Sally Beauty, Avalon Bay provide shelter amid market storm
Friday, October 17, 2014 - 04:08
With some major indexes entering correction territory, some investors are finding opportunities in stocks like cosmetic retailer Sally Beauty and apartment manager Avalon Bay
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Don't be surprised that there's more selling ahead for stocks. After few weeks major volatility. So indexes like the NASDAQ Composite officially -- to correction territory. Longtime market investor day it could talk expects even more down side. I think the market is highly valued. And it's highly valued because of zero interest rates. I think there's a risk of a correction I RE maintain cash reserves frequently. And run into them as soon as I see a ripple. We economic data also has wells Fargo's John Silvia looking for slower growth going forward. And that could have an impact on earnings expectations as well. Don't Lockett is always looking at the future and they had pretty optimistic estimates about future -- not a -- kind of back a notch. That's suggests again and revaluation. Of the earnings growth and the US economy. Big selloff in small cap stocks but manager -- still finds valuations stretched. He think more opportunities in mid cap stocks like Sally Beauty he expects that retailer will continue to -- sales. If you look at the products Celek carries really most of that stuff is now available at mass -- so they really do have an exclusive. Product assortment they can offer the consumer. And the third of the business also lose sales to professional salons. And those are also exclusive. Another name -- likes is a company called chances which is an engineering software simulator. He says the company's shares are attractively priced at its growing its market share. The simulation business that's really a way of accelerating -- So let's say your caterpillars are trying to develop a new. -- for a tractor you can either go and build a prototype and test the prototype. -- can -- instances simulation software. To test electronically. So people where we'll get products to market much faster -- doing that instead of actually going up until an apartment type. We also spent some time this week talking it and that's goes to Aaron turner who -- just real estate investment fund for the firm's -- Forming strongly this year in so recent markets over the last couple of weeks turner says in the near term his favorite real estate investments are in the US. One of his -- is at a lot today which builds apartment complexes. AvalonBay has a three billion dollar development pipeline. In very supply constrained markets and that's the exact exposure that we want to get it now is that completely priced into the stock we would argue note that. And what they're not getting credit for necessarily is where rates are going to be want to bring that property on the market. Turner says across the country are still too few available apartments which means companies like Monday will be able to increase rents. We just spoke with -- colleague Walter Davis who oversees all investments for invesco. With all the stock market gyrations were seeing some investors might look to alternatives as a way to smooth out volatility. Walter Davis tells us investors need to make sure they understand what alternatives offer. The big misconception that investors have is that alternatives are gonna be this super charged return generator for your portfolio that they're always gonna outperform equities and anytime they underperformed equity market they have failed. That's just fundamentally untrue. There are a variety of different alternative strategies out there. Some are very geared very much here towards low volatility to overturn some are geared towards generating outsize returns. But as a whole when you look at alternatives they tend underperform equities and really strong equity markets. But significantly outperformed equities in weaker equity markets and when you look over multiple market cycles. What you see is that alternatives slightly outperformed equities that's been true for the past seventeen years. Davis says the most popular alternative strategies for retail investors added -- is its long short equity fund. I've got a -- there for investing 201.
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