Don’t forget ‘beaten down names’ when looking to invest: Strategist

Yahoo Finance’s Alexis Christoforous and Brian Sozzi discuss the latest market moves with Crossmark Global Investments Chief Market Strategist Victoria Fernandez.

Video Transcript

ALEXIS CHRISTOFOROUS: Our top story today, employers added 1.8 million jobs in July. The unemployment rate fell to 10.2%, so far recovering less than half of the jobs lost due to the coronavirus pandemic.

I want to bring in Victoria Fernandez now. She is chief market strategist at cross Crossmark Global Investments. Victoria, good morning to you. What was your reaction to the jobs report today?

VICTORIA FERNANDEZ: You know, Alexis, there was such a wide band of what the expectations were for this number that I wasn't exactly sure where we were going to fall. I thought we might actually come in a little bit short of the 1 and 1/2 million average expectation. I was glad to see that it was a little bit higher.

Kind of digging into the numbers, I know you guys were talking about it earlier. That permanent-job-loss number stayed somewhat steady, which I guess if you're looking for a silver lining in the fact that we have 16 million people out of work, that would probably be it. 1.3 million of those jobs were temporary workers going back to work, so that gives you a little bit of hope that some of the businesses are starting to open up again.

Obviously we need to do better and better and better each month and each week on the initial jobless claims. We want to see those numbers fall, which we did yesterday as well. So I think it's a positive number, but we still have a long ways to go. And obviously there's so many things that fit into this, like the stimulus package they're working on in Washington.

BRIAN SOZZI: Victoria, what do you think this report-- this jobs report means for corporate America specifically in terms of sales growth and earnings growth as we head into the fall?

VICTORIA FERNANDEZ: You know, my concern right now in listening to the earnings calls as we're kind of wrapping up this second-quarter earnings season is really what employers are going to do with their workforce going forward. With so much of the work-from-home phenomenon that is going on at this point in time, I'm wondering if companies are really going to start trying to find ways they can cut costs, find ways to trim their workforce, find the most productive way that they can do more with less. And in that, I think we have to be concerned that we're not going to get back all of the jobs that we lost, not just because there's companies that will close down permanently but because I think a lot of businesses will find ways to use this to cut costs to trim line what's going on within their firm.

I think when it looks at an investor's point of view, the margins will be better probably in the next coming quarters in relation to this component. But for the individuals and for the consumption and the demand component of our economy, that's where we'll take a hit.

ALEXIS CHRISTOFOROUS: So if businesses are going to feel a little less confident and consumers might feel a little less confident, where do you put money to work in the market right now, Victoria?

VICTORIA FERNANDEZ: You know, we've had this group of high-flying tech stocks for quite a while, and we all have talked about that before. So what we're doing is actually trimming some of those names. Lately, we've trimmed Apple. We've trimmed Microsoft. They still are holdings in our portfolio. We still think they're going to continue to move higher as we go through COVID and work from home becomes more of a commonplace for many businesses, but you can trim those names and find other areas to invest.

We're looking at some stable names like a Walmart because of Walmart Plus. Yes, I know it's being delayed a little bit. The news came out. But still, I think that's a great advantage for Walmart going forward.

We're looking at things that maybe have come about because of COVID but we think are longer-term trends. So McCormick is actually a name that we put in the portfolio. More people cooking from home, and I think that will continue after restaurants begin to open up.

But you can't forget some of the names that have been beaten down a little bit like financials. JPMorgan is actually a name that we've added to as well in our portfolio. You've got to find those names that have the strong balance sheets that can withstand the volatility we're going to see through COVID and through this earnings season and next earnings season and make those more foundational holdings in your portfolio.

BRIAN SOZZI: Victoria, real quickly, do you like Uber?

VICTORIA FERNANDEZ: We actually do not own Uber in our portfolio, and I think the issues that we've seen with COVID have actually just destroyed some of those numbers. I think the ridership was down, what, 70%? 73% is what we heard in their earnings.

I will say, however, that on the food delivery, I mean, I had never used Uber Eats before COVID-19 shutdowns came into place, and now I think I use it probably two to three times a week. Maybe that continues going forward. But it's not a large enough part of their business at this point in time I think to really make it a stock that we want to add right now. We could later depending on how that shifts-- that revenue shifts for them. But for now, we don't own it.