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Investors can choose from thousands of publicly traded securities, so picking stocks worthy of a spot in your portfolio can be challenging. It's even harder knowing if it’s the right time to buy.
To help, professional fund managers are sharing their single best trade idea with TheStreet.
Nobody has a crystal ball, and many things can derail even the best investment thesis. However, professional fund managers have years of experience and resources Main Street investors can only imagine.
For this edition of Single Best Trade, we spoke with Levi Stewart Zurbrugg, senior investment analyst and portfolio manager for Sextant Core Fund. The Sextant Core Fund is managed by Saturna Capital, a West Coast-based money manager with over $7 billion in assets under management.
Saturna Capital/TheStreet
Zurbrugg, a Chartered Financial Analyst (CFA®), is a long-term-oriented investor.
His fund invests about 40% of its assets in U.S. stocks, 20% in foreign stocks, and 40% in investment-grade fixed-income securities. It has returned 13% in the past year, 6.8% in the past five years, and 5.5% over the past 10 years, according to Morningstar. It has about $24 million in assets.
Read on to learn why Schneider Electric SE, a France-based global energy company, is Zurbrugg’s single best trade now and what could change his mind.
Single best idea?
Schneider Electric
Why do you like it?
Schneider (SBGSF) (SBGSY) is the global leader in energy management products and a top player in industrial automation. Simply, its products provide the life blood to the digital transformation and energy transition. Through transformers and switch gears, Schneider products are critical infrastructure in the transmission, distribution, and use of electricity.
Related: Veteran fund manager reveals 3 favorite global stocks
Its uninterrupted power supply solutions ensure that if the grid goes down, data centers can seamlessly switch from the grid to backup battery or generator power. Supporting this tangible infrastructure, Schneider’s comprehensive software offerings allow customers a host of analytics, ranging from the ability to simulate and fine-tune automation processes to predicting required wind turbine maintenance.
While solar panels and AI chips frequent news headlines, the underlying infrastructure required to connect electricity production and its end uses receives less attention. Regardless, Schneider foresees its total addressable market growing from ~€400 billion in 2023 to more than €500 billion in 2027, a 6% to 7% compound annual growth rate.
For its part, management expects the company can increase its share, growing sales in the 7% to 10% range annually to 2027. Along with above market sales growth, the company guides to 50 basis points of annual EBITDA margin expansion. All this provides the foundation for a company that could compound earnings in the low-double-digits for the next four to five years.