An investment chief who crushed the market during the coronavirus crash sees the S&P 500 crashing 20% in the near term — but says investors should buy these 2 stocks on the dip
James McDonald, the CEO and chief investment officer of Hercules Investments, told CNBC on Monday that he expects a 20% S&P 500 sell-off in the near term.
- McDonald, who crushed the market during the coronavirus crash earlier this year, explained that the market is at a "tipping point," and won't gain further without more
stimuluspackage and a slowdown in COVID-19 infection rates.
- However, he added that this will be a buying opportunity for some stocks, specifically NextEra Energy and Intuitive Surgical.
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James McDonald, the CEO and chief investment officer at Hercules Investments, told CNBC on Monday that he expects a more than 20% pullback in the S&P 500 in the near term before the stock market can resume a move higher.
The investment chief who rake in huge profits during the height of the coronavirus crash explained that the stock market is "at a tipping point for a continuation higher," and won't be able to gain any more without fresh stimulus and a decline in coronavirus infection rates. He said the recent S&P 500 rally was just a recovery from its pullback earlier.
"What's interesting about this market is it stopped going up, we've been going higher since March and we kind of hit a climax, came off 9%, rallied back, came off again 9% and have rallied back here," he said.
He said clean-energy company NextEra will be a beneficiary of president-elect Joe Biden's plan to eliminate tariffs on solar panels from China. McDonald added that investors should go long in the clean energy sector because it will get a tailwind from the Biden administration.
NextEra is up 28% year-to-date, but McDonald said it has more potential, along with the alternative energy space more broadly.
"These are a lot of new opportunities and while investors are flocking in, that is going to be momentum for this sector," said McDonald.
McDonald also said robotic surgery company Intuitive Surgical has a "ton of upside" in the long term once the coronavirus is under control.
"All of the different impacts that COVID has had, we have to look at them as temporary and as difficult and as impactful they are in the short term, our long-term investment thesis still stays strong" within the healthcare sector and with Intuitive, McDonald said.
He concluded: "With about 20% coming off the market we think these are good opportunities to come in to NextEra, to come into Intuitive, where we'll see a secular movement both in terms of investment capital as well as upside potential."
Read more: 'The most dangerous type of market': Billionaire Bond King Jeffrey Gundlach says stocks are entering the difficult final stages of their cycle — and warns the market will 'crack pretty hard' in the near future
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