Episode summary
Investors should use the volatility to add to their portfolios, says Hightower's Stephanie Link
Summary
Stephanie Link argued that the recent pullback in stocks is a buying opportunity, not a warning sign. She said markets are moving past the election and into a seasonally stronger stretch, while lower rates, broadening participation outside technology, and still-strong earnings all support equities. She pointed to earnings growth running up 38% and revenues up about 11% so far, saying investors should use volatility to add across sectors rather than step aside.
She was especially constructive on large-cap tech names that have lagged despite strong fundamentals. Link said Nvidia and Broadcom have underperformed even though she thinks they can earn close to $20 to $25 a share over the next year and a half, implying valuations around 15 to 16 times earnings. She also highlighted Micron, saying the group has strong balance sheets and good visibility, unlike some heavily indebted names in the cloud infrastructure space. In cybersecurity, she said Zscaler remains a laggard, trading at roughly a 50% discount to its historical EV-to-sales multiple, while revenue and deferred revenue growth remain solid.
Key takeaways
- Link said the post-election setup and seasonal trends favor equities, and she wants investors to add on volatility rather than sell into it.
- She noted the market has broadened beyond technology, with seven other S&P 500 sectors up more than 6%.
- Link said Nvidia and Broadcom remain undervalued to her despite strong results, and she sees them earning roughly $20 to $25 a share over the next year and a half.
- She said Micron also looks attractive because it has a strong balance sheet and should benefit from the same AI-led demand cycle.
- Link said Zscaler trades at about a 50% discount to its historical EV-to-sales ratio even as revenue metrics keep growing.
- She contrasted companies with strong balance sheets against debt-laden cloud names, saying that is part of why the former look like buys on sale.
Notable quotes
“I THINK THAT WE'RE GETTING THROUGH KIND OF THE VOLATILE TIMES WE GET THROUGH THE ELECTIONS”
“I THINK YOU WANT TO USE THE VOLATILITY TO BE ADDING”
“I THINK YOU CAN FIND THINGS UNDER THE SURFACE”
“I THINK THERE'S REAL VALUE HERE”
“I THINK CYBERSECURITY IS BIGGER THAN AI BECAUSE AI IS NOT SECURE”
How the episode opens
The day's notable upgrades and downgrades. Joe, I'll send things back over to you guys. — Okay, good. All right. Thanks, tom. — You got it. — Okay. See you. Becky.
All right, now it is time for a check on the markets this morning. Joining us for that is Stephanie Link. She is Hightower, chief investment strategist also a cnbc contributor.
And steph, we are heading into the busiest earnings week of the season. This is peak earnings this week. You've been watching what we've been seeing taking all of this in and kind of keeping in mind what the ten years doing.
You think this is actually an opportunity for stocks.
Oh I. — Do becky.
I think that we're getting through kind of the volatile times we get through the elections. And then you have seasonally a really strong period of time for the equity markets. And at the same time, as you mentioned, I mean, last week, a lot happened.
The ten year fell at one point, 41 basis points from 5.36 to 4.95. Today we're at 4.98. The market is broadening out.
I know technology got hit really hard last week and month to date, but you've had seven other sectors that have actually participated and that are up over 6%. So you're seeing a broadening out, which is very healthy. And then I thought last week we got space x and we had meta and we're starting to see monetization.
And I think you're going to see that this week with the other names that are going to be reporting as well. And then by the way, earnings are running. I know we're only 25% of the way in, but earnings are running up 38% and revenues are running up about 11%.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- market volatility
- portfolio strategy
- earnings season takeaways
- market trends
- stock investing
Companies and tickers mentioned
- Hightower
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Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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