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Why thematic stocks like Apple, Disney, Meta make sense right now

Yahoo Finance Live’s Brian Sozzi discusses a Wall Street note explaining why stocks like Apple, Disney, and Meta are still compelling for investors.

Video Transcript


JULIE HYMAN: It has been a volatile year in the markets, to say the least. A new way to play might be to get back to thematic investing, that's according to a new note from Citigroup, which outlines which stocks might be worth buying in this environment. And that's where we find Sozzi's Take today.

BRIAN SOZZI: Yeah, I got my hands on that note. And you can read really our take on the whole entire note in today's "Morning Brief" newsletter. But look, a couple of good points here brought up by Scott Chronert, I believe he's coming on with us later in the week over at Citi, on why thematic investing could be a way to look or a way to go right now.

A couple of things. First, Chronert says Fed actions are well understood. That is very much correct. We generally know what the Fed is going to do with rates looking into the back half of the year. Next, economic growth has slowed. Again, something we all know. And then last but not least, there are a lot of good stocks out there trading at very compelling valuations.

So you put all that together, it might be worth or a good time to pull back from this day-to-day fray of what the Fed might do, what might they not do, and inflation, market volatility, and looks for some longer-term themes. Some longer term themes, here's what Citi called out, automation, other types of technology type plays, consumer, a good brand.

And companies that fit within that matrix are Apple, Meta, and Nvidia. Now, again, I put that note out before this Nvidia warning. But nonetheless, Nvidia is seen as a good brand playing in the AI movement. Amazon, Microsoft, Disney, which will report earnings, I believe, later this week. Google, Netflix, and General Motors. A lot of those companies, of course, are tech names. But again, tech names trading at valuations that are some of the cheapest they have seen in recent years.

My take is this, it is-- there are more important things out there than the Federal Reserve. And there I am, I think this might be the first time I actually had somebody join me visually on my take. You see Jerome out there.

JULIE HYMAN: J doesn't look too happy about you take.

BRIAN SOZZI: Well, he shouldn't really be happy. But nonetheless, look, there's more to investing than what the Federal Reserve is going to do in rates.

JULIE HYMAN: Of course.

BRIAN SOZZI: And it is important when you see themes like this put out by Citi, consider them. You know, they're not the end all, be all. But he is right to call out automation and companies with good brands as, over time, likely to do well and relatively outperform the broader market.

BRAD SMITH: OK, so then that raises the question of, if these are the themes-- automation, innovation-- why doesn't that push people back to an ARKK in that case, too?

BRIAN SOZZI: Well, because ARKK is a company-- is chock full of names that are not making any money. Roku. I mean, Roku is also coming off a disastrous quarter. Teladoc, terrible quarters here. A lot of these companies that Chronert mentioned are cash cows-- Apple, Meta, Nvidia-- with some form of predictability to their business.

BRAD SMITH: All right, fair point.