Ticker Take with Jon Erlichman
A newsletter about investing
A recap of the week
U.S. stocks closed out the week at their highest levels since February, with the S&P 500 climbing 1% to 6,000. U.S. job growth moderated in May, but investors were relieved there were no signs of an imminent economic slowdown. There are also growing hopes that the U.S. can make some progress on trade talks with China next week.
In Canada, the TSX managed its third record close of the week on Friday. Some of the gains were tied to the U.S. rally. The Canadian jobs report indicated things are looking a bit wobbly, but investors will still willing to buy into a range of stocks, with tech (Shopify) leading the charge.
Should you buy quantum stocks?
A lot have you have been asking that — especially since some of these stocks have surged more than 1,000% in the past year! But the business is in its early days, so costs are high and sales are low. To better understand the business, tech investor Eric Jackson of EMJ Capital reviewed 9 stocks -- from startups to massive tech titans -- that are trying to cash in on quantum. Check out the video. And be sure to subscribe to our YouTube if you’re not already subscribing!
Royal Rumble: Trump vs Musk
Well, that was definitely an interesting week! Especially for the Tesla bulls. But long-time Morgan Stanley analyst Adam Jonas is sticking with his high conviction call on the stock and his $410 target price. “While emotions are running high, we are not convinced the longer-term vectors that drive the stock’s value have changed,” he told clients.
By the way, if you’re a long-term investor, context is always helpful. I highlighted that on X. See below.
Analyst says don’t bet against AI stocks
Before the Musk-Trump drama, I caught up with longtime tech analyst Dan Ives of Wedbush Securities, who continues to pound the table on AI stocks, reiterating his call that we’re in a “golden age for tech.” Ives is used to critics who tell him that AI stocks are pricey. But in his view, focusing too much on valuations would’ve cost investors a lot of money in the past decade — and the same will be true in the next 10 years. Not only does he believe that tariffs won’t end tech’s bull market, he expects the NASDAQ to reach the lofty level of 30,000. As for what to buy, he believes it’s worth having exposure to everything in the AI ecosystem — beyond Nvidia, that could include MongoDB, Alphabet, Amazon, Microsoft Meta, Snowflake, Tesla, Alibaba and Baidu.
Which stocks would AI pick for your portfolio?
Speaking of artificial intelligence, I caught up with Doug Clinton, founder and CEO of Intelligent Alpha. He’s been using AI to help him select stocks and he shared three investment ideas that his models continue to like — MercadoLibre, Marvell Technology and Gold!
Stocks to hold for the long run?
I spoke with Tim Regan, Portfolio Manager at Kingwest & Company, who frequently invests with at least a 5-year time horizon. One of his favorite holdings is Definity Financial, a P&C insurer that he has owned since it was demutualized in 2022.
He’s also a fan of TMX Group, having taken a position in the stock in 2003. TMX Group operates the TSX and he likes the company’s dominant market share in Canada, but also the fact that it generates a huge amount of revenue from outside the country, mainly in market data subscriptions and index products. That means a lot of recurring revenue and a free cash flow yield around 5%. And even with all of that, he says the stock is cheaper than its peers.
Gold up, Oil Down — a bad sign?
In a year where gold has been shining, oil has been slumping. And that’s something you’ll want to share with anyone who’s wondering about the economy — or, the stock market. Here’s why… right now, an ounce of gold costs about the same amount as 53 barrels of oil. That’s according to commodity strategist Mike McGlone at Bloomberg. Mike says some of the economic uncertainty that has helped gold prices has been working against oil. And so that has widened that ratio — to 53 barrels — putting it at levels not since 1933, which was a pretty gloomy time for the economy. McGlone says some people are looking at this ratio as a possible recession indicator. Keep in mind new data this week (which we referenced earlier) showed the U.S. jobs market growth cooling in May and in Canada, the unemployment rate rising for the third straight month.
Gold’s gain fuels TSX
Now — this same trend around gold’s outperformance is also important if you want to understand the stock market, particularly in Canada. According to market data, the TSX is outperforming the U.S markets this year. Why? Gold stocks. Not because gold stocks are doing better in Canada, but because they carry more influence. Bloomberg data shows that the Materials index, which includes many gold names, accounts for 14% of the TSX. By comparison, materials stocks in the S&P 500 make up about 2% of that index, which is much more influenced by tech stocks.
Thanks for reading! Talk to you next week!
Disclaimer: this content is for informational purposes only and does not constitute legal, financial, or professional advice. Always consult a qualified professional regarding your individual situation.