Navigating the Next Four Years: Your Investment Playbook

As we step into the next four years, the investment landscape is filled with opportunities and challenges. With the current geopolitical and economic climate in mind, let's explore some key sectors and strategies to help you build a robust and balanced portfolio.



1. Energy and Infrastructure: With Trump's "drill, baby, drill" stance and plans to explore and produce energy on federal lands and waters, the energy sector is poised for growth. Investors can benefit from energy royalties and non-operator ownership interests in oil wells. Additionally, infrastructure spending is expected to increase, providing opportunities in related sectors.
- Example: GE Aerospace (GE) is a growth stock that benefits from the energy sector's growth and is expected to have a wide economic moat.



2. Technology and Semiconductors: The increasing demand for advanced technology and semiconductors, driven by trends like AI, IoT, and edge computing, presents a significant growth opportunity. Investors can consider companies like Nvidia (NVDA), which is expected to have 43% revenue growth in fiscal 2026, and Taiwan Semiconductor Manufacturing (TSM), which is a key player in the semiconductor industry.
- Example: Nvidia (NVDA) is a high-end semiconductor company with impressive growth numbers and a strong position in edge devices.



3. Healthcare and Biotech: The aging population and advancements in medical technology are driving growth in the healthcare and biotech sectors. Investors can consider companies like AstraZeneca (AZN), which has a strong pipeline of drugs with blockbuster potential, and Coloplast (CLPBY), which focuses on medical devices and solutions for people with intimate healthcare needs.
- Example: AstraZeneca (AZN) is a drug manufacturer with one of the strongest pipelines in the industry and is expected to maintain 10% revenue growth in 2025.



4. Financials: Despite the potential impact of tariffs and immigration restrictions, the financial sector is expected to benefit from deregulation and a pickup in M&A activity. Investors can consider companies like JPMorgan Chase (JPM) and Bank of America (BAC), which are expected to have significant implied upside in 2025.
- Example: JPMorgan Chase (JPM) is one of the world's largest banks and financial services companies, with a strong position in the investment banking industry.



5. Real Estate: With a focus on asset-based value investing, real estate can provide consistent growth and inflation protection. Investors can consider companies like Rentokil Initial (RTO), which has a sharply focused strategy on market share leadership in the pest-control and hygiene-service markets, and CoStar Group (CSGP), which is a leading provider of commercial real estate information and analytics.
- Example: Rentokil Initial (RTO) is a growth stock that trades at a 34% discount to its fair value estimate and has a medium uncertainty rating.

To effectively balance your portfolio between growth and value stocks, consider the following strategies:

1. Diversification and Asset Allocation: Diversify your portfolio across various sectors and asset classes to spread risk. Allocate a significant portion of your portfolio to growth stocks, given their historical outperformance and the expectation of continued growth in the coming years. However, be mindful of the potential for overvaluation.
2. Value Investing: Focus on undervalued stocks with strong fundamentals and wide economic moats. Consider companies like Rentokil Initial (RTO), which is trading at a 34% discount to Morningstar's fair value estimate, and has a strong mergers-and-acquisitions strategy that reinforces its moat.
3. Growth Investing: Invest in high-quality growth stocks with wide economic moats and predictable cash flows. For instance, consider companies like Alphabet Inc. (GOOG, GOOGL), which is expected to maintain 10% revenue growth in 2025, supported by artificial intelligence innovation across its advertising ecosystem.
4. Re-evaluate and Rebalance: Regularly review and rebalance your portfolio to maintain your desired asset allocation and risk level. As growth stocks have outperformed in recent years, it may be necessary to trim growth positions and add value stocks to maintain a balanced portfolio.
5. Consider Long-term Themes: Incorporate long-term themes into your investment strategy, such as artificial intelligence, decarbonization, and longevity. These themes can provide opportunities for growth and value investments across various sectors.

By following these strategies and adhering to the rules provided, investors can effectively balance their portfolios between growth and value stocks to maximize returns while minimizing risk in the coming years.