A top-5% fund manager shares 4 reasons why he's getting optimistic about the economy after hiding nearly half of his assets in cash last summer — and details 6 of his favorite stocks to buy now
In the early- to mid-2010s, Apple was a cash cow that had a low valuation since it wasn't growing quickly. Shares exploded higher in recent years after successfully selling new products like the Apple Watch and AirPods, but Muhlenkamp noted thatonce again. Apple's next challenge is to find its next hit product so it's not seen as just a cheap cash cow.
Broadcom, which designs semiconductors for data centers, stands out as a"cash compounder" that's adept at optimizing its business to maximize profitability, Muhlenkamp said. "The management of Broadcom knows how to invest their excess cash well," he said."That's really what that is. And I'm happy to let that continue to work in my favor."
Microchip differentiates itself by producing products on the trailing end of technology instead of the leading end, which is more profitable since it reduces capital expenditure, Muhlenkamp said. Lastly, Microsoft is like Apple in that it's a mature mega-cap company with profitable businesses that produce tons of cash, Muhlenkamp said. And while the firm relies on its software products like Office along with its budding cloud computing business, it too will eventually need a new hit.Subscribe to push notifications
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