Investors can start finding some buying opportunities in the market — as long as they have a strong stomach, Bespoke Investment Group co-founder Paul Hickey told CNBC.
He still sees volatility in the weeks or months ahead and thinks the market has yet to hit bottom.
However, conditions in the recent sell-offs seemed to yield “better-than-average returns going forward” than has happened in similar trends in past decades, Hickey said Friday on “Power Lunch.”
“You can start to nibble here,” he said. “[There’s] sentiment that’s gotten completely washed out” and 2019 will be the first year in a while “that valuations aren’t above average.”
He wants to see if the market hits a “lower low” going forward. “We want to see some of these internals show less baby- out-with-the-bathwater” trends, Hickey said.
Bespoke likes Intel and Pulte Homes, and emerging markets.
Intel and Pulte were losing momentum when the market was going strong earlier this year and “led us on the way down . . . [but] are now showing signs of stabilizing and aren’t making lower lows,” Hickey said.
Intel has climbed 10 percent since falling more than 25 percent from a year-to-date high set in June, while Pulte has climbed more than 25 percent after plunging more than 40 percent from year-to-date high set in February. Intel is trading at about $47 a share while Pulte is trading about $26 a share Friday afternoon.
Hickey argued that the emerging markets sector, which also led markets on the way lower, could hold some promising results.
The iShares MSCI Emerging Markets ETF has “been below its 200 day moving average for 140 trading days That’s happened two other times: 2008 and 2016,” he said. “A year later, EEM was up 75 percent and 26 percent,” respectively.
Hickey also pointed to tech stocks Apple and Netflix. Apple, he said, is more attractive than the consumer staple section and Netflix, which is not a value buy, is transforming TV.
