G Squared Private Wealth Founding Partner and Portfolio Manager Victoria Greene joins Yahoo Finance Live to discuss the market outlook for 2021 as investors digest the latest stimulus headlines.
AKIKO FUJITA: I'm curious how you're seeing things shape up as we count down to the new year, especially now that we've gotten this stimulus bill out of the way. Still question marks about how much those direct checks to Americans are going to be, whether it's $600 or $2,000, but we do have a $900 billion deal on the table now signed by the president. How supportive do you think that's going to be going into 2021?
VICTORIA GREENE: I think it's going to be very helpful. You know, certainly people are still struggling to make some ends meet, and anything we can give them and a little more certainty on the unemployment side is definitely helpful to them.
We're honestly pretty bullish on 2021. Look, the market's a leading indicator. We tend to think the market looks at it and says is the world going to get better or is the world going to get worse? And we generally think the world is definitely going to trend better. I know it may take a little bit for all the vaccines to get rolled out, but I do think we're going to see a recovery, a recovery in demand, recovery in employment, and that's going to drive earnings. And at the end of the day, the companies are going to be more profitable, and that's why we definitely think there's opportunity still in 2021, and we think it actually could be a fairly solid year.
ZACK GUZMAN: Yeah, Victoria, it seems like that seems to be consensus now, optimism in 2021 here. Your notes here kind of mention, you know, doubling down and focusing in on the earnings-growth potential here. I'd be curious to get your take on how much of an impact you might think there would be from upping stimulus checks to $600 or from $600 to $2,000 considering a lot of the times when we've seen this roll out, Americans tend to keep this in savings. We've seen savings take a huge jump here. So would you see that maybe give a boost to some of these harder-hit sectors, or do you expect that to not necessarily change the game all that much?
VICTORIA GREENE: Absolutely. So think about it. If you're living paycheck to paycheck and now you have a little more certainty-- you have enhanced unemployment benefits. You know what's going to be coming in with your stimulus checks. Maybe you go out to eat a little bit more. Maybe you take a staycation or a vacation somewhere. You get in your car and you maybe drive and visit some people you haven't seen. So I do think it's going to definitely spark demand.
And certainty is something the markets and people really like in their lives. So all of this will they, won't they, you know, brinksmanship generally weighs on the American public and the spending. But we honestly saw a fairly robust spending period through the holidays, and I think you're going to see-- you know, people are going to take their checks similar to a tax-refund check. Maybe they get their cars repaired, buy the new tires. You know, some of the spending that maybe they put off due to uncertainty, suddenly you have pent-up demand that may push forward.
So yeah, you could see retail. You could see restaurants. You know, airline travel I know is still down 50%, but it was the best it's been since Q1. And I think even though there's still risk out there in the world, people, one, are very tired of it, and then two, really are feeling this need to go out and do something and finally maybe feel a little bit more secure because now they know what their benefits might be or they know what their stimulus check is.
And $2,000's even better than $600. Certainly that's a huge boost to families.
AKIKO FUJITA: So let's talk strategy here. Two specific stocks you're watching very closely right now, Chevron and CrowdStrike. CrowdStrike certainly one that we've talked a lot about with the growth in the cybersecurity space, but how are you valuing Chevron right now? We've had a number of guests who've come on that have talked about the opportunity just given the declines we've seen so far this year, but also the outlook particularly in the energy sector, some would argue, is not necessarily a very positive one going into 2021.
VICTORIA GREENE: Well, it's not the worst one either. We'll take a little bit of positives where we can get it in the energy sector. So, look, if you look at the China recovery in demand and oil consumption, that is a potential roadmap for recovery. OPEC is actually playing nice. I know the extra 500,000 barrels per day is not optimal for an oversupplied demand aspect, but they actually agreed to something, which is very important that OPEC gets along. And Chevron has a great balance sheet, a 6% dividend yield. They actually eked out a little bit of profit this year. They're going to be very disciplined on their capital expenditures, and they're still down 30% year to date.
So if you're looking across the market and you realize, hey, you know, some of these valuations are untenable or, man, this growth versus value-- where do I go in value? We honestly think energy and financials are great places to go to mine a little bit of value.
And dividends have been unloved. Energy is certainly unloved, but it's certainly a play on demand recovery and a play on an overall recovery. So we think people will travel more. People are going to get in their cars more, and you may see more commuting again. You know, work from home certainly took a ding out of road miles driven, and some of that may normalize.
ZACK GUZMAN: Yeah, and Victoria, I mean, you're talking about risk/reward there. When you step back and kind of look at advice for people trying to put together a portfolio here, maybe putting in some energy risk. But, I mean, CrowdStrike, another one of your picks you're talking about, one of those stocks that's been great all year and not showing any weakness in terms of where we're at. Of course being a cloud company and cybersecurity company, a little bit less tied to the underlying economy here. But talk to me about how investors should probably be weighing that risk/reward, if it should be-- you know, what's your advice to them in kind of splitting between a Chevron in the energy space and some of those other places?
VICTORIA GREENE: So for certain, like, CrowdStrike has a wide moat. Their product is just purely better. They have an AI and cloud-based product. Their Falcon threat defender analyzes 4 trillion events a week. And so it's constantly learning.
And the SolarWinds attack, if anything, it's been a boon for CrowdStrike because, one, reminds people you need to invest in your cybersecurity. Two, you actually need to spend a little bit more money with work from home and make sure all your end users are actually protected and doing what they need to do. And three, SolarWinds actually utilized CrowdStrike's product when it realized that it had been hacked. I mean, what better way of an endorsement is that?
They are eating market share in a growing market. Their product is superior, better to use. They're cross-selling more modules. There are growth expectations of 75% plus year over year, and they're expected to even exceed that target. It's just a good company with a great product, and it's hard to argue against it. I know it's not cheap, right? $227 was its high. It's still above $200. Had a huge run up in the wake of the SolarWinds. But I also think it's just a good product that can defend where it's trading at and is worth it.