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American consumers to return with ‘revenge buying’ in second half of the year: Wall Street Alliance Group

In this article:
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Aadil Zaman, Wall Street Alliance Group Partner, joins Yahoo Finance to discuss the outlook on the market, inflation concerns, and hidden gems in the market.

Video Transcript

ALEXIS CHRISTOFOROUS: Want to stick with the markets now and bring in Aadil Zaman, partner at Wall Street Alliance Group. Aadil, thanks so much for being with us. Look, we got this inflation report out today, the PPI Index. It's running hot on the heels of the Consumer Price Index, also running hot. And if you look at the core food and energy prices, also high, these are things the Fed is looking at. They started their meeting today. What are your expectations for this Federal Reserve meeting tomorrow?

AADIL ZAMAN: Great to be with you, Alexis. So you're absolutely right. Inflation is running hot. Look at corn prices. They are up almost like 90% year over year. And we feel that inflation is here to stay, but that's a problem for tomorrow, because right now, the Federal Reserve is focused on the theme that it's transitory. And they're going to continue to be accommodative.

What was very interesting in the market right now, is if you look at the stock of Amazon and you look at the stock of Alphabet, that tells a very interesting story. Amazon year to date is relatively slightly up, not doing that well relatively speaking, because it's perceived to be a stock which has benefited from stay at home. Alphabet, on the other hand, is doing extremely well. Stock's up more than 35% because it's perceived to be a stock that is benefiting from the reopening.

And that speaks to a broader theme in the market where stay at home stocks are out of vogue and reopening stocks are doing extremely well. So we feel that at this present moment, investors should stick with the trend and invest where the trend is. But at the same time, look for opportunities in certain sectors that are out of favor where they could buy stocks on the cheap.

KRISTIN MYERS: So where are some of those opportunities as you're seeing them? If you have any specific stocks that you might want to mention.

Sure, you know, one of the things that we are seeing is that the American consumer, as you know, has a ferocious appetite, which has been deprived during the pandemic. And because they couldn't spend on things that they normally like to spend on. Parallel to that, personal savings rates went up. And in addition to that, credit card debt declined.

So we feel that in the second half of this year, the American consumer is going to come back and there's going to be something called revenge buying. And it's going to help certain sectors, for example, the restaurant industry. And after the Spanish flu ended, people flocked to restaurants. And we feel that we are going to see something similar take steam now. And we think that certain specific stocks in the restaurant industry are positioned to do extremely well.

ALEXIS CHRISTOFOROUS: I like that, revenge, what'd you say? Revenge buying. OK, so then where else are you seeing opportunities right now? What sectors do you think might lead the rebound? I mean, we're seeing energy taking off today. A lot of that is because of the heat wave, that dangerous heat wave taking place out on the West Coast, sending natural gas and other energy prices higher. But what do you feel about that sector at the moment?

AADIL ZAMAN: Energy, we think that energy, there's an increasing demand, because the economy is recovering. And there's, energy has been underperforming the market for a very long time. And the supply is limited, because OPEC's limiting their production. On top of that, companies are moving towards more clean energy, environmentally conscious, so supply is limited.

But Alexis, we are finding some hidden gems in areas where the market is not paying any emphasis right now. So for example, the biotech sector has been underperforming the market, but we at Wall Street Alliance Group do wealth management for a lot of physicians, and I was talking to a client of mine the other day who was telling me that cancer is going to overtake cardiovascular disease as the leading killer in the developed world. So within the biotech space, we see some specific opportunities related to cancer treatment.

KRISTIN MYERS: I'm curious to know, and I have to ask you about this, just because we've been talking about it every single day, where you stand right now on the meme stocks. We just heard Jared Blikre updating us about AMC. A lot of red on that chart that he had pulled up for us. But how are you talking to your clients about some of these meme stocks, and even about cryptocurrency? We've just seen so much volatility in that space. But if you ignore it, you have to say that there are, you're leaving some money on the table if you pretend they don't exist at all.

AADIL ZAMAN: Yeah. You know, great point, Kristin. So the meme stocks, we feel have a lot of entertainment value, but as far as long-term portfolio is concerned, there are so many opportunities out there. Same with crypto. I mean, we feel that there's a lot of risk in that space, and we are seeing other opportunities. Like for example, to name a company, one of the things that is happening right now is that in the field of cancer, for example, one of the things that's going on is the Holy Grail in early cancer detection is something called a liquid biopsy.

Where eventually, we'll be able to go get a physical done, they'll do a blood test, and they'll be able to tell, screen for multiple cancers, which currently require invasive procedures. And this type of early detection will not only save lives, but it's also going to save a lot of downstream costs that come with treating cancer patients. So one of the companies working on bringing this type of a liquid biopsy to patients is a company called Exact Sciences, which happens to be from its peak this year, down about 20%. So we are seeing those type of opportunities better as compared to focusing on the meme stocks.

ALEXIS CHRISTOFOROUS: All right, we're going to have to leave it there. Aadil Zaman, partner at Wall Street Alliance Group. Good to see you today.