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I was asked recently for an overview of my reopening investment philosophy. This isn't really the easiest of things to convey. Almost as difficult as refocusing a hopefully well-diversified portfolio away from the groups thought of as "growthy" type stocks engaged in industries such as software, or internet names, and toward not just traditional "value" names, but the right kind of names more apt to benefit from a growing, if not broadly better performing economy.
What does mean to me?
While I do maintain exposure to high-tech stocks, especially the semiconductors, and while I do have some exposure to the retail space, I think there's something more important to performing well as an investor during this broadening national and then global reopening. It will be not to focus on the pent-up demand of the consumer, which will be subject to both wage growth as well as inflationary pressures, but more on the benefactors of such inflationary pressures as the powers that be keep the nation awash in liquid fiat.
In other words, I am more focused on the production, manufacture and transport of materials raw, finished and refined than ever before.
1) The Walt Disney Company (DIS) -- This is the ultimate reopening stock. From movies, to vacation destinations to potentially cruises, to stay-at-home entertainment should there be regional failures to reopen uniformly.
2) Simon Property Group (SPG) -- The mall king. What do you want to do once you are fully vaccinated? Well, speaking just for me, I want to go inside of a store. Really, that's about it. COVID kicked my tail last year, and I just want to go inside a store -- and malls allow the space for one to move to where the crowds aren't if one gets uncomfortable. SPG also pays a 4.2% dividend yield.
3 Southwest Airlines (LUV) -- Why Southwest? Because I think I need an airline, and this one is strictly domestic. No reliance on the ability of other nations to tamp down the viral infection and get their economies open.
4) United Parcel Service (UPS) -- Highly efficient CEO meets built-in pricing power as delivery services have never been more important. I don't see the gains made during the pandemic for this name or its key rival as transitory. Investors could choose FedEx (FDX) instead. I like and am long both.
5) Union Pacific (UNP) -- My thought is that every investor needs to have exposure to the rails as that is how commodities in large quantities are transported domestically. I also like Berkshire Hathaway (BRK.B) for this (BNSF in addition to all of Berkshire's other businesses), but that stock is much further along techncially, so I swapped out of BRK.B and into UNP.
6) Freeport-McMoRan (FCX) -- Here's where the investor gains exposure to production of both copper (primarily) and gold. I don't see demand for copper tailing off any time soon. FCX trades at just 16 times forward-looking earnings estimates. Investors looking for a miner with a similar but in-reverse focus on gold over copper could take a look at Barrick Gold (GOLD) .
7) Alcoa (AA) -- A similar play to Freeport, just with a focus on aluminum, alumina, and bauxite, providing rolled and cast product for global clientele. AA still trades at less than 10 times forward-looking earnings.
8 Exxon Mobil (XOM) -- XOM really fills all of an investor's needs for old-world energy exposure, spanning from exploration to production all the way down to retailing. It also pays shareholders a dividend yield of 5.8%. Chevron (CVX) is also a very worthy pick here, as might be BP (BP) . All three appear ready to break out technically. BP might be the best pick out of all of big oil from an ESG perspective, in my opinion.
9) Wells Fargo (WFC) -- I think investors will need at least a bit of exposure to the banking space. With Well Fargo you will get a more highly scrutinized bank (due to past issues) that probably will focus less on investment banking and trading than key competitors and rely more upon traditional banking services as inflation forces interest rates higher. Plus I think the new CEO is really good.
10) United Rentals (URI) -- Provides construction industry equipment through almost 1200 locations across North America and Europe. You can think Caterpillar (CAT) or even Deere (DE) but why buy when you can rent? This stock has never failed me whenever presidents and legislators talk about putting together infrastructure spending packages.
