Add growth names like Meta and Alphabet to capture upside potential - Aureus CEO
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Money manager Kari Firestone said Friday that she has added Meta Platforms (NASDAQ:META) and Alphabet (NASDAQ:GOOG) (NASDAQ:GOOGL), along with few other stocks, to create a balanced portfolio that plays the market "on both sides" of the "tug of war" of sentiment that has dominated trading lately.
Speaking to CNBC, the Aureus Asset Management chairman and CEO reported that she also holds defensive names that have performed well in the current difficult environment. However, she added that investors need growth names in their portfolio to take advantage of the market's upside potential.
For GOOGL and META specifically, Firestone said they were "just so cheap they become undeniably attractive," suggesting that investors look for growth names who see a sharp drop in their share price, giving them an attractive valuation. As a smaller name in that category, she listed Align Technology (ALGN).
"We think it's important to have sides in both the growth camp and, quote, value," she said.
As an example, Firestone pointed to situations when the market sees a massive one-day advance. "You would have had a terrible time getting close to that market gain if you only owned, you know, energy stocks, big health care names and consumer staples," she explained.
In terms of specific defensive names, Firestone spotlighted O'Reilly Automotive (ORLY), Waste Connections (WCN) and UnitedHealth (UNH).
Turning to other parts of the financial market, Firestone clarified that she remains skeptical of crypto and has not invested in the sector, saying that she has yet to see an economic case for the asset class.
Asked about the Microsoft (MSFT) and Activision Blizzard (ATVI) deal, the Aureus CEO, who said the fund owns MSFT in its portfolio, contended that investors may think Microsoft is better off without the $69B acquisition rather than fighting with regulators for the next one or two years.
For more on META's long-term prospects, see why Seeking Alpha contributor Nexus Research thinks that the firm's Reels offering "may not pay off until 2024."