Truist’s Lerner is still overweight industrial stocks: here’s why

on Mar 21, 2023
  • Truist's Keith Lerner explains why he's "overweight" industrial stocks.
  • He recommends energy as well but only for longer-term investors.
  • Other than that, he says the market isn't particularly exciting right now.

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“XLI” – the Industrial Select Sector SPDR Fund is about flat for the year at writing but Keith Lerner (CIO at Truist) is still keeping “overweight” on the space.

Lerner shares his view on industrials

Lerner is constructive on industrial stocks primarily because he’s convinced that the stimulus bill from last year is yet to reflect in valuations. Speaking this evening with CNBC’s Michael Santoli, he said:

We think there’s some structural positives for [industrials] as far as reshoring. The stimulus bill is underappreciated. There’s hundreds of billions of dollars of infrastructure spending happen in the next several years.

Lerner also expects defense spending to remain strong on the back of the ongoing strategic battle with China. An economic slowdown could help ease the labour shortages for industrials as well.  

Versus its low in late September, though, the “XLI” is currently up nearly 20%.

Are there any other sectors that he likes?

Lerner is somewhat constructive on the energy space as well despite the recent decline in oil prices. But that’s a pick only for the longer-term investors, he added.

Other than that, he recommends that investors wait for better opportunities to put their money to use. He sees the market as dull even if the U.S. Federal Reserve chooses to pause raising rates any further at its meeting on March 22nd.  

A lot of people are looking towards the end of the Fed tightening cycle. History suggests that’s not a cure all, especially if economic data weakens later this year, which is our expectation.

The benchmark index ended about 1.0% up on Monday.


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