Jim Golan, co-portfolio manager of the William Blair Large-cap Growth Fund (LCGFX), joined the Investing with IBD podcast this week to provide analysis of the optimism for secular growth in the second half of the year. He looks for stocks like Microsoft stock, that can reinvent themselves and deliver returns over the long-term. With a concentrated portfolio and low turnover, stocks must pass stringent criteria to be considered. Golan shares why stocks like Intuit (INTU), Microsoft (MSFT) and Accenture (ACN) hold a place on his list of stocks to watch.
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Second Half Looks Good For Secular Growth
While cyclical stocks ruled the last few months, Jim Golan thinks that it’s time for secular growth to shine in the second half. He sees inflation fears as transitory and thinks growth is positioned for a strong move ahead.
The move in the Nasdaq composite off the March lows was largely driven by strength in the large-cap heavyweights. Think the FANG stocks plus Microsoft stock. But in the latest push to new highs, the Nasdaq is getting help from more areas and Golan sees breadth improving.
Trade Ideas: Intuit Stock, Microsoft Stock and Accenture Stock
With such a low turnover rate (around 20%), Golan has to be picky when adding stocks. He shares some of the criteria that make a stock get on his short list. He’s particularly interested in companies that reinvent themselves. Like Adobe (ADBE) did with its push to a subscription model or Microsoft stock in its push to the cloud.
Intuit Stock
Intuit stock has kept its growth rocking at an annual EPS growth rate of 20% over the last year and an Earnings Stability Rating of 7 (the lower the number on the 0-99 scale, the more stable).
Recognizing attrition in clients due to life events that might complicate a tax situation in a singular year, Intuit introduced an answer. The introduction of TurboTax Live keeps those clients by offering an added value service and access to tax professionals for questions.
Microsoft Stock
After its peak in 2000, many wondered if Microsoft stock would ever come back. Here’s a company that not only came back, but flourished as it shifted its focus to cloud computing. Golan credits the management team for innovation and forward-looking thinking.
While the move in Microsoft stock has already been impressive since its turnaround, this could still be the early innings for its second act.
Accenture Stock
A number of trends accelerated due to the coronavirus pandemic. Accenture stock benefited as more companies sought technology solutions for a flexible work environment. But the thirst for their services isn’t quenched yet.
Want More? Research Roku Stock Using IBD Tools
Some of these factors used by Golan are similar to what you will find in IBD’s Long-Term Leaders List. Earnings compounding, along with stability, landed both Intuit stock and Microsoft stock on the list. You will also find Microsoft stock as a member of IBD’s Leaderboard. It joined the leaders list in April 2020 and remained on the list since then.
If you’re looking for more stock ideas check out IBD’s Stock Lists page. To get IBD’s real-time assessment of tech stocks like Microsoft, Intuit and Accenture, check out IBD’s Stock Checkup page. The checklist can give you a quick look at which factors might be in place for a high-conviction add to your portfolio.
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