In a market dominated by technology stocks, many investors are seeking opportunities to diversify their portfolios. While names like Nvidia, Microsoft, Apple, and Alphabet continue to drive market growth, there are alternative investments in non-tech sectors that are gaining attention. Stocks have been on a rally since the beginning of June, with the S & P 500 up 1.3% month-to-date, the Dow adding 0.3%, and the Nasdaq Composite rising by 2.4%. Despite the concentration risk posed by tech giants, there are still opportunities for growth and value in other parts of the market.
According to Strategas Securities analyst Ryan Grabinski, although the market is heavily concentrated with about 28% of the index dominated by just 5 stocks, there are hidden gems with reasonable valuations beneath the surface. By looking beyond the tech universe, investors can find stocks that offer strong growth potential and attractive valuations. Criteria such as upside to average price target of more than 10%, forward price-to-earnings ratio of 18 or less, average 5-year price-to-earnings ratio of 18 or less, and trading within 10% of its 52-week high can help identify these hidden gems.
Some non-tech stocks that meet the criteria for growth potential and value include oil and gas corporations like Marathon Oil, Chevron, and Exxon Mobil. These companies have seen a rebound in their stock values, signaling potential growth in the future. In addition, regional bank names such as Citizens Financial Group and Fifth Third Bancorp have also made the list. These banks have shown steady performance this year and have attractive valuations, making them favorable investment options.
General Motors, a leading automotive manufacturer, is another stock with significant upside potential. Analysts believe that GM shares could see an 18% increase and the stock has an attractive forward P/E ratio. Homebuilder Pultegroup and insurance company Allstate are also mentioned as potential winners in the market. These stocks represent opportunities for investors to diversify their portfolios and capitalize on growth outside of the tech sector.
While technology stocks continue to dominate the market, there are opportunities for investors to explore alternative investments that offer both growth potential and value. By looking beyond the flashy tech names, investors can find hidden gems in non-tech sectors that have the potential to reach new highs. Diversifying a portfolio with a mix of tech and non-tech stocks can help mitigate risk and capitalize on the diverse opportunities available in the market.