On a down day for major market averages, Paul Hickey, co-founder of Bespoke Investment Group, and Phil Camporeale, portfolio manager at JP Morgan Asset Management, discussed the ongoing volatility. They both appeared on CNBC's 'Closing Bell Overtime' on March 5 to talk about how tariff policy raises uncertainty around growth and earnings outlook.
Camporeale highlighted the difficulty of navigating the rapid pace of headlines surrounding trade discussions out of Washington. Entering the year with a 10% equity overweight, JP Morgan has since reduced this to 5%, reallocating some exposure to US, developed non-US, and emerging markets. Camporeale noted that while policy uncertainty raises questions about growth and earnings outlooks, the US economy remains strong, with a 4% unemployment rate, 3% GDP growth, and solid corporate balance sheets. He said that despite short-term market turbulence, recession risks remain low, and their portfolio maintains an equity overweight alongside high-yield exposure. He also pointed out that it is still early in President Trump's second term and too soon to draw definitive conclusions about its impact. He believes that lower interest rates could pave the way for positive fiscal and deregulation policies that have yet to fully materialize. Despite current market fears, he remains optimistic about the economy’s strength and low recession probability.
Hickey weighed in on the uncertainty dominating markets, emphasizing that no one can predict the full impact of tariffs. He referenced Target CEO Brian Cornell’s comments earlier in the day about the lack of certainty regarding tariffs, taxes, rates, and the economy. Hickey remarked that this stew of uncertainty is keeping investors cautious. He noted that intraday rallies, such as the one seen earlier in the day after bouncing off the 200-day moving average, are often short-lived due to unpredictable policy developments. For instance, Trump’s speeches have recently been followed by market declines, adding to investor hesitancy. He also highlighted historical context for pullbacks like the current one: since World War II, there have been 64 instances of a 5% drop from all-time highs in the S&P 500. While not uncommon, he advised caution in the short term due to unpredictable market reactions.
Both experts agreed that uncertainty around tariffs and other policies will continue influencing market behavior in the near term. However, they emphasized different aspects, Camporeale focused on economic strength and strategic positioning within portfolios, while Hickey stressed caution amid ongoing unpredictability in policy-driven market movements.
Methodology
We used the Finviz stock screener to compile a list of the top US stocks that had a forward P/E ratio under 15. We then selected the 10 stocks that were the most popular among elite hedge funds and that analysts were bullish on. The stocks are ranked in ascending order of the number of hedge funds that have stakes in them, as of Q4 2024. The hedge fund data was sourced from Insider Monkey’s database which tracks the moves of over 1000 elite money managers.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter's strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
Is United Airlines Holdings, Inc. (UAL) the Best Holding Company Stock to Buy Right Now?
A bird's eye view of a large commercial jetliner taking off from an airport runway.
United Airlines Holdings, Inc. (NASDAQ:UAL) delivers comprehensive air transportation services across a vast global network. It connects passengers and cargo throughout North America, Asia, Europe, and beyond, while also offering essential support services like ground handling and maintenance.
In Q4 2024, the company's international flights were more profitable than its US flights. Flights to Asia were making 4.1% more money per seat than the year before (Pacific PRASM/Passenger Revenue per Available Seat Mile), which is a shift from the 15.7% decline in Q3. It also added 31% more seats to Asia in 2024, restoring pre-pandemic levels. Flights across the Atlantic Ocean also earned 7.1% more money per seat, without the addition of more seats. United Airlines Holdings, Inc. (NASDAQ:UAL) is the largest US carrier on Atlantic routes and anticipates a record-breaking Q1 2025 in this sector.
In 2025, the company will fly smaller 737 planes from Japan to other Asian cities. It will use its base in Guam to make it easier for people to travel between the US and Asia. It will make current international flights more efficient by trying to fill more seats on each flight. The company expects strong international performance to continue due to limited wide-body jet deliveries.
Patient Capital Management highlighted the company's strong Q4 2024 performance which was driven by robust travel demand, a new buyback program, improved customer service, and its leading profitability in the industry. It stated the following in its Q4 2024 investor letter:
“United Airlines Holdings, Inc. (NASDAQ:UAL) had a strong fourth quarter, gaining 70.2% in the period. The company benefitted from continued strong demand that surprised the market as well as the initiation of a buyback program, the first since COVID. There continues to be strong travel demand from both retail and business travelers. According to the International Air Transport Association (IATA), global air passenger travel is still below the pre-COVID implied trend path despite reaching a new all-time high this year. United’s focus on the customer over the last few years has led to strong improvement in net promoter scores (NPS) which should continue to flow through the model via better TRASM (total revenue per available seat mile) and higher cash flows and earnings. As of today, United alone accounts for ~30% of the overall industry’s profits. We expect this market share to grow and be defensible as we transition to an environment where customer service becomes the differentiating factor, and scale provides unparalleled ability to reinvest in the customer experience.”
Overall UAL ranks 8th on our list of the most undervalued US stocks to buy according to hedge funds. While we acknowledge the potential of UAL as an investment, our conviction lies in the belief that AI stocks hold great promise for delivering high returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than UAL but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
