Stocks have been on a wild ride this year.
After one of the fastest falls into a bear market on record, not to mention it was one of the shortest bear markets in history, stocks have surged higher since the March bottom.
The S&P 500 is up 45% since the bottom on March 23, the Dow has gained 44% in the same time-frame, while the tech-heavy Nasdaq has outperformed, rising 55%.
Even as stocks have taken a tumble since their record highs reached earlier this month, Thornburg Investment Management portfolio manager Ben Kirby said this week that we may have seen the market highs this year.
Not only that, but Kirby says now’s the time for investors to “head for the multi asset hills.”
“I hate to say it,” Kirby said, “but I’m telling investors that we may have already seen the highs for the year.”
Given that, Kirby argues investors should maintain an above-average level of cash as increased volatility ahead of the election could mean “buying opportunities will be bountiful.”
Kirby added that Thornburg was in a “healthy risk-off/profit-taking mood right now,” following the market’s historic rally since the March lows.
Right now, Kirby is looking for high-yield stocks paying dividends as they have generally outperform the broader market for decades but have underperformed so far this year.
“We think high-yield, dividend-paying stocks pose a huge opportunity for longer-term investors: quality, compounding companies with sustainable and growing dividends should be increasingly sought after in a world where income from bonds is so scarce,” Kirby added.
The Thornburg Investment Income Builder Fund currently is bullish on the global telecommunications sector, with Kirby calling it “a defensive sector with solid fundamentals, low valuation, high yield, and has underperformed.”
Aside from international telecommunications stocks, Kirby also has his eye on Home Depot (NYSE: HD), saying that the stock is “another great name” that is a play on the stay-at-home trend amid the coronavirus pandemic.
Home Depot shares have surged higher this year, and are up nearly 22% year-to-date and have surged 89% since bottoming out with the rest of the market back in March.
The home improvement retailer saw its sales soar 23% in its fiscal second quarter, reporting earnings per share of $4.02 on revenue of $38.05 billion, versus analysts’ expectations for earnings per share of $3.71 on revenue of $34.53 billion.
Consumers are “not spending on travel and entertainment and restaurants, they’re spending it on maintaining and enhancing their home,” said Home Depot CFO Richard McPhail. “And we think that we’ve reintroduced home improvement to the consumer in our markets.