Tech investor reveals 4 stocks he has “high confidence” in | Wilnesh News
The technology sector has seen a flurry of activity, including the recent sell-off and recent rally. While that may give some investors pause, veteran tech investor Trent Masters still sees hope, revealing four stocks in which he has “high confidence.” Nvidia, Motorola Solutions, Trane Technologies and Sherwin-Williams. Topping the list of Nvidia masters is this artificial intelligence darling that dominated headlines last year. Its popularity shows few signs of waning, with the stock up nearly 141% year to date despite falling about 9.7% over the past three months. “For such a large stock… the volatility is pretty staggering,” Masters, a portfolio manager at Sydney-based Alphinity Investment Management, told CNBC’s “Street Signs Asia” on September 12. Chief Executive Jen-Hsun Huang expressed concern about the company’s innovative plans and artificial intelligence. Smart Futures commented. Investors previously expressed doubts about the stock after it reported quarterly results on Aug. 28. However, Masters called profits “solid.” Adjusted earnings per share came in at 68 cents, beating estimates of 64 cents, while its revenue of $30.04 billion beat estimates of $28.7 billion. “I don’t think Nvidia is in that category right now where they shine in terms of results because the market is more aware of the potential of their AI accelerator and what the market demand might be,” Masters noted. Most FactSet data shows that Analysts remain bullish on Nvidia. Of the 63 analysts covering the stock, 59 rate it a Buy or Overweight rating, while just 4 rate it a Hold. Analysts’ average price target is $149.49, representing a potential upside of 25.5%. Masters said he was “very encouraged” by the applications being rolled out by the AI giant, adding that demand for its cloud remains strong and capital spending by hyperscalers is quite aggressive. “Looking at it from that perspective, I can see Nvidia’s path to profitability at $5 — if you see their EPS (earnings per share) at $5, that’s not a high valuation at all. So, I’m optimistic about Nvidia Still pretty optimistic. The Motorola Solutions guru said he likes electronics maker Motorola even though it comes from a “very unappealing tech space.” “This is not a stock like Nvidia where you might wake up one day and it’s going to be up 20% (or) 30%. It’s just a really good, strong compound business that’s always been able to execute well and beat market expectations.” ,” he said. The portfolio manager said the company’s strength lies in its land mobile radio equipment – walkie-talkies used for all kinds of communications, especially in emergencies – which account for 70% of the business. He added, “There’s an upgrade cycle of new devices called APX, which just gives a nice little boost to growth.” Motorola shares are up about 41.1% so far this year. Of the 15 analysts covering the stock, 10 have a buy or overweight rating, four have a hold rating and one has an underweight rating, according to FactSet data. Their average price target is $449.63, representing a potential upside of 1.8%. Trane Technologies In addition to traditional technology stocks, Masters is betting on Trane Technologies, a company that specializes in heating, ventilation, air conditioning and refrigeration systems. The portfolio manager noted that it is one of the “big four players” with a 75% market share in its industry and exposure to the technology industry through data centers. “Maybe there’s a little bit of artificial intelligence excitement, but (it) is just a very well-executed business that’s generating very strong free cash flow and continues to beat market expectations again.” Its second-quarter revenue hit record highs of US$5.3 billion, an annual increase of 19%. Shares of Trane Technologies are up 49.3% so far this year. Of the 25 analysts covering the stock, nine rate it a buy or overweight rating, 14 rate it a hold and two rate it a sell. FactSet data shows that Trane Technologies’ average target price is $361.46, a discount of 0.8%. Sherwin-Williams Outside of technology, Masters likes paint maker Sherwin-Williams because it’s a “very strong … business (with) a good return profile.” “The positives there are (its) business typically grows in the mid-single digits. When real estate activity starts to pick up, we could see a path to start growing towards the high single digits,” he added. Shares of Sherwin-Williams have risen 26.4% in the past three months. Its shares have gained nearly 20.1% so far this year. Of the 30 analysts covering the stock, 16 have a buy or overweight rating, 12 have a hold rating and two have a sell rating. Sherwin-Williams’ average price target is $375.59, with a potential upside of 0.1%, according to FactSet data. —CNBC’s Jim Cramer contributed to this report.
