Buy Nvidia and Meta, Sell Home Depot and Exxon: Strategist's stock trades

GraniteShares Founder and CEO Will Rhind sits down with Yahoo Finance Live to share his preferred stock trades: Buy tech stocks Nvidia (NVDA) and Meta, Sell retailer Home Depot (HD) and oil producer Exxon Mobil (XOM).

Rhind referenced Nvidia as the "poster for AI exposure" in a note he wrote. Nvidia shares continue to reach all-time highs in 2023, rising 200% year-to-date. Meta is another tech stock investing in artificial intelligence. Rhind specifies that AI is "real" and that it's proving to not just be "a short-term hype where people got in and in six months time have forgotten all about it."

U.S. home sales are stalling as housing prices climb higher, which is why Rhind wants to shy away from home improvement retailer Home Depot. New homes may be selling, but homeowners locked into mortgages are not spending as much on home repair as they were during the "big reshuffle" from pandemic spending trends. Lastly, Rhind finds there to be geopolitical and environmental concerns tied to how much higher energy company Exxon Mobil may climb. He compares it to the post-pandemic nature of tech stocks, which have a lot more room to decline as COVID-era market conditions begin to settle down.

Video transcript

- Will Rhind, founder and CEO of GraniteShares joins us now. So Will, let's start with AI. I think we may know the play there. But, I guess, you know, not only what names you like, but how you guys have thought about that theme and how quickly it really came on for investors.

WILL RHIND: Yeah. No, absolutely. I mean, by far and away the trade of the year in terms of AI, I think the difference being that people really, I think, believe that this is something that is real this time as opposed to a short-term fad.

So Nvidia has been front and center of every investor's mind. The stock performance has been unbelievable year to date. And we've been able to participate in that, if you will, with our Nvidia ETFs. We have a leveraged single stock play on Nvidia for people to get exposure. And that's been a good way to play it.

- So how much-- I guess, two parts, how much inflows have you seen or what's the inflows been like to that product specifically? But then also, how do you guys think about where that fits into a portfolio? And, like, how someone might want to use that name if they see that option on the menu?

WILL RHIND: Yeah. So we're, I guess, nearly $200 million in terms of inflows year to date in Nvidia, which is the Nvidia stock. And I think there's a number of different ways that people use it. I mean, clearly one of the problems with AI is it's this kind of amorphous concept, where a lot of people say, hey I want to play AI, but how do I do it?

And so when they go to the broad diversified ETF market, they might find ETFs even ETFs that labeled AI, the challenges inside it, you get a bunch of stocks that really sometimes can have very little to do with it. So that's where something like a very concentrated exposure like Nvidia itself or the leveraged single stock version has been so popular.

SEANA SMITH: Well, how are you looking at the valuation aspect of Nvidia? The other stock that you like within this space that has been largely tied to the AI rally is Meta. There's been some concern out there just about the lofty valuations that we are seeing from companies like that. Why is that not giving you pause?

WILL RHIND: I think that, as I sort of said at the beginning, I think the difference for me is I think AI is real. It's not just a short-term hype where people got in and, you know, six months time, would have forgotten all about it.

SEANA SMITH: Do you think we will though, see a bit of a pullback here, at least in the short-term?

WILL RHIND: It's possible. I think that if you look at every analyst on the Street, they're kind of overwhelmingly bullish on Nvidia, with some people pricing Nvidia $100 plus higher than where the stock trades today. There's no doubt that there's been multiple expansion from a lot of these big companies from where we were last year in the first half of this year. And that will have to be backed up by fundamentals in the next six months as we get into towards the end of the year.

But I think a company like that is just so well positioned. And in a market where everyone's out there digging for gold, a company like Nvidia is providing the shovels.

- I guess when you raise your guidance by 50%, you get away with some things when it comes to valuation.

Let's talk about a couple of names you're a little more cautious on. And one that stands out to me is Home Depot, particularly since we see demand for new homes or home builders are very excited about their prospects, but when it comes to existing homes, maybe DIY, what kind of in your view is some of the caution around that story?

WILL RHIND: I think it's kind of what you just said, Myles, is that, you know, we've got a real issue with the housing market at the moment. And the housing market is as largely as ground to a halt, not sale of new homes because new homes are new supply coming onto the market. Home builders that have supply are selling homes. But for people that locked in mortgage rates that were a lot lower than where the market is trading today, those people aren't moving.

And so the big reshuffle and the fever that we saw in Home Depot and other stocks during the pandemic has definitely come down. And I think the trouble is that right now we've got to see the housing market start to loosen up. And I just don't see that happening anytime soon, at least until we reverse course on rates.

SEANA SMITH: Well, the other pick that you're advising investors to stay away from is Exxon Oil, still below 80 bucks a barrel. You don't see-- we've heard from a couple of strategists that they do think energy is a great buy right now heading into the second half of the year. That we will see that global demand picture improve a bit. Why are you taking the other side of that bet?

WILL RHIND: Because I think people have to remember that before the last couple of years, in other words, the bottom of the pandemic, Exxon, another big-- a number of big oil companies didn't go anywhere for 10 years. The reason for that was that, you know, oil effectively or oil companies, there was increasing pressure from environmental concerns and others about the future of these companies and obviously carbonization more broadly.

You know, the stock price has done incredibly well on the back of what we saw in the pandemic, brought forward, you know, a huge amount of growth. But the question really is just like the tech stocks before the pandemic, the question is, you know, what came up or what went up massively over the last couple of years? I think now has got room to come down.

- And it seems like in an environment where you can write a 10-year secular thesis for a stock again, which you couldn't do for a little while. You know, oil doesn't exactly get people super fired up about the long term prospects.

WILL RHIND: It's not a growth story at the end of the day. And it doesn't have to be to make it attractive. I think Exxon will go back to what it was, which is a company that has fantastic cash flows and can pay a good dividend. But it's not going to be the stock that doubles or triples like it did over the last few years.

- And, well, quickly before we let you go, I want to ask about gold generally and just kind of thinking about portfolio positioning right now. And, you know, I think a lot of people who maybe weren't even super overweight tech now because of the rally all of a sudden have a ton of tech in their portfolio, might be thinking, I would like to get rid of some of this and buy something else. How are you thinking about gold at this point?

WILL RHIND: Well, I think gold is in a good position at the moment. And the key word is the dollar, that we're kind of at the metaphorical top of the mountain, if you will, with interest rates as opposed to the bottom or halfway up.

And so gold prices, you know, hanging in here quite nicely because we've seen the dollar weaken, you know, from the peak last year. And so just like with a lot of these top tech companies, a tailwind that's going to come into the market is those that have big international earnings that got hampered last year because of the dollar strength will now see that as a tailwind with the weaker dollar. And it's the same for me with the gold market.

- Great. Well, Will Rhind, founder, CEO at GraniteShares. Thanks so much for stopping by. Have a great weekend.

WILL RHIND: Thank you.