By Paul R. La Monica

Oh, what a difference a month makes. It seems like just yesterday that Wall Street was fretting about tariffs and what they might do the business and the economy.

Today, the stock market has snapped back. All the angst about recession and stagflation and a trade war is a (not-so-distant) memory, replaced by optimism about earnings and the resilient job market.

With things looking up -- or at least not so uncertain, a handful of fund managers told Barron's about the opportunities they see in three sectors sure to thrive in a sound economy: consumer, industrial, and tech.

"Industrials are at the center of the onshoring manufacturing trend, the building of data centers and infrastructure," said Josh Wein, portfolio manager with the Hennessy Cornerstone Mid Cap 30 Fund. "And on the consumer side, the economy has remained so resilient."

Wein likes casual dining chains Cheesecake Factory and Brinker International, the owner of Chili's, which he says are in the sweet spot because Americans still want to watch their budgets and go out to eat. The fund is also high on toy manufacturer Mattel and Post Holdings, the cereal and pet food maker All four stocks trade at price-to-earnings ratios in the mid-to-high teens based on next year's earnings forecasts.

For industrials, Wein's fund owns Fluor and Granite Construction, which should benefit from more spending on infrastructure.

John Barr, portfolio manager with the Needham Aggressive Growth Fund, is all-in on infrastructure, too -- particularly because it's a global theme as well.

Barr's fund owns two engineering companies: Parsons, which just announced construction contracts for a new airport in Riyadh, Saudi Arabia; and Jacobs Solutions, which is helping develop the airport. Jacobs was a Barron's stock pick just last month.

The key to successful stock-picking in volatile times, Barr said, is to filter out the noise and focus on trends.

"As chaotic as things are the short-term, five years out they will probably be OK," he said. "To invest in equities, you have to be an optimist."

One trend that Barr is focusing on is the increased need for workers in industries that probably won't be hurt by artificial intelligence. Many are blue-collar jobs such as auto mechanic, electrician, and plumber.

To that end, Barr's fund owns trade school companies Lincoln Educational Services and Universal Technical Institute.

"Their graduates all get jobs. There is an insatiable demand for skilled labor," he said. "But there are still not enough young people going into trades."

Barr is also a fan of the tech sector itself. His fund owns AI infrastructure firm Super Micro Computer and Canadian software firm Thinkific.

Barr's belief in tech is understandable because he does, after all, manage an "aggressive" growth fund. But Allen Bond, the manager of value-oriented Jensen Investment Management, also likes tech.

The post-tariffs selloff, Bond said, finally made many growth stocks in tech more affordable. His firm, for example, bought Nvidia.

"In April, everything fell the same. It felt indiscriminate. So we tried to find opportunities," Bond said. "With Nvidia, we wanted to be comfortable with the entry point since it's such a volatile stock."

Bond didn't say when exactly his firm bought Nvidia. But the stock's valuation fell as low as just 21 times forward earnings estimates -- about in line with the S&P 500 -- in early April. The stock is back up, trading at a price-to-earnings ratio of more than 30. Still, that's a discount to its five-year average P/E of 47.

Bond told Barron's that his fund also "added to names that we really like but were expensive." Two are Cadence Design Systems, a software company that has Nvidia and Apple as customers, and Amphenol, which makes electronics components used in cars, airplanes, smartphones.

Amphenol, another Barron's stock pick , traded as low as 25 times earnings estimates in early April, below its five-year average P/E of 31. Now, the stock is up more than 45% from its lows.

And the story is the same for dozens of other stocks that got hammered in those tariff-dread-riddled days.

Savvy institutional investors like Wein, Bond, and Barr bought the dip. Their experience told then that panic selling was clearly the wrong move.

Write to Paul R. La Monica at paul.lamonica@barrons.com

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May 15, 2025 14:27 ET (18:27 GMT)

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