David Trainer, the CEO of New Constructs, shared with viewers of CNBC's "Trading Nation" three stocks he would buy and three stocks he would avoid.
When it comes to the stocks Trainer wants to buy, he's looking at the value-oriented names that haven't participated in the big move higher.
He's bullish on General Motors Company (NYSE: GM), Hershey Co (NYSE: HSY) and Intel Corporation (NASDAQ: INTC). These stocks are trading as their profits will permanently decline by a significant amount, explained Trainer. They're industry leaders, with high returns on invested capital and they have been cash flow machines.
On the other hand, he would sell three stocks that have crazy valuations and have never been profitable. He also thinks they may never going to be profitable. He would be a seller of Beyond Meat Inc (NASDAQ: BYND), Wayfair Inc (NYSE: W) and Peloton Interactive Inc (NASDAQ: PTON).
Trainer believes they have no competitive advantage, except a first-mover advantage. Their competition is large and growing and the entry barriers are relatively low. If Kroger Co (NYSE: KR) is going to have its own alternative meat, why would it give its shelf space to the competitor, asked Trainer.
Trainer is also bearish on Tesla Inc (NASDAQ: TSLA). He finds it surprising it will be in the S&P 500 index. He thinks the company is losing market share to competition in Europe and it's behind schedule in building the Gigafactories. Trainer believes the stock could drop by 50% and 70%.
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