One of Wall Street’s biggest bulls isn’t jumping on the growth stocks bandwagon.
Despite the Nasdaq’s run to record highs, Credit Suisse’s Jonathan Golub prefers value trades right now.
“The second quarter of this year will be the fastest quarter of GDP we’ve had since 1952. So essentially since the Marshall Plan and the reconstruction of Europe after WWII,” the strategist told CNBC. Head of US Equities and Head of Quantitative Research for the Company. “Trading nation” Wednesday. “The economy is on fire.”
Still, growth, which includes technology, has caught up with an offer with the benchmark 10-year Treasury yield falling to February’s low this week. On Wednesday, the yield fell below 1.30% at one point.
“If you think things are slowing down more aggressively, then you want to be a growth investor,” Golub said. “You want to go back to technology, and that’s what happened more recently with the drop in interest rates.”
‘Just scream backwards’
Golub, a long-term tech bull, predicts the stock will outperform the group over the next six to 18 months.
“There is so much economic demand right now. People are coming out with cash in their pockets that we are seeing shortages wherever you can find it and that is actually what is driving inflation up,” said Golub. “It’s a backdrop that screams upward.”
Its top three choices are financials, energy and consumer discretionary.
“You want to play that in value. That’s where I am,” he noted. “We still have some juice left in this lemon.”
Its year-end target for the S&P 500 is 4,600, which implies a gain of 6% from the all-time high reached on Wednesday. Meanwhile, the Dow Jones is down 1% from its all-time high.
“If you look at the individuals, they are sitting with cash,” he noted. “It’s a very, very supportive backdrop.”
Golub recognizes that the market could have a “hiccup” by the end of the year. However, that wouldn’t derail his bull case for stocks.
“We know that in a year we are not going to experience this level of economic growth. It is not sustainable,” Golub said. “We also know that inflation is transitory and that it will not be here forever either.”