Searching for Growth (w/ Dan Russo)

TL;DR

The slowing growth environment is leading investors to pay a premium for growth stocks, making them a favorable trade. Additionally, real estate is starting to outperform as a defensive play.

Transcript

JUSTINE UNDERHILL: Welcome to Real Vision's Trade Ideas. Today, we're sitting down with Dan Russo of Chaikin Analytics. Great to have you back. DAN RUSSO: Great to be back. Thank you for having me. JUSTINE UNDERHILL: So, last time you were here, you were looking at growth, specifically, we're in a slowing growth environment so investors were going... Read More

Key Insights

• 🐢 Growth stocks remain favored in a slowing growth environment.
• 🎁 The IVW ETF may present an opportunity for reentry.
• ❓ Weakness in the transport sector can still be found in specific areas.
• 🛀 Software is showing relative strength and presents a growth opportunity.
• ❓ Microsoft is an attractive stock within the software sector.
• 🖐️ Real estate is starting to outperform as a defensive play.
• 🇦🇸 American Homes 4 Rent is an appealing stock in the real estate sector.

Questions & Answers

Q: Why are growth stocks still favorable in a slowing growth environment?

While overall growth may be slowing, investors are still willing to pay a premium for growth stocks due to their potential for continued growth and strong market performance.

Q: What is the significance of the IVW ETF and its recent pullback?

The IVW ETF represents growth in the S&P 500 and has pulled back recently. However, considering the ongoing theme of slowing growth, it may still present an opportunity for reentry.

Q: What opportunities exist in the transport sector?

While the transport sector has seen weakness, particularly in trucking stocks, investors can still find opportunities by getting more specific and focusing on weaker areas, such as specific names in the trucking portion of transportation.

Q: Why is software showing relative strength?

The iShares North American software ETF (IGV) has been outperforming the market since December, indicating relative strength. This suggests that software stocks continue to present a viable growth opportunity.

Q: What makes Microsoft an attractive stock in the software sector?

Microsoft has a very bullish rating in the 20-factor model used by Chaikin Analytics and has been outperforming the market. With its proprietary indicators showing positive trends, Microsoft presents a potential upside opportunity.

Q: How is real estate performing as a defensive play?

Real estate had been underperforming as the market worked higher but is now starting to outperform again. The iShares US real estate ETF (IYR) and other real estate stocks are showing bullish ratings, indicating potential opportunities for defensive plays.

Q: What makes American Homes 4 Rent a good investment in the real estate sector?

American Homes 4 Rent (AMH) has a very bullish rating in the 20-factor model, is outperforming the market, and has positive indicators such as oversold conditions and institutional buying. This suggests potential upside to $30 in the near term.

Q: Is it better to invest in individual stocks or ETFs in the real estate sector?

It is recommended to have a mixture of both. ETFs can be used for core strategic positions, while individual stocks within the ETFs can provide additional upside opportunities.

Summary & Key Takeaways

• Growth stocks continue to be a favorable trade as global and U.S. growth slows, but does not contract.

• The IVW ETF, which represents growth in the S&P 500, has pulled back but could be considered for reentry.

• The transport sector has seen weakness, particularly in trucking stocks, but opportunities may still arise.

• Software is showing relative strength with the iShares North American software ETF (IGV) outperforming the market since December.

• Microsoft is a strong stock in the software sector with bullish ratings and potential upside to $135.

• Real estate is starting to outperform again as a defensive play, with the iShares US real estate ETF (IYR) showing bullish ratings.

• American Homes 4 Rent (AMH) is a stock to consider in the real estate sector with solid support at $23 and potential upside to $30.