Investors going long may find the best opportunities in technology and ‘serendipity’ stocks, says strategist James McDonald, CEO of Hercules Investments.
“This is a wonderful time to invest,” McDonald told Yahoo Finance’s The First Trade. “Right now, the leaders in the S&P 500 (^GSCP) are no longer oil companies and big industrial companies. They are tech companies that are sitting on hoards of cash.”
The market’s recent rally off the March 23 lows has been fueled largely by mega-cap tech stocks.
“Not only does it [tech] look wonderful, but they have the economic power to survive whatever happens with this market sell off. So if you want to buy, you gotta do tech,” he added.
“There’s a concept called serendipity, right? No one saw this virus coming, but there’s companies positioned to take advantage of it,” said McDonald.
He noted that companies like Walmart (WMT) and Netflix (NFLX) have been able to benefit from shelter-in-place measures as people have been ordering online, stocking up on essential items, and watching hours upon hours of streaming content.
McDonald also says there are investment opportunities in health care, although those plays involve more speculation. On Monday, Moderna (MRNA) surged more than 24% on encouraging data about its experimental COVID-19 vaccine. Sorrento Therapeutics (SRNE) also skyrocketed after announcing positive developments related to its anti-body therapy for COVID-19.