Communication actions, Netflix, Roblox catch-up games for 2022: Trader
The worst performing sector this quarter could make a comeback in the new year, according to a trader.
The last three months of 2021 have been volatile for U.S. stocks, as heightened concerns about the Covid omicron variant and the risks of inflation triggered more regular swings in major indices.
Communications stocks have lagged behind the rest of the S&P 500, but a return to growth could make them “sneaky catch-ups” of 2022, “Inside Edge Capital Management founder Todd Gordon said on Wednesday. , at CNBC’s “Trading Nation”.
“We are seeing a strong comeback in growth” after about a year of investors opting for value, Gordon said.
“I think we’ll see an increase next year and I think the technology is coming back, especially the large caps,” he said.
Consumer discretionary and communications stocks could also benefit, Gordon said.
“I don’t think the inflation argument, the value rotation, the search for yield is here to stay. I think inflation is transitory,” he said. “I think one of the sneaky catch-up games… is going to be communications next year. I’m looking at two stocks in particular where I’d like to increase exposure: Netflix and Roblox.”
After three years of strong annual returns, 2022 will likely be a more volatile year for markets, said John Petrides, portfolio manager of Tocqueville Asset Management, in the same interview.
“I think domestic stocks will outperform in 2022 and that will continue, I think, until the US 10yr hits around 3% or so, because there really aren’t any other competing asset classes.” which are publicly traded, he said.
Its 2022 strategy has taken the other side of the low interest rate trade, favoring dividend games, especially real estate investment trusts involved in industrial and medical properties.
“I think the fundamentals are very strong in these subsectors,” said Petrides. “These are companies that can increase their dividend, pay a high dividend yield, especially in the medical office real estate space, and in an inflationary environment the landlord can adjust the rents higher, so I think that works out. to REITs some pricing power so there’s one area I’m thinking of for ’22. “
Disclosure: Inside Edge Capital Management owns shares of Netflix and Roblox.