One On One With Scott Wren of AG Edwards
Thursday, May 18, 2006
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SUSIE GHARIB: Despite today`s market sell off, our guest tonight was busy buying stocks for his clients. Joining us now, Scott Wren, senior equity strategist at AG Edwards. Hi, Scott.
SCOTT WREN, SENIOR EQUITY STRATEGIST, A.G. EDWARDS: Hi, Susie, how are you?
GHARIB: Good, thank you. So tell me, how much more selling before this correction is done? Are we getting close?
WREN: Well, I tell you, Susie, I think we`re going to have some more down days. I mean, I think these definitely offer buying opportunities, but I think it`s a mistake to think that after kind of the run we`ve had in these commodity stocks, some of the run we`ve had in these cyclical stocks and then the fear over inflation and what the Fed`s going to do, I think it`s a mistake to think that we can get out of this with just a week or two of down side action. I think it`s going to be choppy in here. I don`t think we`re going to see a really big pullback in the market, but I think it`s likely we`re going to see more down side.
GHARIB: A lot of market strategists I was talking to today are saying that the fundamentals really haven`t changed for most of the companies in the market so do you think investors are overreacting here?
WREN: Well, I think it`s easy for investors to overreact when they`ve been piling in to just a fairly narrow part of the stock market, the cyclical stocks. When you`re at the point of the economic cycle, when interest rates are rising, economic growth is going to slow, virtually every major central bank in the world is either raising rates or talking about it, those cyclical stocks, those commodity stocks, they generally don`t do very well, at least on a relative basis in that kind of an environment. So I think we`ve had a lot of people in those stocks. They`ve been in them late and there is probably quite a few leverage positions there.
GHARIB: So as I said at the beginning of your segment, that you were busy today buying stocks rather than selling. What were you buying? What are some of your favorite stocks for long-term investors?
WREN: Well, I think given our overall view and really when we look out through the end of 2007, so 18 months or, so we`re looking at substantially slower slowdown in earnings growth, a slowdown in economic growth and then just moderate inflation from our end. So really when you look at that, it`s a pretty ideal environment for stocks and stocks in general, but particularly for more reliable, less cyclical defensive types of stocks. A lot of those are in health care and staples. Some of the names that we like right now, things like Walgreens, things like Pepsi, things like Cardinal Health, basically companies who have earnings streams that are really not as affected by the ebb and flow of the economy as some of these commodity stocks.
GHARIB: Do you own any of these stocks? Does AG Edwards do business with them?
WREN: I personally do not own any of these stocks and certainly AG Edwards, our analysts cover those stocks and I`m sure that our investment bankers are probably looking to do business with those stocks.
GHARIB: We just have a few seconds left. Your forecast for the Dow was 12,000 at the beginning of the year. Are you still sticking with those numbers?
WREN: We absolutely are Susie. We`re looking for 1,400 in the S&P, a little bit over 12 in the Dow and just shy of 2500 in the NASDAQ. So we are definitely positive on the market. We want to be in there buying these defense, less cyclical stocks.
GHARIB: OK, Scott, thanks a lot for coming on the program.
WREN: All right, thanks Susie.
GHARIB: We`ve been speaking with Scott Wren of AG Edwards.
