Companies beating estimates ‘bodes well’ for the rest of earnings season: WealthWise Financial CEO

WealthWise Financial CEO Loreen Gilbert joins Yahoo Finance Live to discuss the latest market action as earnings season continues.

Video Transcript

- Let's bring on our next guest here in Loreen Gilbert, WealthWise Financial CEO, joining us now. Loreen, thanks, again, for taking the time here. Just your estimation of how earnings seasons going on so far here, again, kind of early, I guess, in the innings, but what's your take?

LOREEN GILBERT: Well, we've seen so far 86% of the companies reporting beating our expectations, so that bodes well for the rest of the earnings season. And it's an exciting week this week, where we have both quite a bit of technology companies, as well as industrial companies reporting. And it'll be interesting to see the difference between the two and where are we heading as far as are we going to continue with kind of a stimulus play on the lockdowns and technology being the winner. Or are we shifting over, as I would say, towards industrials and the idea of a reopening story? So I'd say, start looking for indications of that continued rotation.

- Loreen, when you look at the rally over the last few weeks, certainly, the focus has been on the expected spending coming from the Biden administration. We're already seeing some pushback from Republican lawmakers, who say they're not going to sign on board with that $1.9 trillion stimulus package. How much of that do you think is the disappointment that could potentially come from that? How much of that do you think will actually materialize in the markets? Because we are so in the thick of earnings season right now, do you anticipate any kind of pullback if, in fact, the stimulus bill is not seen as passing in its original form?

LOREEN GILBERT: Right. Well, I see. I think that's why you've had technology stocks rallying once again. The concern that maybe people need to be more defensive. Are we going to have enough spent to where we truly are in that recovery mode?

But I think given the fact that Yellen is in charge of the Treasury, we know her viewpoint on fiscal spending. I think we're going to see strong fiscal spending continuing, and then, of course, the question is, how much is enough? And when can we start focusing not only on the shorter term, which includes direct payments and unemployment benefits, but on the longer term recovery play, which would be truly infrastructure? Digital infrastructure, as well as traditional infrastructure, is needed in the United States. And I think there'll be a push there with fiscal spending.

- On the earnings front, too, I mean, obviously, as we continue to chat overall indices trading at record highs, a lot of people making quite a bit about valuations being stretched here and wanting to see earnings growth kind of match up with that. So the expectations have been there that we'll see that in 2021 eventually, but I guess it kind of sets up quite a bit of hype here to be met by these earnings reports. So maybe what do you make of the estimation there that companies are going to have to deliver, as we've seen so far, pretty big beats to see their stock rise in value?

LOREEN GILBERT: Well, a lot of it is already priced in with some of these stocks. So what I'm telling investors to think about is, if you're holding some of these stocks, you may want to continue holding them. But when you're really looking for where do you go from here and what are some of the opportunities, it is looking at a valuation story.

We can't just ignore valuations altogether when we're looking at going forward and what will your realization be on the stock price. So it is time for some sensibility, I would say, with valuations, but I wouldn't give up some of those momentum plays that continue to deliver. So that would be the story that I would say is some balance between the two.

- Loreen, when you talk about valuation concerns, what particular names are you talking about?

LOREEN GILBERT: Well, this week, we're going to hear from Tesla, and Tesla has continued to perform in the stock price. And they are the future of so many things. And when you look at what they have on the horizon, we're going to hear more about solar, renewables, and that certainly is a secular trend that we see.

So they're in line with the secular trend. But when you look at PE ratios, it's stratospheric. So then you have to say, how is that stock going to continue to rise?

- Loreen Gilberg, WealthWise Financial CEO. It's good to talk to you today. Appreciate you stopping by.