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AI, Weight Loss Drugs And More: Portfolio Manager Names Stocks To Play ‘new Secular Growth Themes’

AI, weight loss drugs and more: Portfolio manager names stocks to play ‘new secular growth themes’

AI, weight loss drugs and more: Portfolio manager names stocks to play ‘new secular growth themes’

Markets may be facing an “unusual amount” of uncertainty, but there still are very good opportunities right, according to one portfolio manager, who tells CNBC Pro about three new growth areas and the stocks he likes. There are many “cross currents” in the market right now, said Sanjay Ayer of the U.S.-headquartered WCM Investment Management. “You have the Covid period. You have lots of supply demand imbalances out there. You have macro headwinds, you have higher interest rates, higher inflation, uncertainty about both. And then you overlay on top of that the emergence of two or three brand new secular growth themes,” he said. Ayer oversees around $68 billion of WCM’s assets, including $400 million via the WCM Select Global Growth Equity Fund. CNBC Pro takes a look at the stocks he likes in three “brand new” areas of growth: obesity drugs, reshoring and artificial intelligence. Obesity drugs Denmark’s Novo Nordisk is one of the biggest health-care holdings in Ayer’s fund. He’s bullish on the company not just because of the strong demand for its products, but also because its strong corporate culture “has set [it] up well” for talent acquisition. The healthcare player is in the business of producing drugs to treat chronic conditions such as diabetes, hemophilia and obesity. Novo Nordisk ’s Wegovy drug has been approved by the U.S. Food and Drug Administration for weight loss management. GLP-1 (glucagon-like peptide-1) is an active ingredient in the Wegovy drug and is said to be a “major new development in the market,” Ayer said. It was initially approved to treat diabetes but was eventually found to have an off-label use in aiding weight loss. They have been disrupting anything from owners of dialysis centers to bariatric surgery providers and the food industry . Reshoring infrastructure Ayer sees bright spots in the reshoring theme too. Reshoring — which occurs when companies shift parts of their manufacturing and supply chains to different countries — has boomed over the last decade. Among other reasons, companies engage in reshoring to avoid rules and restrictions in certain countries or shorten supply chains to limit potential disruptions. This trend is more prevalent in the U.S., Ayer said, naming U.S. engineering services company Tetra Tech and Canadian railway company Canadian Pacific as his top picks in the reshoring infrastructure theme. Calling Tetra Tech the best potential investment for the theme, the portfolio manager notes it is exceptionally well managed and has “the best game in town” when it comes to building wind farms, decarbonizing buildings and doing vulnerability tests for rising sea levels and wastewater treatments. He is positive on Canadian Pacific because of its “best-in-class financial performance for years,” which he attributes to the culture the company has cultivated over many years. Artificial intelligence Artificial intelligence is another “growth area” Ayer highlighted. The portfolio manager named tech giant Amazon as a good play of the AI wave. Aside from from its involvement in tech, he expects the company to benefit from a growth in market share and profit margin of its retail arm over the next three years. Ayer also likes software development company Atlassian , whose “strong culture,” he said, has enabled it to get “best-in-class talent.” The Australian software juggernaut — which uses AI in its programs — recently made the news for acquiring U.S.-based Loom for $975 million. Loom is a video-messaging platform with AI-powered features. The way Ayer sees it, more companies in the U.S. are foraying into AI right now, compared to those in other parts of the world. “AI has relevance in markets like China, but clearly, it’s a little more investable in the U.S. right now with the big AI companies being located here, so I think a lot of dialogue is more on the U.S. side, but there are lots of companies, in Japan, and India and others that play the theme as well,” he said. — CNBC’s Christina Cheddar Berk, Carmen Reinicke and Julie Coleman contributed to this report.

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Daisie Hobson

Daisie Hobson is a Director at the Reshoring Institute and an engineer with many years of experience in manufacturing and project management.

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