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A&G's Kramer on Stocks: Favorite Pick is Arista Networks(Audio) · Bloomberg Intelligence

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  Speaker 1: I'm Katherine Cowdery. Wall Street pulling back from all time highs,
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  Speaker 1: You're listening to taking stock with Pim Fox and Kathleen
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  Speaker 1: Hays on Bloomberg Radio. Matt Miller here filling in for
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  Speaker 1: Kathleen on this warm and Muggy Friday in New York Ice.
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  Speaker 1: Warm is the wrong word. Hot and muggy Friday in
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  Speaker 1: New York City. Alongside Pim Fox, We're gonna talk to
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  Speaker 1: Hillary Kramer right now about another place that's very hot
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  Speaker 1: and muggy right now, but filled with spectators whose pockets
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  Speaker 1: are overflowing with cash looking to buy everything they see,
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  Speaker 1: and that is Rio. It's winter. It's well, it looks
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  Speaker 1: so hot. Okay, Well that's another story. They do the
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  Speaker 1: summer Olympics in a place where it's winter. It is winter.
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  Speaker 1: All right. Well, I believe you, Pim. You're more well
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  Speaker 1: traveled than I am. Hillary Kramer, I'm sure has been
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  Speaker 1: there as well, in chief investment officer at a MG
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  Speaker 1: Capital Group. Hillary, Uh, When I think about Brazil, because
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  Speaker 1: I work here at Bloomberg, I think about the IBO vest,
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  Speaker 1: but it's killing it. The real unbelievable gains probably the
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  Speaker 1: best gaining currency of any uh in on the Bloomberg
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  Speaker 1: terminal against the US dollar. But those have obviously nothing
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  Speaker 1: to do with the Olympics. Those gains. Um, what about
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  Speaker 1: Brazilian stocks are up because of the Olympics. Well, the
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  Speaker 1: Brazilian travel stocks of course. Now Gold g O l
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  Speaker 1: one of my one of my favorites, that's been a
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  Speaker 1: triple this year. That's the local regional airline. It's really
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  Speaker 1: the jet Blue of Brazil. Uh And you look at
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  Speaker 1: a company like Gold, not even a four million dollar
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  Speaker 1: market cap, and there's a lot more to go. Companies
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  Speaker 1: like Goal. Those small cap and MidCap Brazilian stocks were
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  Speaker 1: hurt so bad. And there is that an effect that
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  Speaker 1: takes place when you have Olympics. You know, just look
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  Speaker 1: at Greece in two thousand four. I mean, don't look
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  Speaker 1: what happened after two thousand four, But you know, Olympics
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  Speaker 1: can shine a light and um and and help illuminate
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  Speaker 1: some of the better buys and undervalued situations. Gain on
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  Speaker 1: the IBO vest year to date, that's not entirely an
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  Speaker 1: Olympic deal, right, no, no, I mean you had a
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  Speaker 1: lot of factors that came together. You know, there were
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  Speaker 1: there was the worst corruption scandal probably um. You know
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  Speaker 1: of the decade that took place in Brazil that brought
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  Speaker 1: the market down. The commodities, you know, completely collapsed. You know,
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  Speaker 1: we're looking at oil potentially a few months ago going
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  Speaker 1: into the teens. Now we're now we're looking at fifty
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  Speaker 1: dollars a barrel, hopefully in the next few weeks and higher.
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  Speaker 1: And so that's helped obviously Petro Brass which has just
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  Speaker 1: been struggling by Petro brocess now and it's fifty two
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  Speaker 1: week high pbr um. You know, companies like valet v
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  Speaker 1: A l E. Which I always used to like, has
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  Speaker 1: a ways to go, but you gotta stick with those
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  Speaker 1: companies like like like g O L by the way
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  Speaker 1: of him. If you invested in Brazil at the beginning
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  Speaker 1: of the year, because you're investing in dollars, I assume, uh,
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  Speaker 1: you'd be up sixty seven yes, because of the value
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  Speaker 1: of the rials has increased, right that real is up
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  Speaker 1: thirty percent. You know, has some of the exporters worried,
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  Speaker 1: of course, but you know, and we have to wait
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  Speaker 1: and see what happens with companies like Amber Air r J.
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  Speaker 1: You know, always had been a popular one, but there's
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  Speaker 1: a glut of it's a glut of aircraft. They're out
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  Speaker 1: in the market. But even that one could come back around. Hillary,
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  Speaker 1: Please tell us about Brock b R a Q. Now,
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  Speaker 1: this is an exchange traded fund, and the reason I
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  Speaker 1: want you to just explain a little bit more is
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  Speaker 1: usually when you get an e t F, it's tied
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  Speaker 1: to an index. And because in Brazil Petro brass is
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  Speaker 1: such a dominant market CAPH, you don't necessarily get an
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  Speaker 1: even slice of the actual consumer market. Tell us about
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  Speaker 1: b R a Q. Well, Brock is a nice e
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  Speaker 1: t F to invest in a way to get a
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  Speaker 1: taste of Brazil and have theposure to Brazil without having
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  Speaker 1: the risk that takes place from investing in a particular
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  Speaker 1: some of these particular large caps that represent the market.
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  Speaker 1: I've never really been a full time advocate of just
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  Speaker 1: e t s, but in the case of Brazil, in
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  Speaker 1: the case of going into um exposure and being a
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  Speaker 1: macro investor and trying to ride a wave, like in
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  Speaker 1: the case of Brazil, you want to be in and
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  Speaker 1: out of those e t F s. It's a great
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  Speaker 1: way to do it. What is it you don't like
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  Speaker 1: about E t F s. Well, I'm gonna get you
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  Speaker 1: in a room with David Kotok. Just locked the door. Um,
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  Speaker 1: because I'm an equity analyst, and I like to find
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  Speaker 1: value and opportunity in particular companies. And you know, and
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  Speaker 1: it's really about the inefficiencies that take place with particular companies.
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  Speaker 1: And I like the valuation of of one company versus another,
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  Speaker 1: like for example, um like flower foods, nothing to do
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  Speaker 1: with Brazil f l O Flowers Food, Thomas Pill, Georgia.
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  Speaker 1: We were talking about it earlier because I was following
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  Speaker 1: it yesterday. Stock tanked yesterday. They make tasty cake products
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  Speaker 1: as well as wonder Bread bake goods line. They're in
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  Speaker 1: the natural bread market. When you look at a company
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  Speaker 1: like that, you know they lower they lower guidance from
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  Speaker 1: a buck five to to a dollar even though they're
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  Speaker 1: gonna do a dollar twenty in cash flow. We're looking
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  Speaker 1: at this company really carefully and you say, Okay, here's opportunity.
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  Speaker 1: Whereas if I were just to do an e t
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  Speaker 1: F in consumer and consumer foods, you know, you run
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  Speaker 1: the risk of not being able to pick up those
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  Speaker 1: opportunities I mean equity investing, stock and being stock investing.
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  Speaker 1: On one hand, yes, it's about long term um wealth
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  Speaker 1: and growth, but at the same time, there's being really
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  Speaker 1: fun about identifying opportunities out there and getting in them early.
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  Speaker 1: I just ask you like a strategic question, because I
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  Speaker 1: understand we always talk about diversified portfolios and so on,
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  Speaker 1: but is it possible that the way to really look
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  Speaker 1: at things is you're looking and waiting for that one
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  Speaker 1: opportunity in your lifetime and just managing your losses because
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  Speaker 1: if you get it, not necessarily right, but if something
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  Speaker 1: pans out, that's when you can make great wealth as
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  Speaker 1: long as you're very disciplined about managing losses. This is
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  Speaker 1: true him, It's true, but any time that you invest
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  Speaker 1: for that big hit, for that home run, it just
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  Speaker 1: never works out that way. Why. I don't mean investing
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  Speaker 1: for the home run, but in other words, that is
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  Speaker 1: what would happen if you're disciplined right, discipline with discipline,
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  Speaker 1: investing um, going the distance and waiting for that big
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  Speaker 1: hit to happen, whether it be buying Apple and being
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  Speaker 1: up ten percent. And I think that's what you're referring to.
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  Speaker 1: But of course it's also timing it right. You know, well,
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  Speaker 1: we all wish we could have bought everything in two
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  Speaker 1: thousand nine. Yes, they didn't bring a bell there market market. Yes.
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  Speaker 1: F l O is a Flowers food and four point three.
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  Speaker 1: You think that the dividends covered? Oh yeah, I think
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  Speaker 1: I think it's fine. I think it's fine because they
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  Speaker 1: have the cash flow. Um, they can cover it next year.
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  Speaker 1: You know, the guidance is still strong enough. Tell me
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  Speaker 1: about Omnicom. That's another one. You want to talk about.
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  Speaker 1: Undervalued growth, undervalued growth O m C. You still have
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  Speaker 1: a dividen yield here of two point six percent. Public
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  Speaker 1: relations advertising agency. Um. You know, it's really pretty cheap
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  Speaker 1: versus the others in the in its category. Itsells at
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  Speaker 1: six times next year's earnings. UM, so it's selling less
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  Speaker 1: than the market multiple. I see opportunity there. I think
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  Speaker 1: it's a really nice solid by. And my favorite stock
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  Speaker 1: right now is Arista Networks a n e T, a
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  Speaker 1: five billion dollar company that competes with Cisco. I think
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  Speaker 1: Cisco could buy them one day if Cisco stops suing them,
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  Speaker 1: because it's these programmable switches and companies like UM, like
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  Speaker 1: Amazon Web Services, they're using Arista's UM programming goal switches.
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  Speaker 1: So I see some opportunity here. We're talking thirty seven
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  Speaker 1: percent sales growth, Like who would ever miss five billion
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  Speaker 1: dollars just stepping in and acquiring a company like this.
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  Speaker 1: So you're talking directly to Chuck Robbins, let me tell
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  Speaker 1: you in any market, tell you gotta explain that to
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  Speaker 1: come because oh, he's the CEO of Cisco, and it
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  Speaker 1: looks like you're you're advising him now via Bloomberg Gradio.
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  Speaker 1: I'm sure he's listening. But well, once he gets you know,
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  Speaker 1: he still needs some more time there to to get
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  Speaker 1: on his feet, you know, and maybe another year or two,
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  Speaker 1: just a couple of minutes left. I want to take
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  Speaker 1: it back to the Olympics. UM, Nike and under Armour
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  Speaker 1: are the kind of companies that I think about possibly
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  Speaker 1: benefiting from the Olympics or Speedo or Arena. UM. What
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  Speaker 1: are the some of the companies that could benefit because
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  Speaker 1: none of those companies have done well this year. I
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  Speaker 1: know under Armour I think could benefit. We could see
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  Speaker 1: some we could see a lift there. I think Nike,
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  Speaker 1: Nigi has run its course. You know, but but we
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  Speaker 1: can still look historically and a think it was beautiful
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  Speaker 1: moment in the Olympics in Atlanta what really created Nike
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  Speaker 1: and brought into the forefront. So so great brands can
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  Speaker 1: be created, um from the right sponsorship. You know, Michael Phelps,
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  Speaker 1: for example, we have Nike, we have under Armour. You know,
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  Speaker 1: he's limited in how much he can show of under Armour,
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  Speaker 1: but there is value that can be found. And many
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  Speaker 1: of these companies have found a way to associate themselves. Um,
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  Speaker 1: Kellogg's has gone back to him. You know, they dropped
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  Speaker 1: him when he was caught smoking pot. Oh yeah, I
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  Speaker 1: mean He's isn't an amazing turnaround story. I gotta say
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  Speaker 1: everybody feels good about about Michael Phelps, which shows you
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  Speaker 1: really can come back, no matter how many times to
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  Speaker 1: get arrested for drunk driving. If you win gold medals
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  Speaker 1: for America, we love you. Right. If you can come back,
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  Speaker 1: if you can beat the underdog and show it you
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  Speaker 1: can win, we love you. Michael Phelps. He's got a
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  Speaker 1: total twenty six medals. Amazing, amazing competitor, you have seven,
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  Speaker 1: don't you met? All right? Thank you very much. Hillary Cramer,
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  Speaker 1: President Chief investment officer A and G a capital group
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  Speaker 1: you're listening to taking stock, will take you through to
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  Speaker 1: the clothes. This is Bloomberg. It is