Financial Stocks Are 'Safer Trades' Than Big Tech Stocks, Says Investor Jenny Harrington

It seems that Jenny Harington, an investor, is more confident in Charles Schwab's ability to deliver solid earnings growth than she is in other large technology names that others have looked to this year.

‍

It has been reported that Harrington made her first purchase of the Westlake, Texas-based financial stock on Trade Algo’s report and that she believes the stock has been unfairly slashed as investors have "freaked out" after the March regional bank crisis. Schwab has lost nearly 30% in the past month and 35% this year as a whole, but Harrington still believes the company will continue to bring in new assets, grow its earnings, and show continued growth in the coming years despite trading below its historical price-to-earnings multiple despite trading below its historical high.

‍

In terms of earnings clarity, Harrington, CEO of Gilman Hill Asset Management, said: "To me, this is exactly what I would like to own right now. The correct word to use is perhaps safe, but there's no doubt that that is a safer trade than what we have now. The fact that money can be transferred from tech to the growth sectors of the economy seems to me to be much more comforting than simply going back to the tech stocks that have inflated values in my opinion."

‍

In addition to Harrington's purchase of Schwab, she has also been trimming some well-known technology holdings, within her growth portfolio, including Meta and Palo Alto. These two holdings have been reduced from their previous 3.5% to about 2.5% now at the same time. There has been a 77% surge in Meta shares so far this year, but they are still around $100 below where they were at the end of the year 2021, even after plummeting 64% in 2022. Interestingly enough, Palo Alto's shares have now climbed over 38% this year to restore the profits that were lost in 2022, after they declined by 25% in that year after rising almost 38% in 2021.

‍

It seems that the two names of the two tech companies have really got their attention," she explained. Several months ago, a year ago, they were underappreciated, despite the fact that they were properly paid. Fortunately, now they are being appreciated as much as they should be."

‍

The stock market has been flooded with large-cap tech investments in recent days, but Harrington said that she does not like these stocks as it is hard to determine what earnings the company should be generating and then determine if the price she is buying is a good deal, plus it is harder to discern how earnings are expected to perform in the future.

‍

A hard time forecasting where growth will occur is difficult, she explained. In my opinion, when you ask, “What is the safety trade?” and I say, “I don’t like megacaps because I don’t even know what their earnings really are, I don’t like them.”A hard time forecasting where growth will occur is difficult, she explained. In my opinion, when you ask, “What is the safety trade?” and I say, “I don’t like megacaps because I don’t even know what their earnings really are, I don’t like them.”

‍

As she said, “I would almost say it is like the lazy trade.” It is just the people returning to their old ways because, you know, they had a good ride for a long time and they say, “I know I have my iPhone, I know I use it, so I guess I’m just going back to the ways I had in the past, because I know I’ve got the iPhone, and I know I’m using it.