Most investors build a portfolio one stock at a time. There is another way to do it: start with the big forces reshaping the economy, then find the companies riding them.
In the latest episode of Ticker Take, I spoke with Matt Orton of Raymond James Investment Management about that top-down approach, and the stocks he thinks fit it best.
Orton starts with the big picture. Rather than studying one company at a time, he looks for the long-term forces he expects to drive the market for years, what he calls mega-trends, and then builds a basket of high-quality companies with real exposure to them. He calls those companies “global trendsetters.”
His process has a few steps. He wants the companies with the most exposure to a theme, genuine quality, and earnings growth that is starting to speed up. For younger companies that are not very profitable yet, he looks for revenue accelerating toward profits. Then he wants the stock chart to back up the story. When the fundamentals and the price action line up, he says, you have found a trendsetter.
Right now Orton is watching three mega-trends: artificial intelligence, the aging of the global population, and what he calls fiscal dynamics, the growing role of government in markets and the economy. Here are the eight stocks he picked across the three, grouped by theme.
Megatrend 1: Artificial intelligence
Sterling Infrastructure (STRL)
Sterling is an industrial company with direct exposure to AI. It does the early site work for data centers, the groundwork that has to happen before the servers go in, and it is concentrated in fast-growing regions with fewer regulatory hurdles, like Texas and Arizona. Orton points to earnings growth that keeps speeding up, revenue closing in on triple-digit rates, and rising free cash flow. He sees a high-quality grower that long-term investors can add to on pullbacks.
Credo Technology (CRDO)
Credo works in connectivity, the high-speed links that move data between clusters of GPUs and across AI systems. Orton notes that its mix of traditional copper wiring and newer optics puts it right where data-center growth is heading. He points to fast earnings growth and the company’s move into positive free cash flow as signs of a trendsetter still early in its run.
Taiwan Semiconductor is the classic “picks and shovels” play on AI, the company that actually manufactures the world’s most advanced chips. Orton describes careful spending to meet demand and a clear lead as the most advanced producer, which supports steady revenue and earnings that keep climbing. He calls it his “steady eddy” grower in the group.
Micron sits at the memory layer of AI. Orton argues that memory is one of the real bottlenecks in the AI buildout, especially as AI systems take on more complex, multi-step work that needs far more memory running alongside the GPUs. With supply tight and demand rising, he expects that imbalance to push revenue and earnings higher, and he sees Micron as a long-term holding rather than a name to avoid after a strong run.
Megatrend 2: Aging and healthcare
BrightSpring Health Services (BTSG)
BrightSpring is easy to mistake for a traditional drug company, but Orton describes a services business. It is a home and community health company that delivers specialized medicines and infusions, the kind that often need a nurse to administer. As chronic conditions like Crohn’s disease and irritable bowel syndrome become more common, demand for those services grows. He also points to widening margins as more of the drugs it gives patients move to generic, which improves pricing power.
Lilly earns its place on the strength of its lead in GLP-1 treatments for obesity and diabetes. Orton points to a deep pipeline and a base of other drugs that support earnings, and notes that the company’s newer pills are not eating into its established injectables. With obesity a chronic condition around the world, he sees a healthcare trendsetter, and one he was happy to add when the stock pulled back and the fundamentals looked too cheap to pass up.
Megatrend 3: Fiscal dynamics
L3Harris is a defense contractor that benefits from government backing, but what Orton likes most is that it sits where technology and defense meet. Its work runs from precision avionics and communications gear to building AI into weapons systems. He sees it winning both from federal contracts and from the direction defense is heading, finds the valuation reasonable, and notes that conflict around the world is unlikely to fade anytime soon.
BNY Mellon may not sound exciting, but Orton describes a steady grower helped by a new leadership team and the bigger role government is playing in markets. The company is leaning into public-private partnerships, building AI into its operations, and has turned a corner on revenue and earnings while gaining ground across its main businesses. He sees a structural winner in financials at a fair valuation, and a clean fit with his fiscal-dynamics theme.
The Ticker Take
Mega-trend investing flips the usual order. Instead of starting with one company, Orton starts with the biggest, most durable forces he can find, artificial intelligence, an aging world, and the growing role of government, and then looks for the strongest companies riding them, the ones where the fundamentals and the chart agree.
His eight picks are a way to own those forces directly. None of them is a sure thing, and the trends will move in fits and starts. But for investors who would rather think in years than days, finding the trend first and the trendsetter second is an approach worth a look.
Jon Erlichman is a BNN Bloomberg contributor and the host of Ticker Take on YouTube.
