Amid the rising expectations with respect to the hike in interest rates, Brent Wilsey of Wilsey Asset Management throws light on the stocks like Bed Bath & Beyond Inc. (NASDAQ:BBBY) that are an attractive bet versus the Utilities SPDR (ETF) (NYSEARCA:XLU), which are to be played down at the moment, during an interview with the Fox Business.
Wilsey is majorly bullish on the equity market, but the one stock that he picks up to be unusually attractive is Bed Bath & Beyond Inc. (NASDAQ:BBBY). According to Wilsey, the retail sector has been badly hurt off late, but sees the employment scenario getting better as the jobs numbers continues to improve sequentially. Bed Bath & Beyond Inc. (NASDAQ:BBBY) is currently trading 12 times its earnings as the retailer recorded 2% growth in its sales and 4% in earnings recently. Wilsey added that the company has no debt on its balance sheet; ” I have a target sales price of $88 for the year ending December, 2015 that’s like a 47% gain.” That lists the stock among the favorite choices in the home improvement segment.
Shifting focus on the sector and stocks to avoid, Wilsey finds the Utilities sector into the overbought territory. Wilsey takes the case of Sempra Energy (NYSE:SRE), which is one of the holdings of Utilities SPDR (ETF) (NYSEARCA:XLU). The stock is trading at 24 times its earnings and twenty-one times its forward earnings indicating it is clearly an overvalued stock.
“It’s just ridiculous, and then people wonder why they lose money investing, because they overpaid for things,” said Wilsey.
He cautioned investors that they should first look at the valuations before investing and should buy stock when they are low, rather than when they are high. Wilsey summed up that it is the right time to buy retail, that is Bed Bath & Beyond Inc. (NASDAQ:BBBY) over Utilities SPDR (ETF) (NYSEARCA:XLU).