Need to Know: Why your best stock bets for the next 10 years are Disney and Target, says this CEO

This post was originally published on this site

In a massive week for corporate earnings, Amazon reports results after Thursday’s close.

Shares AMZN, -0.20%  have slipped in recent months on fears one-day shipping and rising cloud competition have been a drag on the e-commerce giant. Still, the ride’s been glorious for faithful investors, with Amazon stock up 1,387% in 10 years.

We’ve reached a turning point, says our call of the day from Smead Capital Management’s chief executive Bill Smead. He warns investors are “blacked out” to the fact they’re paying too much for future earnings of Amazon and other past decade winners like Netflix NFLX, +1.72%, Visa V, +0.27%  and Starbucks SBUX, -0.86%.

He has been pounding the table lately with the view that investors need to switch to stocks that will cater to future millennial needs — cars, houses and entertainment for their offspring.

“We want to own companies at attractive prices that are going to be where the money is made in the next 10 years,” Smead told MarketWatch in an interview.

That means retailers like Target TGT, -1.62%, home builder Lennar LEN, +0.10%  and Disney DIS, -0.96%, which will soon roll out its new streaming service, and Warren Buffett’s Berkshire Hathaway BRK.B, +0.16% BRK.A, +0.12%, which offers exposure to Bank of America BAC, +0.71%, JP Morgan Chase JPM, +0.26%  and even Apple AAPL, +1.34%, says Smead.  

He also likes Qualcomm QCOM, -1.57%, which “has the patents to make everything in 5G happen” and oil and gas exploration group Occidental Petroleum OXY, +1.66%.

But don’t forget baby boomers and their growing healthcare needs. For that, Smead likes pharmaceutical companies Amgen AMGN, -0.74%, Merck MRK, +1.93%, Pfizer PFE, +0.93%  and pharmacy chain Walgreens WBA, -1.37%

The market

Dow YM00, +0.07%, S&P ES00, +0.13% and Nasdaq NQ00, +0.45%  futures are inching up on another big earnings day. European stocks SXXP, +0.61%  are rising after a ton of company updates and ahead of ECB President Mario Draghi’s last central bank meeting. Asia markets ADOW, +0.50% finished mixed.

The chart
FactSet

Our chart of the day shows Tesla shares TSLA, -0.35%  soaring after the electric-car maker posted a surprise quarterly profit. Shares jumped 20.5%, or $52.32, to $307, at one point late Wednesday. If that holds through Thursday’s close, it would mark the biggest one-day net gain on record, and the second-biggest one-day percentage rise ever, according to Dow Jones Market Data.

Opinion: Tesla is profitable again. How long will it last this time?

The buzz

Earnings are coming from conglomerate 3M MMM, +0.73%, chemical group Dow DOW, +0.88%, airline Southwest LUV, +0.60%  and social media platform Twitter TWTR, +0.05%.  

Along with Amazon, Visa V, +0.27%, chip maker Intel INTC, -0.56%  and biotech Gilead GILD, +1.09%  will report after the close.

Late on Wednesday, Microsoft MSFT, +0.64%  reported double-digit percentage gains in profit and sales. Online payments company PayPal PYPL, -0.74%  is up on an earnings beat, while Ford F, +1.54%  and online auctioneer eBay EBAY, +0.67%  are slipping on results.

U.S. and Finland-listed shares in Nokia NOK, -1.35% NOKIA, -20.04%  are sinking after the phone maker slashed outlooks and halted dividend payments, due to 5G costs and competition from China.

Alphabet’s Google GOOGL, +1.32%  rejects claims it created a spy tool to watch employees and disrupt unionizing efforts.

The economy

Thursday’s data includes jobless claims and durable goods orders, followed by the Markit manufacturing and services purchasing managers indexes, then new home sales.

Read: Here’s why Morgan Stanley’s Mike Wilson is actually rooting for a recession

The tweet

President Donald Trump stirred some confusion with talk of “building a wall in Colorado”, which he later explained.

Random reads

Historic moment in Spain as remains of dictator Francisco Franco leaves state mausoleum

Four American Airlines flight attendants arrested over money-laundering charges

Death toll in Chile rises to 18 as police and protesters continue to clash

London bar becomes first in the world to use facial recognition to keep track of who gets served next

Need to Know starts early and is updated until the opening bell, but sign up here to get it delivered once to your email box. Be sure to check the Need to Know item. The emailed version will be sent out at about 7:30 a.m. Eastern.

Follow MarketWatch on Twitter, Instagram, Facebook.

Add Comment