Latest news with #sectors
Yahoo
20 hours ago
- Business
- Yahoo
Market valuation looks 'stretched,' strategist says
CFRA Research chief investment strategist Sam Stovall joins Market Domination with Josh Lipton to discuss which sectors in which he recommends investing and whether the market is overvalued right now. To watch more expert insights and analysis on the latest market action, check out more Market Domination. Speaking of sectors, Sam, where where do I want to be overweight, what do I want to avoid here? Well, we're still overweight the communication services and the information technology sectors. Um, basically what I like to do is is focus on those groups that were beaten up during the market decline because they tend to end up being the out performers, uh, in the recovery period. Uh, so through July 28th, which was the recent high while the S&P was up 28%, the three worst performing sectors during the decline, communication services, consumer discretionary and tech, were up 37%, and the 10 worst performing sub-industries were up 44%, and they included independent power producers, semiconductors, diversified financial services. I was speaking to another strategist, Sam. It was interesting. She she told me she was getting kind of uneasy after this bounce off of the April low and one reason, not surprisingly, Sam, she brought up her unease was valuation, and I'm just curious how you would broadly characterize valuations here. Are we are we looking stretched, Sam? I I think we are looking a bit stretched. Uh, if you look at a 20-year average, we're trading at two standard deviations above the mean on the S&P 500 based on forward 12-month earnings. If you shorten that to a 10-year average, then we're trading at one standard deviation above, but as a lot of tech analysts like to say, well, so much has changed that really you probably should only be looking at a five-year average, and in that case, we are within a standard deviation. So I would tend to say that until we find other areas to be much more attractive or indeed we it the market is convinced that we are headed for a recession, I think investors are gonna like white water rafting, let the market take it where, uh, take them where it wants to go. They're going to stick with the growth areas for now. Sam, always great to have you on the show. Thank you, sir. Thanks, Josh. Related Videos Video game sector: Tariff impacts, GTA 6 release, EA outlook 2 reasons Waller is 'leading the pack' for Fed chair candidate Why quality non-US stocks are the 'cream of the crop' Fed's Mary Daly says it's time to cut rates Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Forbes
04-08-2025
- Business
- Forbes
The Digital Phoenix Effect: Platforms Improving Legacy Businesses
Traditional companies are building internal multi-sided platforms to solve recurring business problems, including inefficient transactions, innovation bottlenecks, evolving customer demands, underutilized data, and poor strategic insights. For years, we've been captivated by the rise of super-platforms—Amazon, Uber, Spotify—that have reshaped entire industries. These stories, driven by scale, speed, and digital-native bravado, have come to symbolize the platform revolution. But while headlines remain obsessed with Silicon Valley, the fundamental transformation is happening elsewhere: in the quiet, steady reinvention of legacy companies across sectors and geographies. Take John Deere, Siemens, and AXA. These companies are legacy firms focused on tractors, industrial technology, and insurance are rarely associated with contemporary disruption. Yet each of these traditional companies is reimagining its core business through the introduction of multi-sided platforms. That's where Daniel Trabucchi and Tommaso Buganza come in. As researchers and long-time collaborators, they've spent years studying how legacy firms can harness the power of platform strategies—not by mimicking digital-native unicorns, but by activating the untapped potential hidden in their existing assets. Their new book, The Digital Phoenix Effect: How Legacy Companies Can Lead the Platform Revolution Without Burning Everything Down, explores exactly that: how legacy companies can use platform thinking to lead the next wave of innovation on their terms—rising from within, without having to burn it all down to start anew. Revelations from the S&P 500 In a recent large-scale study, Trabucchi and Buganza examined all S&P 500 companies and their platform-related initiatives. They identified more than 800 initiatives across the S&P 500 that described themselves as platform efforts. Yet, when assessed through a stricter lens—requiring both multi-sided interactions and the presence of self-reinforcing network effects that enable growth at minimal marginal cost—only 140 stood up to scrutiny. This refined selection revealed a powerful truth: platform thinking is not exclusive to tech-native giants. On the contrary, it's gaining ground as a strategic tool for transformation in industries such as manufacturing, finance, energy, and healthcare. Their research discovered that non-platform companies are deploying platforms to quietly transform internal processes to solve five common business problems: missing or inefficient transactions, innovation bottlenecks, evolving customer demands, underutilized data, and poor strategic insights. Take Dish Media. Dish didn't adopt platform thinking to reinvent its core offering, but to improve how it advertises. With millions of set-top boxes already in place, Dish turned this idle asset into a data engine. Advertisers now benefit from precise audience targeting, while viewers passively generate behavioral insights. The more viewers engage, the more value advertisers receive—a classic unidirectional network effect. It's a transformation that didn't create a new service, but made an existing one exponentially more innovative and more competitive. Kraft Heinz sought to make its internal R&D and marketing functions faster, sharper, and more effective. With Kraft-O-Matic, a platform built on historical sales and consumer data, teams can now anticipate trends and respond in real time. Existing customers become silent contributors of insight, while internal decision-making gets clearer and faster. It's platform thinking applied not to wow the market, but to quietly, powerfully upgrade how innovation happens behind the scenes. With rising pressure to speed up drug discovery, Merck faced a familiar but thorny challenge: innovation bottlenecks. Rather than trying to develop every new tool internally—which would have been slow, risky, and expensive—Merck turned to its ecosystem. By opening its research infrastructure to third-party developers, the company transformed its internal scientific know-how into a platform-ready idle asset. What's particularly powerful here is the role shift: external developers, once seen as vendors or suppliers, became clients of the platform, building tools, contributing knowledge, and benefiting from direct access to Merck's internal environment. It's a win-win, where mutual value—and innovation—scale on both sides. A very different challenge was confronting Intuit. The financial software giant recognized that evolving customer demands were outpacing what even their most intuitive products could handle. Users needed expert support—but scaling in-house services wasn't a fit for a software business. So instead of trying to own the solution end-to-end, Intuit reframed the opportunity. It opened its platform to certified tax and bookkeeping professionals—onboarding them not as external partners, but as platform customers. Through TurboTax Live and QuickBooks Live, these professionals connect directly with users inside the software experience. The result? Customers gain human guidance; experts gain new business; and Intuit scales a complex, high-touch service without changing its core model. Introducing the Platform Thinking Framework These insights gave rise to a practical framework to help companies apply platform thinking to solve recurring business problems. All of these findings and tools are captured in Daniel and Tommaso's new book: The Digital Phoenix Effect: How Legacy Companies Can Lead the Platform Revolution Without Burning Everything Down. This is a guide for legacy firms to rise from their ashes by deploying internal multi-sided platforms.
Yahoo
31-07-2025
- Business
- Yahoo
UBS reveals its latest top picks after July update
-- UBS has released its latest list of top stock picks following the July update, maintaining a neutral stance on U.S. equities overall but favoring specific sectors and names expected to outperform their respective benchmarks over the next 12 months. The bank continues to rate communication services, financials, health care, information technology, and utilities as "Attractive" sectors, while its latest portfolio changes include a real estate swap. Specifically, UBS removed American Tower (NYSE:AMT) and added CBRE Group (NYSE:CBRE) to the list, citing growth headwinds at the former while highlighting CBRE's 'extremely efficient and high free cash flow generative business model, a strong global presence, and an excellent balance sheet.' In its updated lineup, UBS reiterated a number of existing Most Preferred names. In industrials, Boeing (NYSE:BA) was reaffirmed on expectations for production and free cash flow improvements under new leadership, calling shares 'attractively valued on a price to normalized free cash flow basis.' In healthcare, the bank maintained its preference for Eli Lilly (NYSE:LLY), citing 'highly visible growth over the remainer of this decade.' Abbott Laboratories (NYSE:ABT) and DexCom (NASDAQ:DXCM) were also highlighted as the bank's Most Preferred stocks within the sector. In information technology, the bank favors Microsoft (NASDAQ:MSFT), Micron Technology (NASDAQ:MU), and Nvidia (NASDAQ:NVDA). UBS describes Microsoft as offering 'an attractive mix of offense (growth, share gains, AI) and defense (balance sheet, margins, annuitized profit pools).' Micron is backed by improved memory industry trends, while Nvidia continues to benefit from strong demand in AI infrastructure. 'We believe recent fears over the strucutral demand for AI compute has created an attractive entry point for NVDA shares,' the strategist said. Communication services picks include Meta Platforms (NASDAQ:META), which UBS expects will compound earnings growth on the back of high user engagement and monetization opportunities across Instagram, Reels, and WhatsApp. Within financials, UBS names Capital One (NYSE:COF), Wells Fargo, and KKR & Co (NYSE:KKR). Capital One is supported by its tech-driven underwriting and the recent Discover acquisition, while KKR is seen as well-positioned to benefit from an eventual recovery in capital markets activity. Utilities top picks feature Entergy (NYSE:ETR), Vistra, and NRG Energy (NYSE:NRG). UBS notes Entergy's low customer rates and accelerating Gulf Coast electricity demand, while NRG is praised for its exposure to AI-related data center growth and plans to expand natural gas-fired generation. In energy, UBS includes ConocoPhillips (NYSE:COP), Chevron (NYSE:CVX), Energy Transfer (NYSE:ET), Kinder Morgan (NYSE:KMI), MPLX (NYSE:MPLX), and Expand Energy. The firm expects stronger cash flows and shareholder returns, with some companies benefiting from rising LNG demand and merger synergies. The materials sector is represented by Air Products and Chemicals (NYSE:APD), Freeport-McMoRan (NYSE:FCX), and Martin Marietta. Freeport is favored for its copper leverage, while Air Products is undergoing a strategic reset under new leadership. In real estate, Equity Residential (NYSE:EQR) and CBRE Group are now the Most Preferred names. Consumer staples picks include Coca-Cola (NYSE:KO) and Colgate-Palmolive (NYSE:CL), while consumer discretionary names feature Home Depot (NYSE:HD), Ralph Lauren (NYSE:RL), and Life Time Group. Related articles UBS reveals its latest top picks after July update Risks Rising? Smart Money Dodged 46%+ Drawdowns on These High-Flying Names Apollo economist warns: AI bubble now bigger than 1990s tech mania Sign in to access your portfolio
Yahoo
23-07-2025
- Business
- Yahoo
Expert: 4 Types of Investments To Avoid While Trump Is in Office
One strategy for investing involves the President of the United States. Investors and analysts try to predict which companies and sectors will benefit the most from the anticipated policies of the Commander-in-Chief. Trending Now: Consider This: At the same time, some investors find value in trying to avoid investments that may not pay off with a certain person in the White House. 'I've managed portfolios through multiple presidencies, and I'm seeing a lot of investors make the same mistakes they made during Trump's first term,' said Andrew Lokenauth, a money expert from Be Fluent in Finance. 'Based on my experience, here are the key investments to avoid.' Sector-Specific ETFs According to Lokenauth, sector-specific ETFs based on campaign promises are a huge trap. 'During Trump's first term, I watched countless investors pile into energy ETFs thinking his pro-drilling stance would send oil stocks soaring,' Lokenauth said. 'Boy were they wrong — energy stocks stayed flat despite all the 'drill, baby, drill' rhetoric.' For You: Defense Stocks Defense stocks are another one on the list of those to avoid for Lokenauth. 'Sure, Trump talks tough on military spending, but I've noticed these stocks tend to perform better under Democratic presidents — counterintuitive, right? Plus, the massive defense budget is already priced in,' Lokenauth said. Chinese Stocks Per Lokenauth, Chinese tech stocks are particularly risky right now. 'From my portfolio experience, the trade war rhetoric plus tech restrictions create too much uncertainty,' he said. 'I lost about 15% on some Chinese holdings during Trump's first term before I wisened up and sold.' Environmental, Social and Governmental (ESG) Funds 'Environmental, Social and Governmental (ESG) funds are also problematic,' according to Lokenauth. 'While I personally support sustainable investing, Trump's anti-regulatory stance could gut environmental protections and create headwinds for clean energy companies. The sector dropped roughly 20% in his first year last time.' While Lokenauth said there are some types of investments to avoid while Trump is in office, he added a warning about making big investment shifts. 'And here's something most advisors won't tell you: Avoid making any major portfolio shifts based on presidential policies,' Lokenauth said. 'I've learned this lesson the hard way. The market cares way more about interest rates and corporate earnings than whoever's in the White House.' Editor's note on political coverage: GOBankingRates is nonpartisan and strives to cover all aspects of the economy objectively and present balanced reports on politically focused finance stories. You can find more coverage of this topic on More From GOBankingRates Mark Cuban Warns of 'Red Rural Recession' -- 4 States That Could Get Hit Hard Clever Ways To Save Money That Actually Work in 2025 Mark Cuban Tells Americans To Stock Up on Consumables as Trump's Tariffs Hit -- Here's What To Buy This article originally appeared on Expert: 4 Types of Investments To Avoid While Trump Is in Office
Forbes
17-07-2025
- Business
- Forbes
My Best 5 Sectors To Invest In For Q3 2025
Diversification across these sectors can help investors navigate the complex market environment ... More while positioning portfolios for potential outperformance in the coming quarter. As we approach the third quarter of 2025, investors are navigating a complex landscape shaped by evolving monetary policy, technological disruption and shifting global economic dynamics. The Federal Reserve's recent pivot toward a more accommodative stance, combined with resilient consumer spending and corporate earnings growth, has created unique opportunities across various market sectors. Understanding which industries are positioned for outperformance in the coming months requires careful analysis of both macroeconomic trends and sector-specific fundamentals. This article examines five sectors that present compelling investment opportunities for Q3 2025, based on a comprehensive analysis of current market conditions, earnings trajectories and forward-looking indicators. Each industry has been selected for its potential to deliver strong returns while offering reasonable risk-adjusted opportunities in an environment where selectivity has become increasingly crucial for portfolio performance. The State Of The Market So Far In 2025 The first half of 2025 has delivered mixed results for equity markets, with the S&P 500 posting modest gains of approximately 7% through June, while experiencing heightened volatility around tariff uncertainty, key economic data releases and Federal Reserve policy. Technology stocks have shown resilience despite concerns about AI investment sustainability, while traditional value sectors have benefited from improved economic sentiment and stabilizing interest rate expectations. Market leadership has rotated significantly compared to 2024, with energy and financial sectors emerging as unexpected outperformers, while growth stocks have faced headwinds from persistent inflation concerns. The VIX has averaged around 18 during the first half of the year, indicating elevated but manageable market anxiety. Corporate earnings have generally exceeded expectations, with S&P 500 companies reporting aggregate earnings growth of roughly 12% year-over-year through Q2 2025. How These Sectors Were Chosen The selection methodology for these five sectors combines quantitative screening with qualitative analysis of fundamental drivers and market positioning. The primary criteria included forward earnings growth projections, relative valuation metrics compared to historical averages, shifts in analyst sentiment and correlation with key macroeconomic variables expected to influence Q3 performance. Additional consideration was given to sectors demonstrating strong free cash flow generation, manageable debt levels and exposure to secular growth trends that transcend short-term economic cycles. The analysis also incorporated technical momentum indicators and institutional positioning data to identify sectors where sentiment may be overly pessimistic relative to underlying fundamentals, creating potential value opportunities for discerning investors. The Best 5 Sectors To Invest In For Q3 2025 Based on a brief analysis of current market conditions and forward-looking indicators, the following five sectors present the most compelling investment opportunities for Q3 2025: 1. Technology (Software And Cloud Services) The technology sector, particularly software and cloud services companies, presents exceptional opportunities in Q3 2025 as enterprises accelerate digital transformation initiatives and AI integration reaches practical implementation phases. Recent earnings reports from major cloud providers show revenue growth rates stabilizing around 25-30% annually, while profit margins continue to expand due to operational leverage and improved pricing power. The sector's forward price-to-earnings ratio of approximately 22x represents a significant discount to its five-year average of 28x, suggesting attractive entry valuations. Corporate IT spending surveys indicate that 78% of enterprises plan to increase cloud infrastructure investments in the second half of 2025, driven by productivity gains from AI-powered applications and the need for scalable computing resources. Software-as-a-Service companies are particularly well-positioned, with average customer retention rates exceeding 95% and net revenue retention consistently above 110% across the sector. The regulatory environment has also become more favorable, with recent clarity on AI governance frameworks reducing uncertainty that had previously weighed on valuations. Major technology companies are reporting record levels of free cash flow generation, enabling increased capital returns to shareholders while maintaining robust research and development investments that should drive future growth acceleration. 2. Healthcare (Biotechnology And Medical Devices) Healthcare represents a compelling defensive growth opportunity for Q3 2025, supported by demographic tailwinds, breakthrough therapeutic developments and improving reimbursement environments. The biotechnology subsector has experienced significant multiple compression over the past 18 months, with many quality companies trading at substantial discounts to their intrinsic value based on pipeline assets and commercial products. Recent FDA approvals have accelerated, with novel drug approvals running 15% ahead of historical averages. Medical device companies are benefiting from the resumption of elective procedures and increased healthcare utilization, as aging populations drive demand for innovative treatments. The sector's defensive characteristics become particularly attractive amid persistent economic uncertainty, given healthcare's relatively inelastic demand profile and strong cash flow generation capabilities. Merger and acquisition activity has intensified significantly, with pharmaceutical companies sitting on record cash balances and facing patent cliffs that necessitate external growth through strategic acquisitions. This dynamic creates a favorable backdrop for smaller biotechnology companies with promising clinical assets. In contrast, established healthcare companies benefit from improved pricing power and market consolidation trends that enhance competitive positioning. 3. Financial Services (Regional Banks And Insurance) The financial services sector is positioned for strong performance in Q3 2025, driven by stabilizing interest rates, improving credit quality metrics and normalized loan demand patterns. Regional banks, in particular, have emerged from the 2023 banking crisis with stronger capital positions and more conservative lending practices, while benefiting from reduced regulatory uncertainty and improved deposit stability. Net interest margins have begun expanding again as funding costs stabilize while loan yields remain elevated. Insurance companies are experiencing a particularly favorable operating environment, with property and casualty insurers achieving significant rate increases that are now flowing through to improved underwriting profitability. Combined ratios have improved to their best levels in over a decade, while investment income benefits from higher-yielding fixed-income portfolios. Life insurers are similarly positioned to benefit from higher interest rates, improving spread income, and reserve adequacy. The sector's valuation metrics remain attractive, with regional banks trading at approximately 1.1x tangible book value compared to historical averages of 1.4x. In contrast, insurance companies trade at significant discounts to their sum-of-the-parts valuations. Credit loss provisions have normalized at levels well below historical averages, suggesting that earnings quality has improved substantially compared to previous economic cycles. 4. Energy (Renewable Infrastructure And Traditional Oil) Energy presents a unique dual opportunity in Q3 2025, combining the cash flow stability of traditional oil and gas operations with the growth potential of renewable infrastructure investments. Conventional energy companies have maintained disciplined capital allocation strategies, resulting in strong free cash flow generation and attractive dividend yields averaging 4-6% across major integrated oil companies. Global oil demand has remained resilient despite economic headwinds, while supply constraints continue supporting favorable pricing environments. Renewable energy infrastructure has reached an inflection point where projects generate attractive risk-adjusted returns without requiring government subsidies, driven by dramatic cost reductions in solar and wind technologies. Utility-scale renewable projects now offer internal rates of return exceeding 12-15% while providing long-term contracted cash flows that appeal to institutional investors seeking inflation-protected income streams. The sector benefits from bipartisan political support for energy security initiatives and infrastructure modernization, creating a stable regulatory environment for long-term investment planning. Energy companies are also increasingly attractive from an ESG perspective as they transition toward cleaner energy portfolios while maintaining the financial strength to fund this transformation through internally generated cash flows rather than dilutive equity issuances. 5. Consumer Discretionary (E-commerce And Luxury Goods) Consumer discretionary companies, particularly those focused on e-commerce and luxury goods, are well-positioned for Q3 2025 as consumer spending patterns normalize and discretionary income levels recover from previous inflationary pressures. E-commerce penetration continues expanding globally, with online retail sales growing at double-digit rates while traditional retail faces ongoing structural challenges. Leading e-commerce platforms benefit from network effects and economies of scale that create sustainable competitive advantages. Luxury goods companies have demonstrated remarkable resilience throughout various economic cycles, supported by wealthy consumers whose spending patterns remain relatively insensitive to broader economic conditions. Recent earnings reports show luxury brands achieving gross margins exceeding 70% while maintaining pricing power that enables them to offset input cost inflation through selective price increases. The sector's performance correlation with broader economic indicators has decreased as digital transformation enables more efficient inventory management and customer targeting. Consumer discretionary companies with substantial brand equity and direct-to-consumer capabilities are particularly well-positioned to capture market share from traditional competitors while benefiting from improved operational leverage as sales volumes recover to pre-pandemic growth trajectories. Bottom Line These five sectors offer compelling risk-adjusted return opportunities for Q3 2025, each supported by distinct fundamental drivers and attractive valuations relative to their growth prospects. Technology provides exposure to secular digitization trends, healthcare offers defensive growth characteristics, financial services benefits from normalized interest rate environments, energy combines income and growth potential, while consumer discretionary captures recovering spending patterns. Diversification across these sectors can help investors navigate the complex market environment while positioning portfolios for potential outperformance in the coming quarter.
