(Kitco News) - Today’s markets are unpredictable, but according to Ed Butowsky, Managing Partner at Chapwood Investments, getting away from the tech and high-growth stocks might be your best bet. During an interview with Jeremy Szafron, Anchor at Kitco News, Butowsky sheds light on why the smart money is inching toward utility stocks and why sectors like the electric vehicle market, particularly Tesla, might not be the best place to invest for those looking for investment opportunities.
According to Butowsky, the utility sector, often overlooked for its perceived lack of excitement, is where investors should be directing their attention. "I'm avoiding the Magnificent Seven, and I'm doing something really boring. I'm investing in utility stocks... Utilities have come under a lot of pressure last year as interest rates rose. And the idea is that interest rates are going to start to drop and you're going to see natural gas prices have dropped as well. And as a result of that gas prices dropping, you're going to see a windfall profit coming into these utilities because they generate a lot of their energy from natural gas and coal," he explains. This strategic pivot, he believes, could result in a "really nice 12 to 14% total return for 2024."
Butowsky's analysis extends beyond broad sector bets, highlighting specific opportunities such as Hawaii Electric, a company he believes is poised for a significant rebound. "And I believe Hawaii Electric has just been beaten up beyond recognition... now it's selling at around 13. They will win the lawsuit and come back," Butowsky said, suggesting a deep value play that could reward patient investors handsomely.
The electric vehicle sector, and Tesla in particular, doesn't escape Butowsky's critical eye. "Yeah, the valuations are just way too high. And that's the number one reason that I'm doing it. It's not like I don't like these companies. I just don't like them at these price points. And you talk about Tesla. I think Tesla is a nightmare waiting to happen. I think that the EV market has been overdone," he said. This cautionary stance is a wake-up call for investors heavily weighted in high-flying EV stocks, suggesting a reassessment of risk in light of soaring valuations and more stable demand for EVs.
To gain a deeper understanding of Ed Butowsky's investment philosophy and to hear more about his predictions for 2024, watch the full interview on Kitco News above.