A recovering economy is laying the foundation for a rally in large-cap stocks, according to Philip Tasho, chief executive and chief investment offer at Tamro Capital Partners LLC, a $1.3 billion asset management firm.
Despite the fact that investor appetite for large-cap stocks “couldn't be worse” and that “over the past 10 years, most of the action has been elsewhere,” Mr. Tasho said the valuations of many blue-chip stocks are “extremely compelling.”
“It is the mirror image of 10 years ago,” he said.
Mr. Tasho believes that many of the large, cash-rich corporations are poised to grow and use the capital for dividend distributions, stock buyback plans and acquisitions.
A favorite in the technology space is Google Inc. Ticker:(GOOG), which controls 20% of the world's electronic commerce.
“The first thing people do on the Internet is search,” Mr. Tasho said. “Google's niche is significant and underestimated.”
Multinational large-cap companies are also uniquely positioned to tap into the growth of fast-growing economies in places such as India and China, he added.
“Ten years ago, we didn't have India and China participating on the global stage to any degree, but the bigger companies have the scale to participate,” Mr. Tasho said. “Our thesis is that as the uncertainty starts to dissipate, it will lead into the real economy and the acceleration of growth.”
Mr. Tasho also said there niche are areas within the automobile industry that will benefit from the trend toward a growing middle class in several emerging economies.
Instead of banking on a specific automaker, Mr. Tasho said an auto parts producer such as Johnson Controls Inc. Ticker:(JCI) is in a solid position, as is BorgWarner Inc. Ticker:(BWA), which makes transmissions for various car companies.
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