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Tags: Mark Boyar | Stocks | Bonds | Investments

Analyst Mark Boyar: 'Stocks Are Certainly Much Better Than Bonds'

Monday, 19 August 2013 11:44 AM EDT

Stocks are most likely the best asset class, a superior choice when compared with bonds, according to Boyar Asset Management founder Mark Boyar.

"Stocks are still probably the best asset class, certainly much better than bonds," he told Barron's. "The 30-year bull run in bonds is over. I'd say 6 percent or 7 percent annual total returns are achievable in stocks."

Investing in stocks presents greater challenges than in the past, he noted.

Editor’s Note: Put the World’s Top Financial Minds to Work for You

"It's clearly much more difficult to find stocks today than it was when the Dow was around 7,000. CBS sold for $6 a share, and today it's over $50. Saks, which was $1.85, is $16 and on its way to being taken over. Clearly, the days of six or seven baggers [stocks rising six- or sevenfold] are over," he argued.

"Stocks aren't overvalued, but investors should temper their expectations about the kind of returns they can expect over the next few years."

Weight Watchers is among Boyar's picks.

"The stock has been hit recently after the company reported weaker-than-expected earnings, and guidance was significantly pared back," he explained. "If obesity were a stock, you'd want to own it. You can't do that, but the next best thing is Weight Watchers. It's a great consumer franchise and an iconic name."

Bank of New York Mellon also drew his praise. "It has done well from the market bottom, but it has underperformed most financial stocks," Boyar proclaimed. "It could be broken up into two pieces. There's no reason for it to be a single company. It has a money-management and an asset-servicing business."

Also recommended was Molson Coors, which Boyar described as "inexpensive, around $51." He explained the company is the largest craft-beer business in the world and doesn't get much credit for it. "Craft brewers like Boston Beer [the maker of Sam Adams] have done very well and trade for high multiples. We think [Molson Coors] is worth $65 a share."

As for his pans, Boyar believes Scotts Miracle-Gro shouldn't even be public and would be a great business for private equity.

"The company [is] vulnerable to a rainy or cold spring that hurts demand for gardening products," he asserted. "It has a great consumer franchise and is a market leader with brands like Miracle Gro and Scotts Turf Builder. It has been penalized because of bad weather and poor execution over the past few years. We think it could be worth 30 percent to 40 percent more than the current stock price."

Boyar also expressed disappointment in Dole Food. "It's in the fresh-fruit business and owns valuable land in Hawaii that isn't needed for the business," he said. "We would prefer it to be a public company and let the business do what we think it can do over the next few years."

He also had picks in the the financial sector. "If you're going to own two financials, I would go with Bank of New York and Bank of America," he declared. "Bank of New York gives you exposure to money management and servicing. Bank of America is weighted to the economy, housing and the consumer. The stock, which is at $14, could be up 50 percent in the next two years."

However, Boyar noted there are some "highflying stocks" that are overpriced. 

"Any time the market has a significant run-up, there's a group of stocks that always trade in multiples that are significantly higher than the market," he said. "There's a new group now, companies like LinkedIn, Facebook, Tesla, Netflix, Amazon.com. You look at the kind of multiples that are ascribed to these companies and you wonder whether they will get their comeuppance."

He elaborated on Tesla. "Compare it to other automobile manufacturers and it's perplexing," he said. "How many cars does it sell a year? 20,000? And you look at the kind of market valuation ascribed to it and you wonder why."

However, some experts disagee with Boyar's basic premise that stocks are better than bonds.

Lawrence McDonald, senior director at brokerage firm Newedge, recently told Newsmax TV that bonds represent a more attractive investment now.

"There are just a lot of secular problems with the economy that will rear their ugly head more in the second half."

To be sure, sell-offs in the stock market will represent good buying opportunities, he maintains. "You want to sit in the boat and wait for some fear, and that's when you want to get in," McDonald says.

Editor’s Note: Put the World’s Top Financial Minds to Work for You

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Boyar Asset Management founder Mark Boyar told Barron's that stocks are "still probably" the best asset class, a superior choice when compared with bonds.
Mark Boyar,Stocks,Bonds,Investments
Monday, 19 August 2013 11:44 AM
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