CRWD, DE, LLY: McMahon's Picks for a Broadening Rally

**SPEAKER_1** (0:00)
So to help us do so, we are now joined by Chris McMahon, the President and CEO of Aquinas Wealth Advisor Presi- And so Chris, really great to have you with us today.
Now, as far as what we are seeing with earnings growth this quarter, I mean, what really stands out to you and what has done so much of the heavy lifting for various sectors or industries as far as sustaining this momentum into, of course, the back half this year?

**Chris McMahon** (0:23)
Danny, we've been really, our thesis, we've been beating the drum on this thing, broadening out for probably, I don't know, a year and a half, it's finally starting to happen. All the earnings, this is other, we see it really different than other recoveries in the market, simply because it's been based on real earnings. I think we're annualized between 30 and 40% for most of the S&P 500 I mean, no matter how you slice it, that is an unbelievable, I think earnings have been so great in the last year.
I think it's the best thing we've seen ever since I've been keeping records, other than coming out of a recession. And I think that shows that we have a real strong recovery in place in spite of the, there's really some dark spots there as well, but generally, we see this going beyond chips, we see this going beyond, we even seen software recover a little bit. So we see the broadening out, we see energy picking up a lot of steam, and we see it finally getting to those other places. Like, we will talk about John Deere in a second, but we're seeing it kind of spreading out a little bit finally. And I think there's gonna be more opportunity in broad based equities over the last 12 months than we've seen in the last 36

**SPEAKER_3** (1:20)
Well, and there's some math that kind of backs that up, right Chris? I mean, I saw CNBC had a report that they put out over the weekend essentially said that interest stock correlations within the S&P 500 are the lowest going, you know, basically on record that they have. But it was going back to like the early 1990s. You see it in whether you want to look at measure dispersion through volatility or just using our eyes. I mean, I watch names like Micron move like 5% in a day and then I'll look down at the S&P and we're unchanged. So depending on what you're looking at, it tells different stories.
As an investor, as a steward of others' capital, as a wealth advisor, is the opportunity to be a stock picker in a responsible way where that alpha is going to be given that we're kind of playing tug of war under the surface?

**Chris McMahon** (2:10)
Yeah, you're right. It is a mixed bag and you get burned if you make the wrong decisions. But I do think something, Alex, that we see great companies with unbelievable earnings that the price for share just hasn't come up to it yet.
So there's some layups up there, I think, that are out there somewhere for sure. In spite of getting bad news from Walmart last week, et cetera, there's places that even a kind of a pedestrian stock picker could pick those direct stocks and make the right decisions. And I think it is outside of tech. We're not saying we'll get completely abandoning tech, but we took our allocation to tech from about 23%, normalizing it back down to about 16% in our balance portfolios simply because we feel so bullish on the broad markets over the next 12 months. And I think it is a stock picker's market, and I think there's, I think that this, look, let's tell us what the charts tell us and look where the earnings are and the price hasn't recovered yet. And I think you see a lot of good examples of that for sure.

**SPEAKER_1** (3:01)
No, absolutely. And as far as, I mean, some of these individual names that you like, CrowdStrike is one of your top picks. The cybersecurity spendings has continued to be really a boom. We just actually discussed CrowdStrike earlier in today's show. But I mean, walk us through what differentiates CrowdStrike say versus its competition and where that money right now is flowing because it's a pretty competitive market as far as cybersecurity is concerned.

**Chris McMahon** (3:22)
It is a competitive market. We think cybersecurity is uniquely positioned to lead in that marketplace. And we all need to go take a step back, Jenny. We think that people are talking about storage as a subsector. We think it's its own sector. Finally, it's going to be less cyclical. It's in such great demand. We heard Juan say about six months ago, it's all about storage, right? Isn't that unbelievable? Storage has been a kind of boring, boring stepchild of the industry for a while, but we see it as its own sector. And we think CrowdStrike, just because of its position, where it is and its relationship, is probably going to lead in this space. And I heard Ben earlier talking about, you know, doing some options trading around it. But I think that there's still a 10 to 12% run up, maybe in this highest 13% run up, in this stock over the next six months, simply because storage is in demand and there's no, CrowdStrike is, in my opinion, on a very short list of the most qualified candidates to get the money.