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He's earned decades of Wall Street success, a lifelong student of the market
who learned to navigate the world of finance with unshaking confidence
and underdog who achieved the American dream.
Now the Fox Business Host is sharing all his investing wisdom with you
on Charles Payne's unstoppable prosperity podcast.
All right, so my next guest says that while the Iran conflict increases risk of
this lower economy, slower growth, even potential pressure and inflation,
they remain constructive this firm on equities and of course the notion of buying a dip.
So let's bring in our new edge wealth that managing direct or also portfolio manager Dave Peters.
Jay, just sort of before we get to sort of why you're optimistic and constructive,
this is a disconflict.
Is there a point like, is there a time when you say, okay, now it's starting to change things?
Like how long would it have to last?
Because right now I think it's going according to plan.
You know, I think we're doing an amazing job.
I feel like the markets over the act can particularly energy market.
Yeah, I mean, I thank you for having me on, Charles, but I do think it's tough to call
the duration of the conflict.
And I think in this environment, you want to be selective when adding exposure,
you've correctly pointed out that buying the dip and especially when it relates to geopolitical
tensions has been a good long-term strategy for investors.
And I think even though we haven't had much of a dip so far,
I think there could be a little more valuation compression,
depending on how things shake out.
But there's a lot of companies on sale on the market right now that continue off
or healthy earnings growth.
You like earnings here, you like the earnings growth momentum is still intact
and valuations you're okay with that.
Still intact and we're seeing upward revisions to 2026, 2027 estimates as well.
So I think the earnings momentum is a key pillar support for the market,
especially in this volatile period.
Let's talk about how they flip the script, right?
Because growth dominated has dominated for a long time.
But this is growth folks versus value.
And so you can see growth dominated, growth dominated, until it didn't.
But now growth is coming back here.
This is where maybe an opportunity is.
Yeah, and I think if you look at the valuation of growth to value,
it's about a 40% premium.
That's below its long-term average.
It's kind of at this level where it's dropped in the past.
So I think it's not surprising that investors are starting to nipple on some of these growth names.
They do offer premium revenue and earnings growth relative to the rest of the market.
And they are businesses that are generally more capital-like and high margins.
So yeah, I think you can definitely start to look at some of the growth
your names in the market.
Let's talk about one of Microsoft.
Of course, this is a name that it's sort of, I don't know, you know,
it's sort of just kind of has drifted there,
hit a double top last year.
It's been drifting.
Although, again, we see obviously it looks like it's attracting some buyers here.
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But what what turns this little bit of a turn around into a longer term move?
Yeah, so it's hard to say what what turns it around.
But I'd say at 22 times, I think it's certainly.
Let me jump in for a second.
The bottom line when I listen to you,
it sounds like one thing you're really comfortable with is risk reward.
Yeah, right.
I mean, so limited downside based on valuations
and the great how great the business is compared to huge upside potential.
Yeah, I think that's the key point.
It's companies that can continue to deliver healthy earnings growth
at valuations that are justified by a business.
And Microsoft, obviously, one of the highest quality companies in the world,
incredibly diversified revenue.
Company known for capital efficiency and sort of delivering
returns on capital for shareholders.
I'd say the concerns about the hyperscaler capital intensity are valid.
But Microsoft is still on pace to do 20% free cash flow margins,
which is the highest of a hyperscaler.
It's amazing.
It's just it's a really a machine.
It's been a machine for a long time.
This is the name I love.
I traded a lot.
You know, maybe I don't know if I've ever really bought it long term,
but the chart is absolutely phenomenal.
Monolithic power.
What is it about this name that is actually kind of sustained
its momentum better than most tech names recently?
Yeah, so I think what we've seen with with model of the power is power management
is becoming an increasingly critical part of the data center infrastructure.
So as these AI chips and custom chips and GPUs become more advanced,
they're consuming more and more power.
And you need chips that can regulate that power efficiently and deliver it
across all aspects of a chip.
And Monolithic is another high quality company,
but certainly seeing these secondary was not only from video,
but from companies like.
Do you name like this can?
I've seen it.
It can't be volatile from time to time.
Do you add that caveat when you talk to your clients like,
okay, periodically it may pull back sharply.
Don't let that jar you.
Yeah, this is a higher beta, higher model type name.
I think you want to size it appropriately.
Our ELG resources.
Now, this is the only thing that survived from Inron,
folks, trivia question for you, you know.
And it's surviving big time right now.
Of course, obviously it's got the tell one from the situation here,
but even before the conflict,
this started off 26.
It's been on fire.
Yeah, it's off to a great start this year.
It's a company we've owned for a long time.
We look at the energy sector.
I think it's still reasonably valued,
despite the move we've seen in some of these stocks.
EOG is trading at 13 times earnings.
It's a company known for being highly operational,
efficient.
Some of the lowest production costs in the industry.
Great acreage down in a permeant basin
and proofs are both natural gas and crude oil.
And EOG, you're not worried about peak permeant
or things like that.
You know, the sort of scuttle butt
that maybe that plays over.
Well, I think, you know, the idea of having
an operator who's incredibly efficient in the space,
using technology to bring down their cost of production,
keep their business on track is certainly valuable.
And EOG, I think, is it come to the top-tier balance sheet,
mid-single-digit total yield,
if we give it ends in buyback.
So obviously benefiting from the oil price
we're seeing, but I think long-term,
so a great company.
Very tough, man.
Good stuff, Dave.
Thanks for all of you getting real soon.
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