‘Peloton is here to stay’, despite economic reopening: Momentum’s Allan Boomer
Yahoo Finance’s Akiko Fujita and Zack Guzman discuss the market action and outlook with Allan Boomer, Momentum Advisors Managing Partner.
Video Transcript
ZACK GUZMAN: You're looking at some stocks that maybe have not rallied since the beginning of the year, some opportunities out there people might be overlooking. So hit me with maybe the most exciting one you have for us.
ALLAN BOOMER: Well, first of all, thanks for having me. None of my stock picks are all that exciting. Everything that I'm interested in today is a value play. And you know, Warren Buffett just bought into Verizon recently and the stock has gone down since then you know. And what I'm getting at is that these aren't exciting opportunities. These are kind of companies that simply are being overlooked by the market, you know, companies that have really strong dividend yields.
And in a world where interest rates are very low, where the growth stocks are starting to stumble a little bit, you know, I think it boils down to valuation. You know, so the companies that we like, we like Verizon and you know, Citizen Financial, and companies that again, have-- trade at really low valuations and also pay really attractive dividends.
AKIKO FUJITA: Yeah, there's some exciting names in there, right. You've got retailers like Target of course, which has gone through incredible transformation over the last year. But even Activision Blizzard, we've talked so much about gaming companies seeing big growth. What do you say to those investors who are saying, look, I understand the value play right now, but if I'm investing in the long term isn't growth where you should be?
ALLAN BOOMER: Yeah, it all depends, right. You know, I think value is over time, I mean, if you think about the last few years, value stocks have underperformed. And that trend has been a multi-year trend. Growth stocks have really been in vogue but you're really starting to see a number of companies that are trading at absolutely just ridiculous valuations.
And that's on the high end and on the low end. You know, the value stocks that I'm referencing you know, like a McKesson, I mean, these companies are trading at half the valuation of the overall stock market. And that's absurd when you also have companies that are trading at 1,000 times earnings. You know, so I just think that again, yes, growth has been the trade for the last few years but there's something to be said about companies that can continue to produce earnings and pay out dividends. And that's kind of where my money is today.
ZACK GUZMAN: There is one stock though on the growth side that you did highlight, Peloton. And that's an interesting one because so much of kind of the emphasis on value here has been on kind of the reopening side and people going back to normal. And I'm not sure if riding a bike in your living room might be what that is envisioned here. But talk to me about that one because it seems like a lot of that value trade does stem from getting back out there.
ALLAN BOOMER: Yeah, Peloton is just one of these companies that I think is unique. Like I'm not interested in Peloton because it's a growth stock or a value stock. I just like Peloton because I believe that this company has really done an amazing job at creating really passionate customers. And the customers are so passionate, they're promoting this company and attracting more and more customers. And I've just never seen anything like it, right. And so I think Peloton is here to stay.
You know, when I think about the reopening of the economy, yes, people will go back into gyms but I think there's a lot of folks that have become just lovers of their Peloton bikes. I mean, Peloton has recently announced rides with people like you know, you've got a Megan Thee Stallion ride, you've got a Beyoncé ride. You've got all of these different things that have really emboldened the Peloton user to be connected well beyond the bike.
Like it's a community, like these folks are talking offline. They're planning trips and spending time together. Like this is really not just a fitness company, it's really a community. And I think that's why I'm really big on Peloton.
AKIKO FUJITA: You brought up an interesting point here on a debate we've been having about what's actually considered sort of a reopening stock. You look at a name like, I mean, Peloton has really seen growth because of the restrictions in place and yet, the case seems to be that we're going back to a hybrid if we're talking specifically about gyms. How do you balance those two factors when you look at where to invest, put the value play aside, but when you think about real growth opportunities when the full reopening happens, how are you looking at the different variables?
ALLAN BOOMER: Yeah, it's a great point. I just think you have to play it, you have to be diversified. I don't think anyone should position their portfolio completely towards a reopening or a closure really. Like you want some things like you mentioned, like I own value and I own growth. I own some reopening stocks, I own some you know, some non reopening stocks I guess you could say.
And you know, the fact of the matter is our economy still is not reopened even though we're looking to get it reopened. The stimulus that was just announced is just starting to-- it hasn't started to trickle into the economy just yet. And so you want to be balanced. I think you want to have some stocks that again, will do well even in the event that the economy takes a little bit longer to reopen.
