Raymond James Strategist Jeff Saut Reveals His Stock Buy List

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Raymond James’ chief market strategist Jeff Saut was recently interviewed on Fox Business News by Liz Claman. Saut indicated he didn’t believe investors should underweight the U. S. in that fund managers outside the country are trying to increase their U. S. allocation.

Saut said he looks at the S&P 500 operating earnings per share which are at 15 times. Even without multiple expansion, Saut sees an upside target for the S&P 500 in year 2014 of 1,850.

Claman asked Saut what he was doing with the cash he’s been sitting on since June. Saut said he hasn’t deployed the money. They targeted the first meaningful decline of the year to commence between mid-July and mid-August, he added. He believes we’re halfway through the correction.

Saut said the short-term NYSE McClellan oscillator accompanied by a 90% volume downside day indicated the market was very oversold last week. Following these indicators it’s typical to see a 5-7 day throwback rally, according to Saut.

Regarding stocks he favors, Saut said he read a report from the Mayo Clinic out of Jacksonville, Florida indicating people who smoke in their later years have 20% higher medical costs per year, however, people who are obese incur medical costs 50% greater per year because of all the ancillary diseases.

Given the hard facts of medical costs and seniors laying around getting fat and suffering from diabetes, Saut had three names in mind; Davita (DVA), Novo Nordisk A S (NVO), and Dexcom (DXCM). Claman pointed out that one of Warren Buffett’s investment managers likes Davita.

Saut also favors the wireless tower stocks which Claman said he had mentioned nine years ago. Saut included SBA Communications (SBAC) and American Tower (AMT) as timely stocks. Saut said you see the computer going to mobile devices more and more. It’s like real estate in the sky, Saut added.

Saut commented on a recommendation he made a year ago which he referred to as a call option that doesn’t expire. Claman pointed out its up 190% since Saut mentioned it. Rite Aid (RAD) has a new management team and the new beneficiaries of Obamacare will be nurse practitioners, the “doc-in-a-box,” who are in the Rite Aids and Walgreens of the world, according to Saut. RAD is closing down marginally profitable stores, doubling their CAPEX, and upgrading the stores they’re keeping, Saut added. He said RAD is potentially a “double-digit stock.”

Back in May, Saut said the bull market had much further to run, but there was a chance of a pullback in the July/August timeframe [link].

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