March Madness Stock Picking Part 3

(CNBC Fast Money)

The Final 4 looms in the stock picking challenge. There were a couple of upsets that I didn’t see coming. Alphabet my 2017 top pick lost to Nvidia. The parent company of Google has been hit by some bad news this last week. YouTube has been hit by a boycott as companies have pulled ads because of the ads being displayed on homophobic and semitic videos. Verizon, AT&T are among the big players who have pulled out. This is Google’s version of Fake news problem that Facebook had, it will be sorted and this presents a buying opportunity. my picks American Express and Altria were correct. I hope I get the Allergan match up correct.

Now let me pick which two will meet in the final for the championship match.

  1. Altria vs America Express: For this match up which is really tough because they are diversified areas I would have to go with American Express. The turn around story for this company is still intact. They had a great investor day which had good guidance. The company is also using its great brand to capture customers and cutting fees. The company will benefit from tax reform that will be implemented this year. As for Altria, the valuation is stretched right now and will likely under perform. The company carries a takeover premium nonetheless.
  2. Nvidia vs Allergan/Valeant*: This match up is too tricky for me. On one hand I have Nvidia a stock that has been a beast since 2016. The chip sector is on fire right now Micron gave some great numbers this week. Micron’s flash demand can be a read through to Apple’s iPhone 8 super cycle. On the other hand, I have the healthcare sector that is in limbo. The repeal of Obamacare did not take place as expected as we starting to see a chink in the Trump administration’s armor. The failure of the healthcare bill makes this space an area of opportunity as investors like status quo. With Trump focusing his efforts on tax reform which benefits this sector too makes Allergan a good buy right now. I like Novartis, Gilead(sigh) and Bristol Myers in this space. I think Allergan will easily beat the troubled Valeant but you never know with the upsets in this tournament. For this match up I have to go to Allergan.

My picks for the championship game are American Express and Allergan.

Additional disclosure: This article is intended for information, engagement & entertainment purposes only, and is not to be construed as investment advice or direction. Investors are strongly encouraged to perform due diligence and/or consult with their financial advisor.

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