Earnings growth is the ‘name of the game’ right now, says CIO, naming 3 stocks to buy
Many are predicting the U.S. Federal Reserve will cut interest rates in the second half of this year. Though CIO Michael Landsberg of Landsberg Bennett Private Wealth Management says the conditions don’t justify a cut, he says there might be one. “I think if Chairman Powell had not said, we’re gonna get a rate cut, we wouldn’t be having these discussions because earnings growth has been really strong. Inflation is not really going down,” he told CNBC’s ” Street Signs Asia ” last week. “So I think we’re gonna get one because I think he’s been pandering and mostly really wants one but in reality I don’t think we’re getting to deserve one. [But] I think we might get one and done,” he added. The Fed has repeatedly said inflation needs to come down to its desired level before it starts cutting rates. At their June meeting, Fed officials indicated that inflation is moving in the right direction but not quickly enough for them to lower interest rates, minutes released Wednesday showed. But Landsberg predicts that inflation might still inch up on two factors — soaring shipping prices out of China and rising oil prices. “I think that’s what we’re seeing is some of these things that aren’t gonna get any better. … And I think those base effects are going to mean some higher inflation later in the year,” he said. The impact of that spike in shipping costs hasn’t been reflected in the U.S. consumer price index, he said. But that could happen in the fourth quarter of this year or the first quarter of 2025, he added. Meanwhile, U.S. West Texas Intermediate crude is up around 19% in the year to date, with OPEC+ saying earlier last month that it would extend crude production cuts into 2025. Against that backdrop, Landsberg says, investors should focus on companies generating strong earnings growth. “The major indices are continuing to rally based on strong earnings growth. Earnings growth is the name of the game for this stock market right now,” he said in additional notes to CNBC. “The companies that have continued to generate strong numbers are getting rewarded and those that haven’t have been punished.” He also recommended adding some inflation protection to portfolios, through commodities or stocks with pricing power, for example. Stock picks He likes these three stocks: TJX Companies : Landsberg says the department store company is increasingly attracting higher income consumers. “They’ve got good customer growth. Wealthier clients are shopping there. We think that’s a place that that works,” he said. Stryker : The medical technology firm’s “organic growth” has accelerated from the single-to-mid digits to low-to-high teens as surgery backlogs are normalized, Landsberg said. “They’re one of the few I would argue as is a benefactor of these weight loss trucks. Lots of people need knee and hip replacements in the US, but we’re too overweight to get the surgeries. Those drugs help people lose the weight to be able to become considered for them surgeries,” he said. Trade Desk : Landsberg says the company has a “leading role” in the advertising tech industry, which “represents a large addressable market opportunity.”
