Joseph McNay of Essex Investment Management is one of the all-time greats of growth investing. In this week's Barron's interview, McNay shares his thoughts and picks for the current economic slowdown.
- Gold: M3, a broad measure of U.S. money supply (see graphic), is growing at almost 15%/year (vs. a typical 5%), driving the dollar down. While some cite gold's already-high prices, McNay notes that at its peaks, gold has traded at the same price as the DJIA; right now it sells for 1/14 of the Dow. He recommends gold ETFs streetTRACKS Gold Trust ETF (GLD) and Market Vectors Gold Miners ETF (GDX). He also suggests owning Chinese yuan rather than U.S. dollars. As the yuan revalues upwards, it will offer protection against purchasing-power erosion.
- Biotech: Genentech (DNA), Gilead Sciences (GILD) and Celgene (CELG) have good products, great growth and 'no risk' from economic slowdown or a falling dollar. BioMarin Pharmaceutical (BMRN) has some nice products, and Intuitive Surgical (ISRG) is the leader in robotic surgery.
- Emerging companies: Aladdin Knowledge Systems (ALDN) is an overlooked company that develops security software for application access. Earnings are growing at 20%-plus. Perrigo (PRGO) gives off-patent drugs private labels for drug stores. VASCO Data Security (VDSI) makes information-access security software. Quarterly sales have been growing at 60%.
- Agriculture: DuPont (DD) has a new seed business that will compete with Monsanto Company (MON), yet it sells for 13x earnings.