This fund manager says a bull market might be on the horizon — and names her top stock picks
Stock markets seem to be slowing after a strong start to the year. The S & P 500 is up about 1.5% in February, down from a 6.2% gain in January. And the tech-heavy Nasdaq Composite and blue-chip Dow Jones industrial Average tell a similar story. What’s cooling the market? The prospect of sticky inflation and more interest rate hikes, as well as ” rolling recessions ,” among other things. But though bearish sentiment has seeped into the market, fund manager Barbara Doran is taking a contrarian view. “The market has gone up and there seems to be a real appetite [for stocks]. People are coming in; they started the year with a lot of cash. Part of that was just bear market positioning but with the breadth that we saw in January, this is feeling like the start of, dare I say, a bull market,” Doran told CNBC’s ” Street Signs Asia ” last week. The chief investment officer and senior portfolio manager at BD8 Capital Partners said the U.S consumer remains strong — the unemployment rate is at a 53-year low and there’s an estimated $1 trillion in unspent Covid-19 stimulus payments. “Market is discounting more Fed hikes, but also a continued decline in inflation. There are few discernible negative catalysts on the horizon: investors seem to be thinking more of opportunities rather than just risk. A bull market attitude is slowing emerging, albeit a fragile one,” she added. “If you’re a long-term investor, you stick to your guns and you wait for opportunities in names that may have gotten too expensive,” she said. Stock picks One of Doran’s top stock picks is Uber — and she’s given the stock upside of between 25% and 50%. The ride-hailing giant is a “global leader” in two “secular growth areas” — ridesharing and food delivery — and has gained market share in both, according to Doran. Other metrics such as revenue and rides have also shown double-digit improvements, she added. “They expect to break even in the next quarter or two and then they start to make real money next year. There is a solid balance sheet with over $4 billion in cash sitting there. And the stock is in the camp where there is no [price-to-earnings] because there’s no earnings, but I think there’s substantial upside here,” she said. Walmart is another of Doran’s top picks. She said the stock is a “well-positioned defensive name” that will hold “steady” in a recession. The stock is also a “long-term winner,” according to Doran. “They have massive scale and they have also been very innovative in terms of bringing in e-commerce [sales]. They’ve been really ahead of the game on that. They are improving the customer experience and so I think they will continue to be a compounder in the portfolio,” she said, giving the stock near-term upside of 15%. Rounding off her picks is Starbucks . The stock is a play on China’s reopening for the second half of 2023, and Doran estimates the company will grow its earnings per share by 15% to 20% over the next few years. — CNBC’s Michael Bloom contributed to reporting.
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