Transcript:Caroline WoodsJoining us with her five top stock picks is Nancy Tengler, CEO and CIO, Laffer Tengler Investments. Nancy, great to have you here in person I guess.

Nancy TenglerThanks for having me, Caroline.

Caroline WoodsSo let’s get right into your stock picks. Your first one is actually a tech name that’s in favor this year. Unlike some of the big names, Lam Research LRC is up what, 40% year to date? Tell us why you like lam research over some of the other, maybe more obvious names.

Nancy TenglerWell, it’s a beneficiary of the Dram drive up in memory prices and memory stocks. So, you know it’s an I name through the back door. You get if you’re a memory producer like micron, your biggest clients or some of the AI players like Nvidia, they use the chips in their in their products and in the infrastructure. So we had purchased Lam for very different reasons a couple of years back.

Nancy TenglerIt’s the largest holding in Tiger, which is our ETF, and it’s just continuing to deliver. The management has described it. They’re expanding in the regions across regions. Even with weak sorry weakness in China. They’re also expect to outgrow the the wafer fab market. And so they’re going to gain share. And they’re just growing in the multiples. Not that expensive.

Nancy TenglerSo we’re going to continue to hold it. We’ve trimmed it back a few times because it’s appreciated. So much. But we will continue to hold it and enjoy the benefits of AI.

Caroline WoodsSo you mentioned you’ve taken some profits, but you’d still be comfortable putting new money to work at these levels.

Nancy TenglerYeah, it is our largest holdings. So as we get money into the fund, or if we get, individual client money, we are still buying it up to almost 5% of the portfolio.

Caroline WoodsOkay, shifting gears, actually, no pun intended. Actually, Tesla is your next, pick a different chart for 2026. So far down about 15% year to date. Make the bull case for Tesla because this is a one that, you know, the bulls remain bullish. But then there’s a lot of skepticism. And it seems like Wall Street‘s skeptical this year.

Nancy TenglerYeah. And there’s a lot to hate I mean FSD, which is the full Self-Driving software is is has hit some, road bumps, no pun. There is you know, the sales in Europe came out today. They were better than expected. But sales are still declining. And and there’s just, a narrative around the EV business, which isn’t super robust, but we’re buying the company for the long term narrative, which is physical.

Nancy TenglerAI robots, that we think they will combine Tesla and SpaceX, which is already combined with X. We like that. You’ve got a CEO who’s highly motivated to deliver an eight fold, 7 or 8 fold total return on the stock, depending on where you start from. And and you’ve got a company that’s in the sweet spot of AI and will become an AI powerhouse.

Nancy TenglerI mean, robots are AI driven. FSD is an AI, portion of the business. The one business it’s not necessarily AI that we like is the Megapack, utility grade energy storage. So at this price and there have been these kinds of dislocations many times. It pays it pays to just be disciplined and acquire shares. We bought during Deepak at 240 a share.

Nancy TenglerWe initiated our position at $100 a share, a couple of years back. So you can afford to feel these ups and downs if you if you step in at the weak periods.

Caroline WoodsHow are you thinking about Tesla’s valuation right now? Now that it’s come off a bit, it’s, you know, still higher than those levels.

Nancy TenglerYeah. No, it’s a perfect question. It is, more attractive than it was. But this is not a company that you’re buying on valuation. You’re buying the narrative. And I say that as a, as a trained and tried and true value investor. So if you think back to Amazon, when was it too late to get in? Like I never understood that company.

Nancy TenglerHow could the stock keep going up. There’s no earnings. But it was the narrative and I think I learned from that from the IPO. Amazon’s up 250,000% give or take. And that’s that’s why you want to be invested in these names and use weakness to add your hold. I also trim when the thing gets you know, when it has a nice run because it is so volatile.

Caroline WoodsOkay. Next up is another mag seven name, not Amazon, but Microsoft. Another laggard so far in 2026. Why do you look at Microsoft as a as a top pick right now.

Nancy TenglerYeah. So we were trimming the stock in the summer. And we sold some more in all the way through the middle of September. But now we think that that whole, AI is eating software narrative is, is overblown. This company will be a survivor. Their margins will ultimately increase and improve as a result of being a survivor.

Nancy TenglerTheir security business alone is bigger than a couple of the security companies. So they have a lot of levers to pull. They’ve got a fortress balance sheet. They turned in 17% revenue growth, 24% earnings growth. Azure grew at 39%. The market was upset. It wasn’t 40. I think as time passes, we will settle in and back in and look at the at the fundamentals.

Nancy TenglerIt’s trading at a very attractive valuation of 20 times this year, 19 times next year’s with earnings growth of around 20%. So that’s a price earnings to growth ratio of one times. We think Satya will get it together. As it relates to AI. They just announced a reboot and they’re going to be integrating AI, throughout all of their products and infrastructure.

Caroline WoodsYou don’t think that software will be totally disrupted by AI? Hence the Microsoft Pick next pick ServiceNow. And that’s the name that’s been disrupted because of those fears. It’s down big so far this year. Tell us why you’re a buyer here.

Nancy TenglerAnd last year. So the stock has the stock has come in pretty dramatically. I think Bill McDermott is one of the best CEOs, in un, in Silicon Valley. He, he came out with fire this last earnings call, and he has continued to tell the story. The company is being misunderstood. I believe it’s vertically integrated. They’re vertically integrating security.

Nancy TenglerAs a gente AI grows, that becomes more and more important to have security and to have a robust security system. But more importantly, think of them as, the train conductor or the, airline. I’m sorry, what do they call it? Control control tower? Sorry. Yeah. Of AI on the cloud. They are, they are protected in terms of margins.

Nancy TenglerThey’re growing revenues and earnings at about 20 plus percent. Once again, valuation is now attractive. Based on historical levels, they’re buying back shares. And the CEO just got $3 million worth. So we think that gives them time to work out, and get the market to see things their way. We don’t like every software company. You know, we’re not in Adobe.

Nancy TenglerWe’re not in Salesforce. But this is a survivor. We believe and we think they’ll thrive.

Caroline WoodsI’m curious, before we get to your final tech and shift away from tech, actually, what’s going to separate the winners from the losers? And what are some of the other names that you would avoid because of this? AI is going to eat software narrative.

Nancy TenglerWell, so those two in particular, because, you know, Salesforce is still selling seats and employment will likely decline, some due to AI, but also just due to, a shrinking, labor force requirement. And that’s what productivity is. And that’s actually a good thing. Adobe, we did not think pivoted fast enough to I think got way behind.

Nancy TenglerAnd that’s a story similar to Intel where it’s very difficult to get back in the game. I was asked all the time about Elon’s pay package, and it was so gracious. And how can we defend it? Adobe CEO returned a -32% over the last five years in a raging bull market. So a cumulative negative return. And he got paid $220 million for the privilege.

Nancy TenglerSo I think you have to pay attention to all all of what management is saying and doing. Salesforce will likely be fine, but we just think there’s better places to be.

Caroline WoodsOkay. All right. And finally your your final pick here. Moving on to financials is Goldman Sachs. Yeah. Why Goldman Sachs. And is it Goldman Sachs over some of the other big banks. Or do you like big banks in general.

Nancy TenglerYeah. So Goldman’s in our 12 best ideas portfolio. I had a five for 25. It was one of the top performers in there. It was off of a pretty low base you know. Remember David Solomon did not have a good go run of it for a few years. But they are they are in the sweet spot for M&A.

Nancy TenglerAnd they have said repeatedly that they believe M&A will pick up again as soon as we get through this. The war in Iran. So I think this is a company that they can they can pull the trading lever, they can pull the, the M&A lever and they have, a very strong leadership role. Pole position in each of those businesses pays a decent dividend, grows the dividend.

Nancy TenglerQuite handily over the last couple of years. So we think it’s a good place to park in financials. And, they have been able to generate significant outperformance over the last couple of years.

Caroline WoodsI have to ask, though, because financials and tech are two of the lagging sectors so far this year. What is the market getting wrong that you think you’re getting right, that your best ideas are in those spaces? Yeah.

Nancy TenglerWell, so we’re looking forward, not backward. And we think that the market is going to shift its attention to fundamentals, deregulation, M&A for the financials and then for technology. You win kind of two ways. The companies are putting up around 15 to 25% earnings growth as a group. In that you so you have you have the earnings part of the equation.

Nancy TenglerIf we get a slowing economic environment, which many people are expecting, you want to own the reliable growers. Then you look at the fundamentals. And they are the companies that we like are in the sweet spot of what we think is the next 3 to 5 years in outperformance. That’s how we invest. So when we’re selling, oftentimes we’re selling to eager buyers, because people are looking back and going, oh, that worked.

Nancy TenglerI want to own that. But generally speaking, we’re looking ahead 3 to 5 years based on valuations and the fundamentals. We do our own research. We sit on all the calls, we listen to managements. We, you know, dissect the cross-section of industries and economic sectors to really identify themes. And our theme has been and will continue to be in the near future, old economy companies that are pivoting to the new technology.

Nancy TenglerSo Walmart’s been our poster child and now they’re listed on the Nasdaq, which felt like vindication. And it’s performed quite well. And then the suppliers of the picks and shovels and so, that’s that’s where we’re focused, generally speaking.

Caroline WoodsAnd just finally, what is your market view? Not 3 to 5 years out, but maybe a little bit a shorter term as you think about the rest of this year, is this a market that can ultimately move higher despite geopolitical concerns, surging oil, the concerns about the economic slowdown? Yes. Do you think this is a market that’s moving higher?

Nancy TenglerI do, I do I think it’s going to be choppy. And we said that at the beginning of the year for the first two quarters, most likely, once we and it may be the first three because we’ve got midterm elections. But once we get past all of that and investors return their attention to earnings growth and fundamental economic growth and, fiscal policy, which is really quite constructive for this market, average taxpayers getting back, 10 to 20% higher in, in, in refunds, 150 billion additional dollars going into refunds to make a total of 510 that comes into spending in the first half of the year.

Nancy TenglerAnd then corporations are also saving a tremendous, Amazon paid 50% less in taxes last year due to the, one big, beautiful bill, like so we think there’s a lot of good stuff going on under the surface. And we think this administration is so determined to win the midterms, they’re going to make the adjustments to housing.

Nancy TenglerThey’ve already started, and then we’ll see. I don’t know if we’ll see checks, you know, to offset higher oil prices. I mean, not that I love this stuff, but that that is what we expect to see from this administration.

Caroline WoodsOne thing that chips away at your bullishness, though, what is it that keeps you up at night or makes you think, as long as this doesn’t happen, we can move higher?

Nancy TenglerYeah. I mean, if we do go into recession, that’s going to be a bear market. And so we’re watching the earnings guidance, not earnings growth, backward looking earnings guidance. It can also change on a dime. So we’re looking you know at at all of the inputs that go into whether or not a company can grow. But I am really concerned about the deficit.

Nancy TenglerThat said, we could go on like this for years, decades, even if you’ve got a cooperative, fed and treasury. So it bothers me. I think the policy, the moral hazard is now gone. So, you know, we we bomb Iran. Oil prices go up, we send out a check, potentially. I mean, that’s what we did in Covid, and and it’s it’s great for the recipients of the check.

Nancy TenglerIt’s not necessarily good for the Treasury and the deficit and debt. So.

Caroline WoodsOkay.

Nancy TenglerYeah.

Caroline WoodsWell we’ll leave it there. And Nancy, I always appreciate your picks and your perspective. Thank you so much. That Nancy Tangler, CEO and CIO of Laffer Tengler Investments.