Top picks from Peter Hodson, chief investment officer at i2i Capital Management
Peter Hodson, chief investment officer at i2i Capital Management, discusses his outlook for the markets.Everyone is talking about high valuations in the market, which frankly makes us less concerned. The “worry” means a healthy dose of skepticism and can create opportunity.
There is certainly lots of noise out there. But the two things that really count are interest rates and corporate earnings. Interest rates have already started to move lower as inflation cools. Corporate earnings are solid, with reporting companies in the S&P 500 Index so far showing 8.8 per cent growth in the third quarter. The fourth quarter is usually good for markets.
Valuations remain very attractive in the small/mid sector. Typically, smaller companies get a premium in the market, because they are growing, and have the ability to grow, much faster than large companies. But this premium has shrunk in the past three years, and historically is not far from record low levels reached less than a year ago. Despite faster growth and low valuations, the Russell 2000 Index is up 13 per cent this year, versus 23 per cent for the S&P 500 Index.
Peter Hodson, chief investment officer at i2i Capital Management, discusses his top picks: SHIFT4 PAYMENTS, CELLEBRITE DI, and CONSTRUCTION PARTNERS.SHIFT4 offers payment processing solutions, to many different industries, but has a good niche in restaurants and hospitality. We would consider it a decent takeover target, and it has already been approached twice, once last year by Global Payments and earlier this year by an undisclosed company.
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