TopPicks from Shane Obata, portfolio manager, Middlefield Capital
Shane Obata, portfolio manager at Middlefield Capital, discusses his top picks: Nvidia, LVMH, and Eaton.Nvidia is the first and foremost beneficiary of the AI spending cycle. We recently heard that NVDA’s top of line GPUs are effectively impossible to buy in the current environment. As a result, companies hoping to deploy will have to wait until at least the second quarter of next year. We are not worried about the recent pullback in the stock price and in fact are embracing it.
Therefore, we are significantly more comfortable with the price now than we were before its last blowout quarter. This is especially true given that we believe this is just the beginning of the AI spending cycle and Nvidia has the best offering, with leadership across both hardware and software. Even though earnings per share estimates jumped following the last quarter, we think they are probably still too low for 2023 and 2024.LVMH continues to be our preferred name within the luxury space, with the best portfolio of brand sin the world. We view this company more as a staple than a discretionary stock. LVMH is well diversified across geographies and business segments. This should provide resiliency to the overall business, regardless of how the global economic situation evolves.
LVMH is a company that we think can demonstrate high-single-digit revenue growth and low-double-digit EPS growth through 2025.The electrification megatrend was evident in Eaton’s most recent earnings report. The company, which is one of our top picks in electrical equipment, delivered record quarterly EPS and lifted guidance for the full year to reflect 16 per cent growth over 2022. Eaton also reported strong growth in its electrical sector backlog, which was up 22 per cent.
We believe that ETN will demonstrate mid-to-high single digit revenue growth and low-double-digit EPS growth through 2025. As such, we do not believe the stock expensive even though it has done very well Year to date.
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Shane Obata's Top Picks: Nvidia, LVMH, and EatonShane Obata, portfolio manager at Middlefield Capital, discusses his top picks: Nvidia, LVMH, and Eaton. He believes that Nvidia is the first and foremost beneficiary of the AI spending cycle, with its prospects for earnings growth improving. LVMH is seen as a staple within the luxury space, with the best portfolio of brands in the world.
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