6 Picks from ’Tailwind Industries’
11/23/2011 3:00 pm EST
Michael Yoshikami explores the outlook for these stocks that are riding higher on trends like global growth and 4G technology, irrespective of where the larger economy is headed, in this exclusive interview with MoneyShow.com.
Michael, you know a lot of investors are very, very nervous these days, and panicking, but some people are actually seeing opportunities. These people with the iron god, or iron constitution, or whatever you call it are really looking around for some bargains, because a lot of stocks have sold off as we’re recording this.
What kinds of things are you looking at? What kinds of individual stocks are you looking for people to buy and put in their portfolio?
Well, first of all, I think what’s important is you define the themes that you’re going to invest in. I’ll give you some themes that we think are particularly appealing.
First of all, we think the global theme makes a lot of sense. Companies like, for example, McDonald’s (MCD) that derive a significant percentage of their revenue overseas. Coca-Cola (KO), IBM (IBM), the big large multinational companies, many of which pay dividends—which, by the way, dividends are significantly greater than what you’re getting in money-market rates, and still give you the opportunity to participate in emerging market growth.
We also think tailwind industries, such as telecommunications...
What do you mean, "tailwind industries?"
Tailwind industries, really, is our description of a sector where something is changing in the environment that’s going to benefit these companies. I’ll give you a perfect example of that. It would be a company like Qualcomm (QCOM) that is benefiting from the transition to wireless that the whole world is going through at this point.
Well, it’s not a new story, though, but we go through different iterations. Now we’re in 4G already, and that’s been coming in now, and I think Qualcomm has a lot of chips in that.
Absolutely, so it’s not a new story. The question is, is it going to be a bigger story in a year and in three years and in five years? We believe it will in fact be a bigger story.
So it’s important when investors invest in this type of environment in our view not just to focus on the fundamentals of an individual company, but the environment and the themes associated with the stocks they’re buying.
Costco (COST) is another example. Costco is a discount warehouse store that tends to sell to more affluent customers, but affluent customers that are trading down a bit. So, we’re in a tougher economy, and we believe GDP growth is going to be slower in the United States, so this probably will be a tailwind industry as well—discount retailing.
OK. Can you give us one more theme, one more stock connected with it?
Certainly. I think that companies that are going to benefit from what’s happening in health care right now, and by health care, I mean companies that are going to benefit from globalization and increases in the amount of health care that is being consumed.
A good example of that, a diversified health-care name, would be Johnson & Johnson (JNJ). It pays a dividend, is a great global brand, and their consumer product division sells what? It doesn’t sell discretionary items, it sells items that people need—more established items that tend to do well in difficult economies.
So, you see, you have a difficult economy story, and then you have a global increase in health-care consumption. Those are the types of names we think make sense.
And they pay a nice dividend.
And they pay a nice dividend.
Now, do you own any of these stocks that you mentioned personally or professionally?
I don’t own them personally. My business does not own them. However, we do buy them for our client portfolios.