Eva Ados, COO and Chief Investment Strategist at ERShares, recently appeared on CNBC’s Trading Nation to discuss investment potential in the midst of high performance by the markets.
Growth stocks are where Ados believes investments are smartest, particularly in a market that is still experiencing inflation fears. “As this earning season demonstrates, seemingly priced-to-perfection growth stocks still have more room to run,” she said.
Companies such as Square and Snapchat both posted big earnings during a reporting season that saw 80% of companies reporting growth beyond estimates. While this was a win for both growth and value stocks, Ados explains that the day after positive earnings reports, value stocks tend to plateau while growth stocks go up on average 2%.
“It shows that they have high expectations to obtain but are still able to exceed them and surprise investors,” Ados said.
Pivoting to discuss cybersecurity, Ados believes that the sector to be an area of growth, with demand only continuing to grow. “Every 11 seconds there’s a company around the world under cyberattack,” Ados said, explaining that ransomware costs have more than doubled over the previous year.
With the shift to working from home, there are greater opportunities for hackers to exploit the vulnerabilities of the end points of computers at home. They have driven an already aggressively growing sector into a hypergrowth one amidst the pandemic.
A Look Ahead
Ados went on to discuss the overall outlook for the markets moving forward. The two primary risk factors that she described as oscillating factors throughout this year have been Covid and fears of inflation.
Ados argued that Covid could be considered deflationary, but that there is an element of it that affects inflation through its ability to disrupt supply chains. With the deflationary pressures of Covid, combined with the inflation fears and inflationary aspects Covid creates, Ados said that she expects growth and value to continue to alternate as lead performers going forward.
Ados said to expect a somewhat choppy Q3, but that “we think it’s going to set the stage for a very strong year end.” She believes that the tech sector will get its time in the spotlight again as cyclicals come back around with money to invest back into technologies like cloud computing and cybersecurity.
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