Michael Hakes, senior portfolio manager, Murray Wealth Group
FOCUS: U.S. and global stocks
Top Picks: UnitedHealth, Accenture, LVMH
MARKET OUTLOOK:
First quarter earnings season is almost done and the visibility for the second half of 2025 just became very murky with many companies pulling second half guidance over the last two weeks. Airlines, such as Delta and American, all cited economic uncertainty around tariffs. The auto makers, Ford, GM and Stellantis suspended guidance. Others such as Mattel, UPS, Apple, AMZN and Walmart all flagged issues with second half visibility.
What do investors do when we have a “once in the thousand years” U.S. president?
All eyes will be focused on three things: the consumer, the labour market and inflation.
The consumer currently is in pretty good shape but that is set to change through the summer and fall. If some sort of trade deal with China is not reached, the U.S. consumer could be facing empty shelves for Christmas and or higher prices.
On the labour front, unemployment is stable at 4.3 per cent but job growth is slowing, and jobless claims came in above expectations on May 1.
For inflation, we will begin to see the impact of tariffs through the summer. Some are expecting headline PCE could reach 3.5 per cent to four per cent by year end. That’s from the 2.3 per cent today.
We feel that “peak tariffs” are behind us and the speed of de-escalation is now the debate. The daily headline chaos from the Golden House is the new normal.
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TOP PICKS:
UnitedHealth Group (UNH NYSE)
We like UnitedHealth at this price. A few weeks ago, the company guided down for the year on its first quarter results, after experiencing a spike in care utilization from Medicare Advantage members. Seniors seeking outpatient care and physician level services was far above what they had planned. It took down earnings per share for 2025 by 11 per cent, the stock was down 20 per cent.
It is trading at 13.5 times price to earnings (P/E) it is the cheapest its been in five years, it hasn’t been this cheap since Bernie Sanders was running for leader of the Democratic Party and his policy for healthcare was universal coverage, single payor program that would eliminate the need for private healthcare coverage.
If they can get back to more normalized utilization rates in 2026, EPS will approach $30 and the stock will recover into the $500 range.
Accenture (CAN NYSE)
Accenture is a global professional services company specializing in strategy, consulting, technology, and operations, helping clients improve performance and drive digital transformation. Companies in 2024 and early 2025 beta tested Gen AI on small parts of their platforms, they are now beginning to utilize it across the entire business. Accenture is a key player to help companies achieve this implementation.
We believe all companies will need to adopt gen AI throughout their business if they want to compete and survive. This will lead many years of robust demand for Accenture and their services. We think the stock can grow in the low double digits over the medium term.
LVMH (MC FRANCE)
LVMH Moët Hennessy Louis Vuitton SE is the world’s largest luxury goods company, headquartered in Paris, France, and founded in 1987 through the merger of Moët Hennessy and Louis Vuitton. Today, it owns 75 prestigious brands across sectors such as fashion, leather goods, wines and spirits, perfumes and cosmetics, watches, and jewelry. These brands include Tiffany, Celine, Sephora and Bulgari.
The stock has been weak after they missed the last quarter and investors became worried about the impact of tariffs and the increased odds for a global recession. The stock is trading at a very undemanding 17.5 times forward P/E. As the tariff picture becomes clearer the stock will respond positively.
| DISCLOSURE | PERSONAL | FAMILY | PORTFOLIO/FUND |
|---|---|---|---|
| UNH NYSE | N | N | Y |
| CAN NYSE | N | N | Y |
| MC FRANCE | N | N | Y |
PAST PICKS: APRIL 19, 2024
Kingfisher (KGF LON)
- Then: £245.60
- Now: £302.20
- Return: 23%
- Total Return: 29%
Starbucks (SBUX NASD)
- Then: US$87.61
- Now: US$81.17
- Return: -7%
- Total Return: -5%
AstraZeneca (AZN NASD)
- Then: US$68.55
- Now: US$68.26
- Return: 0%
- Total Return: 2%
Total Return Average: 9%
| DISCLOSURE | PERSONAL | FAMILY | PORTFOLIO/FUND |
|---|---|---|---|
| KGF LON | N | N | Y |
| SBUX NASD | N | N | N |
| AZN NASD | N | N | Y |
