Some days the market is in a good mood. Other days, not so much.
One session is about AI excitement. The next is about war, tariffs, or recession fears. For investors trying to stay positioned through all of it, the bigger question is how to build a portfolio that works in both kinds of markets.
In the latest episode of Ticker Take, I spoke with Jay Hatfield, CEO of Infrastructure Capital Advisors, about a strategy designed to do exactly that.
He calls it a barbell approach.
The idea starts with a concept called beta, a measure of how much a stock moves relative to the broader market. High beta stocks swing more than the market. Low beta stocks swing less.
In a strong market, higher beta names tend to lead. In a weaker one, lower beta names tend to hold up better.
Hatfield’s view is that since nobody knows exactly what the market is going to do, owning both sides makes sense. A barbell gives investors exposure to growth when conditions are good, and some stability when they are not.
To pick the individual names, Hatfield uses a methodology he calls PEGY, which stands for price-to-earnings divided by growth plus yield. The advantage of including yield is that it captures dividend income as part of the total return. He also makes risk adjustments for the lower beta names to make sure he is not overpaying for stability.
With that framework in mind, here are the eight stocks Hatfield highlighted, five on the high beta side and three on the low beta side. As always, this is not financial advice.
Citizens Financial Group (CFG)
Citizens has been caught up in broader credit concerns, but Hatfield sees a better story underneath.
As older bonds roll off, net interest margins should improve. The company has also been cutting expenses and growing its private wealth business.
Add in a roughly 3 per cent dividend, and Hatfield sees a regional bank with stronger earnings ahead and income to collect while you wait.
Bank of America (BAC)
Bank of America is the bigger bank on the list, and Hatfield likes the valuation.
The stock trades around 10 times earnings, which he sees as attractive given the quality of the business.
He also points to the company’s investment banking division, which he considers more reasonably priced than the pure-play investment banks.
Amazon (AMZN)
Hatfield calls Amazon a “poster child” for the overdone tech rotation.
The cloud business continues to perform, and the retail side is benefiting from cost cuts and the rollout of robotics.
He also highlights the company’s Trainium chip, which he says positions Amazon as a “mini Nvidia” in AI infrastructure.
Marvell Technology (MRVL)
Marvell sits squarely in the AI conversation, and the stock has already doubled.
Even so, Hatfield is sticking with a $210 target. He points to the company’s optics business and a PEG ratio that remains reasonable at around 1.0.
In other words, he thinks there is still more room to run.
KKR (KKR)
KKR is the most controversial pick on the list, given recent concerns about private credit.
Hatfield says those concerns are overdone. Private credit accounts for only about 15 per cent of KKR’s business, and the company continues to grow assets by roughly 15 per cent a year.
He views it as a high-quality alternative asset manager getting caught up in a broader scare.
Energy Transfer (ET)
Energy Transfer is the first of Hatfield’s lower beta names, with a beta of about 0.6 and a dividend yield near 7 per cent.
The business is built around energy pipelines, transportation, and storage assets.
Hatfield sees it as a value play with real tailwinds, including growing demand for natural gas tied to data centers and U.S. energy exports.
Cheniere Energy (LNG)
Cheniere is one of the pioneers of U.S. LNG exports, and one of the most highly rated stocks on Wall Street.
Hatfield views it as a defensive long-term holding, with significant growth opportunities already teed up through export permits.
It is also a low beta way to play rising global demand for natural gas.
Lockheed Martin (LMT)
Lockheed Martin rounds out the low beta side of the barbell, with a beta of just 0.2.
Hatfield has a $600 target on the stock, pointing to the need to restock missiles and a sizable increase in the U.S. defense budget as the main tailwinds.
If geopolitical uncertainty drags on, he sees Lockheed as a name that can hold up while still offering a path to growth.
The Ticker Take
Trying to predict the market’s mood is a tough way to invest.
Hatfield’s approach is to stop trying.
By building a barbell of high beta and low beta names, he is aiming to participate when the market is climbing, and limit the damage when it isn’t.
After a year of swings between AI optimism and geopolitical anxiety, that kind of two-way thinking may have appeal for investors who would rather be ready for both than try to time either.
Jon Erlichman is a BNN Bloomberg contributor and the host of Ticker Take on YouTube.
