Gary Black, a 20-year fund manager and portfolio manager of The Future Fund, has shared his thoughts on the remainder of 2023 for the stock market. Despite other portfolio managers predicting a negative fallout, Black has a more positive outlook and believes the market will continue to grow but in a choppy manner. He has identified several trends that he believes can help shape his stock-picking approach for this year. Black believes mega trends or the most influential secular growth opportunities can help identify companies that benefit and lose from these shifts. Using fundamental research, he has selected eight mega-trend stocks to bet on and five to short.
One stock that Black has identified as a winner is Alphabet (GOOGL). He suggests the search engine will benefit from the shift in how advertising dollars are spent. Another mega-trend stock is Tesla (TSLA), which he believes is the leading brand when it comes to electric vehicles (EV). Black has predicted that the EV adoption rate will reach 66% by 2030. He also notes that Tesla’s upcoming cybertruck launch will help generate more sales for all Tesla models.
Black’s next mega trend is lifestyle betterment, where he identifies Eli Lilly and Company (LLY) and Lululemon Athletica (LULU) as top contenders to benefit from the trend. Another mega trend is big data and cybersecurity, where he selects Palo Alto Networks (PANW) and Nvidia (NVDA) as his favored stocks to bet on.
On the other end of the spectrum, some stocks that Black is shorting include Toyota (TM) and Lucid (LCID), the latter of which is expected to burn through $3.4 billion in 2023. Black also claims Under Armour (UA) has bloated inventories resulting from overproduction, which will likely cause its gross margins to fall short of expectations. Finally, he is short the brokerage franchise RE/MAX Holdings (RMAX), as the US’s low number of homes listed for sale make it difficult for homeowners to move.
Black expects the Federal Reserve to halt any further tightening, waiting for a soft landing into a short and shallow recession. His predictions for the market’s growth remain positive but in a choppy manner throughout the remainder of 2023.
