By Philip van Doorn, MarketWatch
Where to look for long-term value
Cuggino doesn’t think investors should be selling stocks “wholeheartedly,” but he did say some sectors are more attractive than others.
Here are some financial sector stocks held in the Permanent Portfolio, along with comments from Cuggino:
1. Morgan Stanley /zigman2/quotes/209104354/composite MS -0.22% . “We tend not to focus on money center banks, but Morgan Stanley has good diversification of businesses and a good management team.”
2. State Street Corp. /zigman2/quotes/209758976/composite STT +0.03% . “The bank is a very efficient operator, focusing on fee revenue. They are a market leader in many of their business segments.”
3. Janus Capital Group Inc. . “We owned the stock before the Bill Gross move there [from Pimco]. I see that as a potential furthering of the business if he is successful in raising the profile of their fixed-income group. We like the operating leverage and improvement we see in that company.”
4. Charles Schwab Corp. /zigman2/quotes/201281754/composite SCHW +1.74% . “Schwab is very leveraged to the psychology and behavior of individual investors. So you tend to see it mirror market activity. They are also on the cutting edge of the changes in the market, including the robo-adviser trend.”
When discussing the technology sector, Cuggino said he favors companies serving “consumers of entertainment technology,” including Facebook Inc. and Walt Disney Co. /zigman2/quotes/203410047/composite DIS +0.56% .
In transportation, which has been hurt by declining railroad freight volumes and “weaker numbers” for FedEx Corp. /zigman2/quotes/203047719/composite FDX +2.15% , Cuggino says the sector’s prices “have become more reasonable.”
Within energy, Cuggino likes HollyFrontier Corp. , a “small domestic refiner,” that has “no currency issues or exappropriation risk, as well as limited transportation costs, because it mostly deals with onshore production.” He also favors oil-field-services giant Baker Hughes Inc. , “which has actually held its own decently.”
Finally, among integrated energy companies, Cuggino likes Chevron Corp. /zigman2/quotes/205871374/composite CVX -0.26% as a conservative play, and BP PLC /zigman2/quotes/207305210/composite BP -0.10% as a more aggressive choice for long-term growth.