Trivariate Research debuted a new basket of companies called “non-technology compounders” for investors looking to extend their portfolio beyond high-growth technology stocks. Founder and CEO Adam Parker wrote in a weekend report to clients that Trivariate is “more neutral than bullish on U.S. equities” to start the new year. With the S & P 500 and Dow Jones Industrial Average closing at records Monday and the Nasdaq Composite a hair below an all -time high, concern continues to swirl that valuations are too elevated at a time of heightened geopolitical risk and that companies may not meet aggressive consensus earnings estimates. In fact, S & P 500 earnings expectations look too high, particularly in technology and industrials sectors, and the penalty for companies that miss Wall Street’s estimates has been harsh, Trivariate argued. The researcher is also concerned that the median stock in the S & P 500 is finding it increasingly tough to widen profit margins, and that any future Federal Reserve interest rate cuts won’t lift forward price-to-earnings ratios as much as in the past three years. To find opportunities that position investors away from vulnerable parts of the market, Trivariate introduced a basket of 20 stock ideas outside of tech proper, including companies like Amazon and NextEra Energy . This basket of “non-technology compounders” was recently up 2.2% year to date, slightly underperforming the 2.4% return of the comparable ProShares S & P 500 Ex-Technology ETF as of Jan. 9, Parker said in the note. Take a look at a selection of stocks from Trivariate’s basket below: E-commerce giant Amazon has lagged Big Tech peers. The stock, up about 13% over the past year, has gained more favor from Wall Street analysts in recent months thanks to a multi-year agreement with OpenAI, expected Amazon Web Services growth and focus on emerging technologies such as custom silicon development. Analysts covering Amazon have a consensus price target that suggests roughly 17% potential upside ahead, according to LSEG. Tobacco giant Philip Morris International also made the Trivariate screen. Shares of the cigarette and smoke-free tobacco maker, a typically non-cyclical, defensive name, have jumped more than 44% over the past year. Investors have grown bullish on the company partly due to efforts to increase demand for Zyn , an oral nicotine pouch, in the U.S. market. Another non-tech stock primed for growth is NextEra Energy . The nuclear power producer and parent of Florida Power & Light has jumped 23% in the past year, fueled by steady earnings growth and long-term energy deals with companies such as Google and Meta Platforms to supply clean energy for data centers. Other stocks that made Parker’s screen include Visa , rideshare giant Uber Technologies and Booking Holdings .
