Apple stock ‘dwarfs anything else on the table,’ market strategist says

Fitz-Gerald Group CIO Kieth Fitz-Gerald joins Yahoo Finance Live to discuss investing during market corrections, tech and energy, FAANG stocks, AT&T spinoff in the Discovery deal, 5G, and crypto.

Video Transcript

ALEXIS CHRISTOFOROUS: I want to stick with the markets now and bring in Keith Fitz-Gerald, Chief Investment Officer at Fitz-Gerald Group. Keith, always good to see you. So look, it is lunar year, the year of the tiger, not the year of the bull or the bear. But I'm curious where you think this market is headed. After a pretty miserable January, do you think this market will find its footing, or are we going to take another big leg down?

KEITH FITZ-GERALD: Well, you know, this is one of those things where you've got to take a step back, look at the broader perspective. By the numbers, we know that this is not unusual. There's been 33 massive corrections since 1950. January ergo is absolutely normal. There's a buyer for every seller and a seller for every buyer.

Me personally, I think we've got another few percents downward, and then we're going to find some footing and charge higher because the economy actually is strong. The right companies are even stronger. So I think we've got a little more downside. Floor is not quite in yet. We haven't seen the capitulation to give up. Your neighbor hasn't sworn off stocks, for example, any more than mine have. Until that happens, we've probably got a little bouncy behavior ahead of us.

ALEXIS CHRISTOFOROUS: So then what do you do with the portfolio to take advantage of the bouncy behavior, or to at least preserve what it is you've got going on, Keith?

KEITH FITZ-GERALD: Well, the first rule of behavior is don't do anything stupid. This is not the time when you want to make rash decisions or change your long-term investment philosophy. This is when you focus on finding companies that are winning, companies that are profitable, companies that have great products we can't live without. You sell the laggards. You concentrate on companies that have inflation protection capacity. Companies that are in energy, for example, or technology are doing great things. Apple, for example, Exxon just this morning. The roster is pretty full, if you know what to look for.

ALEXIS CHRISTOFOROUS: All right, let's talk a little big tech because it's a big week for these names. This week alone we're going to hear from Meta, formerly Facebook. Google's parent, Alphabet, I mentioned at the top of the show, Amazon as well. What are you expecting from these companies? And what positions do you have in them at the moment?

KEITH FITZ-GERALD: Well, I'm completely flat on all three of them. And the reason I'm flat is because I want to wait and see what the numbers have to say. You know, Facebook, Meta is going to be Fantasy Island for me. It's all about what they're going to do with Oculus and how they're going to move into the Metaverse. But we don't know what that looks like yet. So I'm going to hang back until I see what the numbers. Google, Alphabet, that's clearly, for me, the area of interest because they've got a lot of businesses. Their cloud, their data, their advertising, that truly is the one that's going to generate the money.

On the other hand, Amazon is still under pressure. So I've owned all three of these companies in the past, but I'm very much wait and see right now. I want to see what they're going to do. We've got to get through the Fed. We've got to get through that little bounce. I'm not in a rush, and I'm perfectly content to look for those companies that are making money.

ALEXIS CHRISTOFOROUS: What are you doing with Apple's holdings right now? I mean, they came out with pretty stellar earnings.

KEITH FITZ-GERALD: Oh, that's a company that if I'm smart enough, I'm not going to let go of for the rest of my life. I'm content to buy more and hope I'm smart enough to do it.

ALEXIS CHRISTOFOROUS: All right, so that's your-- that's your big blue chip. I understand. It's gone from growth to, like, just being this, like, blue chip company you have to have in your portfolio. Is that how you see Apple?

KEITH FITZ-GERALD: Yeah, it's one of those companies that, you know, if you look at the way the world is working and you look at what that company is doing, you know, you don't see growth at 30%, 40%, 50% in every business segment. The company is so big. You're talking about $600, $700, $1,000 that it makes every 60 seconds. So it just dwarfs anything else on the table. And when you're firing on all cylinders, I submit it's very hard to go wrong with a company like that.

ALEXIS CHRISTOFOROUS: All right, got to talk a little telecom because we know that 5G, lots and lots of hurdles here for 5G sort of taking off the way a lot of these telecom giants had hoped. And AT&T in particular getting hit today. The news there, of course, it's going to be slashing its dividend nearly in half. It's going to be spinning off its WarnerMedia. And it's saying it's doing that in part to sort of catch up in the 5G game. What do you like in that space right now?

KEITH FITZ-GERALD: Well, first and foremost, I got to tell you, I don't buy that argument. I think they're splitting up because they can't handle the combination of streaming content and the 5G. So to me, this is a deconglomerization. It's similar to GE. It's similar to Harley. Trying to break it apart so they can unlock value is the thinking. But I think they're playing catch-up in both business segments, so I'm not keen on the stock either way.

If I were going to go into the 5G space, I'm going to go right back to Apple because they're going to make the haystack, not the needle. If I'm going to go into the technology, I'm going to be looking at the chipsets like the NVIDIA because they're going to power the 5G. This country's got a problem. Most of our big phone makers have spent more money advertising 5G than they have building it out. I mean, Verizon's the one that's out in front, but even so, it's a fraction compared to what you see overseas.

ALEXIS CHRISTOFOROUS: Interesting. So your play on 5G is Apple, not the major telecoms.

KEITH FITZ-GERALD: Correct, simply because, you know, this is one of those situations where if you're going to look for the needle in the haystack, there's a role in that. That's fine. I'd rather own the haystack.

ALEXIS CHRISTOFOROUS: Well, OK, fair enough. And finally, you and I have talked crypto in the past. It's been a wild ride. At least today, they're up, the major cryptos, with Bitcoin now nearing $39,000. I'm looking at Ethereum, up now better than 4%. Have you changed your feelings about crypto? And do you hold any?

KEITH FITZ-GERALD: I'm upside down on the crypto I do own, but no, I haven't changed my feeling because digital money is coming, whether we like it or not. It's one of those situations where it's very hard to pick the winners. But you got to have a toe in the water. So I own Bitcoin, I own Ethereum, and I'm perfectly content to wait this one out. But again, going to the needle in the haystack, that's going to be JP Morgan for me with regard to all things digital, even though I have some of the currency.

ALEXIS CHRISTOFOROUS: A little bit of an outlier, Keith. Keith Fitz-Gerald of Fitz-Gerald Group, thanks so much for being with us.