience.
| DISCLOSURE | PERSONAL | FAMILY | PORTFOLIO/FUND |
|---|---|---|---|
| V | Y | Y | Y |
| MSFT | Y | Y | Y |
| FB | Y | Y | Y |
PAST PICKS: MAY 13, 2019
FEDEX (FDX NYSE)
- Then: $172.30
- Now: $123.72
- Return: -28%
- Total return: -27%
RAYTHEON (RTN NYSE)
- Then: $178.60
- Now: $116.96
- Return: -35%
- Total return: -34%
ACCENTURE (ACN NYSE)
- Then: $171.02
- Now: $196.32
- Return: 15%
- Total return: 16%
Total return average: -15%
| DISCLOSURE | PERSONAL | FAMILY | PORTFOLIO/FUND |
|---|---|---|---|
| FDX | Y | Y | Y |
| RTN | Y | Y | Y |
| ACN | Y | Y | Y |
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