Speaker · Updated
Sarat Sethi: latest market views
Douglas C. Lane & Associates
Summary
Sarat Sethi, CFA, is Managing Partner and Portfolio Manager/Equity Analyst at the New York investment advisory firm Douglas C. Lane & Associates, which he joined in 1999, and he is a regular CNBC contributor.
Chorus has 15 views from Sarat Sethi across 2 episodes on CNBC Halftime Report and CNBC Power Lunch since October 13, 2026. Their latest calls: bullish on Medline Industries, LP, Qualcomm, Apple and Chevron; bearish on UnitedHealth Group and Southwest Airlines Co..
Where they stand
Their latest bullish or bearish call on each company.
- Medline Industries, LPBullish ·
- QualcommBullish ·
- UnitedHealth GroupBearish ·
- AppleBullish ·
- ChevronBullish ·
- Delta Air LinesBullish ·
- Johnson & JohnsonBullish ·
- Southwest Airlines Co.Bearish ·
- United Airlines HoldingsBullish ·
What they talk about most
- US stock market outlook · 3
- Medline Industries, LP · 1
- Qualcomm · 1
- Software & SaaS · 1
- UnitedHealth Group · 1
- Apple · 1
- Chevron · 1
- Commodities (broad) · 1
- Delta Air Lines · 1
- General Motors Company · 1
- Johnson & Johnson · 1
- Southwest Airlines Co. · 1
The latest views
Newest first. Every quote is checked against the episode's transcript.
Semis' index weight is falling from its peak, and the growth money that chased it is unlikely to return.
Sarat says semiconductors peaked at about 20% of the S&P 500 and were about 16% last week, probably 12-14% now. The largest weight ever was about 8% in 2000. He argues that a lot of money followed the fast growth in semis, and that growth is probably not coming back. He sees the rotation starting four to six weeks ago, with the equal-weighted S&P outperforming in October.
“they peaked at 20% of the S&P. They were 16% really as of last week. They're probably down to 12 or 14 now... you had a lot of money following really fast and growth that is probably not gonna be there.”at 10:39
Health care and other defensive sectors with organic growth and cash flow are where opportunities are growing.
Sarat says his portfolio is 18% in health care, and that defensive sectors have done well in recent weeks. He argues the opportunities in these areas will grow, especially as investors focus on companies with organic growth and cash flow. Health care also had a three-standard-deviation move compared with the rest of the market, which he cites as part of the rotation.
“we're 18% in health care right now. So if you look at some of our defensive sectors have been doing really well for the last few weeks... the opportunities there are gonna get even more.”at 18:38
SaaS stocks sold off on fears that AI compute would replace them, and are now recovering as that fear fades.
Sarat argues that SaaS stocks were being written off because of the fear that the compute build-out would take their business. That fear is not playing out, and software stocks that were considered dead have reacted positively in the last couple of weeks and on Tuesday. He sees this as part of a broader rotation rather than a sign that the market is strong.
“the SaaS stocks that were getting killed because all the compute that was gonna come out. Well, guess what? That's not gonna happen as well.”at 21:16
QualcommBullish
Qualcomm is cheap at 12.5 times forward earnings, with a strong balance sheet, dividend and diversified earnings.
Sarat says Qualcomm trades at 12.5 times forward earnings, with a great balance sheet and a dividend. Apple is out of the picture, so the company no longer depends on that partnership. Automotive, connected devices and other semiconductor growth diversify its earnings beyond data centers. He sees the selloff in semiconductors as an opportunity to buy a company with real earnings, but says it may take patience.
“It's trading at 12 and a half times earnings, forward earnings... It's got a dividend... Apple is out of the picture... the opportunity to buy something like a Qualcomm today that has real earnings and diversified earnings base.”at 34:29
Medline Industries, LPBullish
Medline is buying-worthy: it's the Amazon of medical supplies with long growth runway.
Sarat is adding to Medline, which he calls the Amazon of medical supplies because it sells across the board to many different companies. He cites 10% organic growth and 30% margins. He says the company has a lot of runway left, which is why he is moving within healthcare into Medline.
“which is the Amazon of medical supplies... It's growing 10% organic growth, 30% margins. We think this company's got a lot of runway to go”at 48:07
UnitedHealth GroupBearish
Selling UnitedHealth after a 20%-plus gain because its remaining upside is limited.
UnitedHealth is up over 20% for the year, and Sarat says the fund did very well with it. He thinks the upside from here is more limited, so he is selling and moving within healthcare into Medline instead.
“we're selling UnitedHealth, which is up over 20% for the year... I think, you know, the upside there is more limited.”at 48:07
AppleBullish
Apple's services recurring revenue and pricing power justify its high multiple by smoothing earnings.
Apple's key is services. Recurring revenue and its ability to raise prices across phone, home, car and TV give it steady earnings. That keeps the business sustained even at a roughly 36 times multiple, because its earnings are more even than those of other megacaps. The services strength also offsets possible hardware demand weakness from higher memory and hard drive costs.
“For them, that recurring revenue and their ability to raise prices is giving them, even though they have a 36 multiple or depending on what year you're looking at, I think that's sustaining it because it's going to have more of an even earnings”at 7:52
CNBC Power Lunch: Bank Earnings Kickoff, Tech Fueling Rally, Sarat Sethi Guest Host 10/13/26 ·
Value and cash-flow stocks could do well as in the first post-2000 decade, since rates are now at 5%.
Investors can barbell: keep growth exposure, and hold cash-flow-heavy parts of the market that partake if growth stalls. The first decade after the 2000 crash was great for the Russell and value stocks. That has not happened in 15 years because rates are now at 5%, not zero, which favors cash-flow businesses.
“The first decade was great for the Russell stocks. The value stocks did really well. We haven't seen that in fifteen years because we also have interest rates going at 5% finally, not zero and two.”at 24:09
CNBC Power Lunch: Bank Earnings Kickoff, Tech Fueling Rally, Sarat Sethi Guest Host 10/13/26 ·
Energy is a portfolio hedge: commodities rise when the dollar weakens, and they are a good inflation hedge.
He holds market-weight energy because it is a commodity and it works as a hedge in the portfolio. Energy correlates with the US dollar, so when the dollar weakens, commodity prices rise. He notes that oil can roll over if the global economy slows, so the holding is a hedge, not a bet on fundamentals.
“I have market [weight] energy because it's a commodity. It also correlates with the price of the US dollar, so dollar gets weaker, commodity prices go up”at 31:03
CNBC Power Lunch: Bank Earnings Kickoff, Tech Fueling Rally, Sarat Sethi Guest Host 10/13/26 ·
ChevronBullish
Chevron offers rising dividends, buybacks and an inflation hedge, making energy better than bonds for equity-heavy portfolios.
For a portfolio that is 100% equity, energy is better than bonds. Energy majors like Chevron have rising dividends and buy back shares, which lifts the stock. They are also a strong inflation hedge against events happening in the world. Energy is a good hedge within the portfolio against the other side of the trade, as seen with airlines hurt by high fuel costs.
“Yes, definitely better than bonds because thing with the Chevron excellence of the world, you have rising dividends as well. They buy back shares, stock goes up, and it's a great inflation hedge to things that are going on in the world.”at 32:23
CNBC Power Lunch: Bank Earnings Kickoff, Tech Fueling Rally, Sarat Sethi Guest Host 10/13/26 ·
Delta Air LinesBullish
Delta is the best-run airline; premium demand holds up despite high oil prices and it stays cash-flow positive.
Delta is the best-run airline, doing its best with oil prices. Traffic is still there, including premium traffic, and the company is still cash-flow positive and making money. It can pass some costs on. As oil prices come down over time, its profits should rise further, helped by loyal customers coming back. The upper end of the K-shaped consumer is less sensitive to price, so premium carriers hold up better.
“I think, again, Delta is the best run airline we have out there. They are doing their best with oil prices the way it is.”at 32:50
CNBC Power Lunch: Bank Earnings Kickoff, Tech Fueling Rally, Sarat Sethi Guest Host 10/13/26 ·
Southwest Airlines Co.Bearish
Southwest and other non-premium carriers will be hurt more because their pricing may not stick.
The upper K of the consumer is less sensitive to price than the lower K. Airlines focused on premium, like Delta, are fine, but airlines like Southwest that are not into premium will be hurt more, because their pricing might not stick with a more price-sensitive customer base. He says there is a breaking point, but consumers are not there yet.
“The upward K is not as sensitive to price movements as the lower K. So the airlines that are more focused, maybe the Southwest or some of the others that are not into premium, I think will get hurt more because their pricing might not stick as much.”at 34:45
CNBC Power Lunch: Bank Earnings Kickoff, Tech Fueling Rally, Sarat Sethi Guest Host 10/13/26 ·
United Airlines HoldingsBullish
United's raised status requirements build loyalty, helping United and Delta at others' expense.
United raised its status requirements for next year. Customers want their status and the premiumization that comes with it, so they stay loyal to the same airline. That helps United and Delta and hurts other airlines. He notes that United shares are down 7% year to date despite this, so the loyalty effect is not yet in the stock.
“That's where this is really going. It will also mean that you'll keep on trying to fly the same airline and you'll be loyal because you want to hit it the same. That helps United and that helps Delta.”at 35:29
CNBC Power Lunch: Bank Earnings Kickoff, Tech Fueling Rally, Sarat Sethi Guest Host 10/13/26 ·
Johnson & JohnsonBullish
J&J's post-earnings selloff overstates the problem; the stock looks cheap again and remains a great company.
The stock fell on weakness in its med-tech unit, which Stryker and Boston Scientific had also flagged, and an overhang from the planned sale of its orthopedics division. Sethi argues the selloff is overdone. Guidance was raised above the start-of-year target, the pharma division is doing well, and the stock is still up 18% for the year. He says the valuation has reset to about 20 times earnings, down from the 15-16 range where he first got interested, and the company has a AAA balance sheet. He attributes the med-tech slowdown to consumers and hospitals in Asia, Europe and China pulling back on non-essential procedures amid Middle East tensions and high oil prices, which he sees as a manageable issue rather than a fundamental break.
“I think it got baked in. It's 20 times earnings. It used to be trading at 15, 16. That's when we got interested. I think it's still a great company. It's a AAA balance sheet”at 41:00
CNBC Power Lunch: Bank Earnings Kickoff, Tech Fueling Rally, Sarat Sethi Guest Host 10/13/26 ·
General Motors CompanyUncertain
GM is a cyclical auto company; oil-driven car sales slowdown and union pressure are real risks despite buybacks.
Sethi says he was wrong to sell GM earlier, since he had expected the consumer to weaken, but consumers are still buying cars. He credits GM with good cash flow, buybacks and effective management through tariffs. He stresses that autos are hard businesses with no recurring revenue, that unions will eventually push for a bigger share of profits, and that a sustained oil price rise, for example a $25 increase, would drive car sales lower. He calls the stock a holding that moves within a band rather than a clear long-term winner, and describes its competitive position as strong but contested.
“Brian, if oil goes up $25 from now, you know car sales are gonna start coming down.”at 43:46
CNBC Power Lunch: Bank Earnings Kickoff, Tech Fueling Rally, Sarat Sethi Guest Host 10/13/26 ·
Shows
- CNBC Halftime Report · 1 episode
- CNBC Power Lunch · 1 episode
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