The technology sector has been a hotbed of activity, with a recent sell-off and a recent rally. While some investors may be hesitant, veteran tech investor Trent Masters remains optimistic and revealed four stocks he has “high conviction in”: Nvidia, Motorola Solutions, Trane Technologies and Sherwin-Williams. Nvidia Topping Masters’ list is the artificial intelligence darling that dominated the headlines last year. Its popularity shows no signs of waning, with shares still up about 141% year-to-date, though they’re down about 9.7% over the past three months. “It’s really quite astounding to see such a big-cap move,” Masters, a portfolio manager at Sydney-based Alfinity Investment Management, told CNBC’s “Street Signs Asia” on Sept. 12. Nvidia shares surged Wednesday after CEO Jensen Huang commented on the company’s innovation plans and the future of AI. This comes after investors became skeptical of the stock after the company released its quarterly earnings on August 28. But Masters called the company’s earnings “solid.” Adjusted earnings per share were 68 cents, beating expectations of 64 cents, and revenue of $30.04 billion, beating expectations of $28.7 billion. “I don’t think Nvidia is at a stage now where it can do wonders financially because the market is more aware of the potential of its AI accelerators and what the market demand for them will be,” Masters noted. Most analysts remain bullish on Nvidia, according to FactSet data. Of the 63 analysts covering the stock, 59 give it a buy or overweight rating, while only four give it a hold rating. The average analyst price target is $149.49, which offers room for upside of 25.5%. Masters said he’s “pretty encouraged” by the applications coming out of the AI giants, adding that cloud demand remains strong and hyperscalers’ capital spending is looking pretty strong. “From that perspective, you can see Nvidia heading for $5 in earnings. And if you get $5 in EPS (earnings per share), valuation isn’t harsh at all. So I’m pretty positive on Nvidia,” he said. Motorola Solutions’ Masters said he likes electronics maker Motorola even though it comes from a “very unattractive technology space.” “This isn’t an Nvidia-like stock where you wake up one day and you’re up 20% (or) 30%. This is a really nice, strong, compounding business that’s always executed well and beat market expectations,” he said. The company’s strength is its land mobile radio devices, walkie-talkies used for a variety of communications, especially in emergencies, which make up 70% of its business, he said. He added, “We have a new device coming out called the APX, and we have an upgrade cycle, which is giving us a little bit of a tailwind for growth.” Motorola shares have risen about 41.1% year-to-date. Of the 15 analysts covering the stock, 10 rate it buy or overweight, four hold and one underweight, according to FactSet data. Their average target price of $449.63 gives it room for 1.8% upside. Trane Technologies Beyond traditional tech stocks, Masters also invests in Trane Technologies, which specializes in heating, ventilation, air conditioning and refrigeration systems. The portfolio manager noted that the company is one of the “top four” companies with 75% market share in its industry and is connected to the tech industry through its data centers. “There may be some excitement around AI, but (the company) has a very solid business, generates very strong free cash flow and has consistently beaten market expectations.” Second-quarter revenue was a record $5.3 billion, up 19% year-over-year. Trane Technologies shares have risen 49.3% year-to-date. Of the 25 analysts covering the stock, nine rate it buy or overweight, 14 hold and two sell. Trane Technologies’ average price target is $361.46, a 0.8% discount, according to FactSet data. Sherwin-Williams Outside of tech, Masters rates paint maker Sherwin-Williams as “very strong, with good profitability.” “The positive is that their business typically grows at mid-single digit rates. If housing activity starts to pick up a little bit, they have a path to get to high single digit growth,” he added. Sherwin-Williams shares have risen 26.4% over the past three months. Year-to-date, they’re up nearly 20.1%. Of the 30 analysts covering the stock, 16 rate it buy or overweight, 12 hold and two sell. Sherwin-Williams’ average price target is $375.59, with room for 0.1% upside, according to FactSet data. —CNBC’s Jim Cramer contributed to this report.
Tech investors reveal four stocks they have “high conviction in”
By NvidiaDaily
