Stay-at-Home stocks have fallen from grace since the start of 2022. While the NASDAQ has rebounded since mid-June lows, many names- especially within Tech- have yet to recover. Eddy Gifford, Wealth Advisor at Tactive, talks about the aspects that led to high growth and breaks down the headwinds facing industries, like semiconductors.

Opening Bell

Stocks That Benefitted From Covid Lockdowns Are Now Coming Down

Welcome back to Cheddars. Open bell. Stay at home. Companies have fallen from grace since the start of the year and while the NASDAQ has rebounded since mid june lows, many names like peloton and zoom have yet to recover. So this is the end of an error Summer Sang. But could they recover here to discuss is Eddie Gifford, The wealth adviser at tactic. Thank you so much for joining us. You know, I gotta ask you about this chip sector to start off with no one of the leading industries during the pandemic. While since the beginning of July, semiconductors have popped about 10%. The industry is still down over 25% year to date. So what's your take on the chip sector right now? Well, it's one of those things we say in the stock market that sometimes when we have these rallies were kind of borrowing from the future. So we saw during the pandemic, was this thought that what if this thing happens for longer than anyone expects and so we're gonna start everything's gonna start flooding in. Which is exactly what happened now that things are starting to recover and then things are starting to normalize, uh, it appears that we've kind of given some of that back. Right. And so obviously anytime you have a significant upside that you had during the pandemic to think that that's going to continue for the long term, that's just highly unlikely that just never happens. And then you couple that with the fact that on the back end of all of this, we got uh, we still have supply chain issues. Yes we did pass legislation that's gonna bring more chip growth or or chip building manufacturing back to the States. But All that stuff takes time. So you figure you've got 3-5 years until we're really actually producing as a country in the United States, you've got the supply chain issues that we're still running into. And then you know the fact that the Fed keeps raising rates and as they do that that Wayne's demand. And the other thing it does is it affects evaluation because growth stocks are determined valuation is determined by looking at sales growth over time, looking at earnings estimates over time and the multiplier that they're using is going to be affected as interest rates rise. Yeah. And then you know we gotta talk about intel, the world's biggest chipmaker, they have lost ground since mid june. So what headwinds do you see for intel and could their output impact other industries like pc and console makers? I think they definitely could. Intel has been one of those names that it's almost like uh in a way they stopped innovating a little bit because they were so good at what they did. They focused primarily on the small business owner, they focused primarily on the office and then when the but when the pandemic happened and we had this rush to the work the home in type situation all of a sudden the companies like A. M. D. For example that we're focusing more on gaming uh their chips all of a sudden became more useful in that type of situation. So I think that for intel it's just one of those things where you know they're they're they're a good company. They do have a good long term upside bringing. They're getting a lot of that money or a good portion of money from the recent legislation and so As long as they can you know start to kind of innovate again and do what they did to make a name for themselves in the first place there's definitely long term growth potential there. Alright well speaking of growth potential once they're at home stock down over 40% zoom what do you make of Zoom's growth trajectory now that people are returning back to the office. I mean that was the only way most of us communicated during the pandemic but now it's different. Well the thing about zoom is I think it's really just gonna come down to the messaging that the company provides and and and that is how the zoom make the office environment better. There's definitely a lot of things that they use. There's definitely a lot of ways to interact with different regional areas across the country using zoom and you know what they have up against them of course is that there's more competition now there's more virtual conferencing systems but I think that at the end of the day if if they can communicate uh how employees can be more efficient at work using zoom than zoom does have long turned up upside and you know, to go back to what I was saying earlier, we're borrowing from the future. What? So during the pandemic. So if we're looking out over the next 7 to 10 years, what could the company look like in 7 to 10 years? It could potentially be back at its pandemic highs. I don't think it like shoots through the pandemic highs. But you got to remember it was in the 4 50 to 500 range. So we got a long way to go before we get there. Okay, well let's move on to another stay at home, darling. Peloton is laying off workers and they're raising their prices and now the company get this, is exploring the idea of customers building their own bikes at home once they arrive. Now the new ceo says that as part of their plan to become more efficient, cost effective and agile of course. But peloton is market cap was once over $45 billion and now it's less than four billion. That is a huge difference. So do you see peloton returning to its glory days, is it even possible? I don't think so. I mean it's one of those things where I've been a huge fitness advocate for my whole life, played sports russell growing up. Uh and what I've learned is the way that you find success through fitness is by consistency, right? And accountability. And I think that the nice thing about peloton during the pandemic was it kind of gave people that opportunity to still kind of interact with others and to kind of have like a trainer and and to do that. And so that's really what's driving everything more so than the equipment itself, It's it's hard to work out on your own, all by yourself, in your in your office or in your den or wherever. Right? So I think that for peloton, it's gonna be, you know, their their ability to be successful again is gonna be in their ability to actually build a community more than it is to build a better bike. And so that's where I think that they have some soul searching to do for sure, yeah, that's gonna be an uphill battle for them. But, you know, and other stocks as well, can some of these other stocks withstand the broader market pullback or these industries just more vulnerable to more declines? I think it all comes down to uh an industry or a company's flexibility and adaptability at the end of the day. You know, like if you think about it, the do it yourself, trade like Home depot Lowe's or to kind of take it like further pandemic related Pinterest. I think that those types of companies still have good upside potential, Those are companies that can still withstand, especially as housing is rising, we're not we're not going out and buying new houses anymore, fixing up our own houses. So the Home Depot and Lowe's trade uh benefits there. And the Pinterest trade from the design standpoint benefits on the other side of the coin, you've got companies like Tesla that did really, really well not not doing as well uh as they have but you know evey trade whether it's Tesla itself or battery companies like plug power, there's opportunity there and then you've got like the disruptors, right? That's like the virgin galactic, the guys that do everything different. Uh SpaceX, you know, which you can get access through through private equity and then in the marketing media space, the trade desk I think has a lot of upside opportunity just because businesses still want to grow and we're seeing bigger advent conversions now because not as many people are spending money on that. So if you're getting a lower cost per lead and you're willing to kind of uh increase the marketing budget. This could be a really good opportunity to gain market share over the next 12 to 18 months. Alright, that's a positive perspective there. Now, our last guy said that he doesn't think that the markets will dip below june lows and let's hope not. But what do you think? Is that true? Especially for tech. Well I think it's one of those things, I've been telling everybody, we're in this kind of this coin flip market, right? And we can we can definitely fast forward 12 months and see the market be up 50% or the market be down 50%. And so uh do we have to test the june lows? We don't have to test the june lows. Do I think that it's a possibility. Sure. I I totally think it's a possibility if we look at 4002 where we saw 83% decline in the Q. Q. Q. Well while that was happening we had five different rallies, one rally was over 50%. And so this is not uncommon to see this type of rally especially coming off of a six month minus 20 percent plus uh scenarios. So is this a bear market rally? And are we going to test the lows or you know, are we actually heading to recovery? I don't think we have enough data to say that we're recovering yet. There's still a lot of inflationary things that are happening. And so I say be protective with your portfolio implement hedges, put stops in place, you can put risk on the table but you just have to be smart how you manage it. Alright, great advice from Eddie Gifford from detectives. Thank you so much