'Playing defense.' Three stocks this adviser is counting on to ride out uncertain economic times.

By Barbara Kollmeyer

Critical information for the U.S. trading day

"It's been very much a short-term market and everyone seems to be running to one side of the boat all at once, and then back over in the next week and the narrative has been shifting pretty dramatically."

That's Tim Chubb, chief investment officer at wealth management and advisory firm Girard, a Univest Wealth Division, summing up the tough macroeconomic backdrop for investors and money managers these days.

Chubb has been with Girard since joining in 2012 to get their equity strategies off the ground and help in the hunt for "durable growth stories," though he noted the firm already had invested in many top tech stocks.

"Many of those companies like Apple (AAPL) and Alphabet (GOOGL), in particular, were just very well positioned to continue evolving and adjusting," Chubb told MarketWatch in an interview on Wednesday.

He said the firm took some profit on those tech names in the first quarter of this year as the market was looking fragile. And he does voice concerns over Nvidia (NVDA), saying that while artificial intelligence is in the early innings, the chip giant's gross margins of around 90% are "too high given the customer concentration that they have," he says. For example, the last two quarters saw 20% of sales with Microsoft (MSFT), a company that seems set to ramp up its own technology, he notes.

The only Magnificent Seven stock the firm has shunned is Tesla (TSLA). "Elon [Musk CEO] is a brilliant person, but he doesn't build from an efficiency standpoint if you look at some German auto manufacturers, for example. So we just thought there would be a broadening out of the market share, which would likely lead to price pressure, what we're sort of seeing in the last 12 months," Chubb said.

"I also think there's just a risk of having somebody who has got a lot of stuff going on," he adds.

But it's not just about tech for Chubb, who says healthcare is the largest allocation in its portfolio right now, as it sees a drag in performance for the sector ending. He zeroes in on one holding - analytics, diagnostic and laboratory service group Thermo Fisher (TMO). "We're very much anticipating that as a result of many of these J&J and Pfizers of the world coming up against patent expiration in the next couple of years, R&D in healthcare is really going to be accelerated."

Read: This weight-loss ETF has performed well in its first five months. How does it compare with cheaper alternatives?

Chubb also says it has a "healthy exposure" in aerospace and defense as countries work to build up weapons amid swirling geopolitical conflicts. "I think that's another area of the market that has been chronically misunderstood," he said.

One favorite portfolio holding that meets the durable growth story requirement is Lockheed Martin (LMT). "Unfortunately, guns and bombs are a profitable business and there's a lot of pricing power," he said. While not "unbelievably cheap," he sees upside for Lockheed "if we start to see some of these risks materialize."

Chubb also flags utilities as an important sector for exposure, and one important holding is NextEra Energy (NEE), the wholesale power generator that's also one of the world's biggest wind and solar energy producers. The U.S. "power grid is something that's going to need pretty significant reinvestment in the next 10 years, especially with AI," says the CIO.

What his stock picks have in common is that they are all about "playing defense." Chubb says investors need to understand they could be looking at a "wider range of outcomes" on the economy and elevated interest rates that will "start biting on the bottom end of the consumer."

Read: These in-the-know investors are more bearish than they've been since 2014

The markets

Stocks DJIA SPX COMP opened higher after tame producer prices, with Treasury yields BX:TMUBMUSD10Y BX:TMUBMUSD02Y backing up after Wednesday's surge. Gold (GC00) is climbing, and oil (CL00) is dropping in a consolidation move, as investors eye Iran/Israel tensions.

The euro (EURUSD) has stabilized after the European Central Bank left interest rates unchanged, but indicated that a rate cut could be on the cards. Investors are turning into a news conference with President Christine Lagarde.

Follow MarketWatch's Live Blog for all the latest news and market updates.

The buzz

Headline and core producer prices rose by less than expected in March - up 0.2% for both in March. The annual headline rate rose 2.1% from 1.6% in the prior month. Elsewhere, data showed first-time unemployment claims retreated again.

New York Fed Pres. John Williams said inflation will fall to 2% even after recent "bumps." He's among a handful of speakers today that include Boston Fed Pres. Susan Collins at noon, Chicago Fed Pres. Austan Goolsbee at 12:45 p.m. and Atlanta Fed Pres. Raphael Bostic at 1:30 p.m.

Read: Economist who predicted no 2024 interest-rate cuts blames Fed for inflation resurgence

In his annual letter to shareholders, Amazon (AMZN) CEO Andy Jassy counted the ways the company is helping to fuel the AI revolution.

CarMax shares (KMX) are off around 5% after earnings and sales fell short of expectations, while Fastenal (FAST) is down 6% on an earnings miss.

Micron (MU) says the recent deadly earthquake in Taiwan will have a mid-single digit percentage impact on quarterly dynamic random-access memory supply.

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Top tickers

These were the top-searched tickers on MarketWatch as of 6 a.m.:

   Ticker  Security name 
   TSLA    Tesla 
   NVDA    Nvidia 
   TSM     Taiwan Semiconductor Manufacturing 
   GME     GameStop 
   AAPL    Apple 
   NIO     Nio 
   AMC     AMC Entertainment 
   DJT     Trump Media & Technology 
   AMZN    Amazon.com 
   NKLA    Nikola 

The chart

The S&P 500 has nailed 22 all-time highs this year, but that's no reason to fear buying stocks, says Michael Batnick, managing partner at Ritholtz Wealth Management, on his Irrelevant Investor blog. "On average since 1970, the S&P 500 has done better 1, 3, and 5 years after making an all-time high than picking a random day," he notes, providing the below chart:

Random reads

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-Barbara Kollmeyer

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04-11-24 0933ET

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