Why WAM is bullish following a recent trip to the US - and the stock they're now watching

Comparison is the thief of joy, but that doesn't mean it's not worth paying attention to how everyone else is getting on.

While Australian investors and consumers lick their wounds, over in the US it's a different story. 

In this special Q&A, Laura Hargrove, Investment Analyst at Wilson Asset Management for the WAM Global Team (ASX: WGB), talks us through everything she learned on her recent research trip to the US, and the stocks they're now backing as a result. 

You’ve just returned from a research trip to the US, how would you describe the mood from the meetings you attended?

Constructive. I met with more than 40 companies across the technology, industrials, healthcare and consumer sectors and conferences, and the tone was upbeat. 

While the outlook for the consumer is more nuanced, management teams generally painted a relatively consistent picture of new growth opportunities and greater resilience to disruption. Interestingly, artificial intelligence (AI) was central to the growth story even outside the technology sector. 

In industrials, several companies described embedding AI across their installed base to deliver predictive maintenance and performance optimisation, converting one-off hardware sales into recurring, higher-margin service revenue. In life science tools, there are early signs that AI will meaningfully accelerate drug discovery, expanding development pipelines and, in turn, demand for preclinical research. 

At the same time, companies are far better positioned to withstand disruption than they were during COVID. Supply chains are more diversified, inventory discipline has improved, and many companies have been able to pass through tariffs and higher fuel costs without meaningful customer attrition.

Have you come away more bullish or bearish on US shares?

Bullish! The US backdrop is undoubtedly noisy, with the midterm elections approaching, inflation still elevated and interest rates rising. Our meetings, however, told a more encouraging story. 

Fundamentals are largely sound, and strength is broadening across a wider range of companies and sectors. This is why we prioritise meeting companies in person, as first-hand conversations often reveal insights that the headlines may obscure.

If you had to pick one takeaway that you think matters for investors what would that be?

Execution is the key differentiator. Across almost every sector, capacity rather than demand has become the binding constraint, favouring companies that can attract skilled labour, secure long lead-time components, and deliver reliably on schedule. 

Those that do are being rewarded with meaningful pricing power. Aerospace is a clear example. Aircraft manufacturing has run into challenges over recent years, so airlines are keeping older aircraft flying for longer. 

Safran (EPA: SAF), which supplies engines for the most popular narrowbody jets through its CFM joint venture with GE, is a key beneficiary. It has executed well on the ramp-up of its new LEAP engine, lifting deliveries by 41% in the first half, while demand for spare parts to maintain the older CFM56 fleet continues to outstrip supply. That scarcity underpins its pricing power, with Safran aiming to raise spare parts catalogue prices by a couple of percentage points above inflation each year. 

The same dynamic is evident across many parts of the technology stack, where tight supply has allowed price increases to spread beyond memory into power semiconductors, manufacturing equipment and components.

Was there anything that made you more cautious about a particular company or sector?

The lower-income US consumer. As we have heard time and again, the US economy is increasingly K-shaped, with higher-income households continuing to spend while those at the lower end face mounting pressure. This divergence was evident even at BJ's Wholesale Club, the third-largest membership warehouse operator in the US behind Costco and Walmart's Sam's Club. 

Despite 18 consecutive quarters of traffic growth and a record 8.5 million members, management noted that most of the comparable sales growth in its most recent quarter came from its highest-income members. Against this backdrop, we remain selective in our consumer exposure. 

That said, we are also cognisant that much of this pressure already appears to be reflected in valuations, with apparel, retail and restaurant stocks having sold off sharply. The risk-reward is therefore becoming increasingly asymmetric, with meaningful upside should macroeconomic conditions improve.

Have you made any portfolio changes on the back of your trip and why?

Yes, we added to our position in Thermo Fisher Scientific (NYSE: TMO). Our meetings with a number of life science tools companies, including Agilent, Waters, Avantor and Sartorius, reinforced our confidence that the sector recovery has taken hold, and that, in our view Thermo Fisher is one of the best ways to capture this. 

As a leading supplier of the instruments, consumables and services that underpin drug discovery, clinical research and biopharmaceutical manufacturing, it is exposed to activity across the entire drug development cycle. Beyond the cyclical recovery, it is also well placed to benefit from several structural tailwinds. 

AI should broaden demand for its research and clinical services as more drug candidates enter development, the reshoring of pharmaceutical manufacturing to the US is already lifting orders in its contract manufacturing business, and growing investment in mRNA therapies is creating new sources of demand. With these drivers in place, Thermo Fisher remains one of the major holdings in the WAM Global (ASX: WGB) investment portfolio.

Which investment did you add to your watchlist on the back of your recent trip?

Technip Energies (NASDAQ: FTI). The company designs and builds large-scale energy infrastructure, most notably LNG export terminals, and has two tailwinds working in its favour. 

The conflict in the Middle East has made energy security a global strategic priority, which should drive greater investment in secure and diversified LNG supply, while the reconstruction of damaged infrastructure across the region should add a further source of demand. 

Despite this supportive backdrop and a record order backlog, the shares have de-rated to around 12x forward earnings.

What’s your favourite chart or data point from your trip? 

I found this chart a useful reminder that markets can easily become preoccupied with short-term noise, and that stepping back to consider longer-term patterns often provides a clearer sense of the bigger picture. 

History suggests September is typically a soft month for US shares, with weakness concentrated in the second half of the month and more pronounced in midterm election years such as 2026.

What first drew you to markets and what continues to keep you inspired today?

I took an unconventional route into markets, having studied geography at university. Geography taught me to think about how the world works, from geopolitics to trade, and I was drawn to markets because that is where you see the impact of those forces on companies and economies in real time. 

What keeps me inspired is that those forces are constantly shifting, so there is always something new to learn.

How do you unwind when you’re not thinking about the market? 

I head down to the beach or for a swim at Clovelly.

Rapid fire! 🔥

What is your favourite investing book?

Capital Returns: Investing Through the Capital Cycle, Marathon Asset Management.

What is your favourite investing or finance/markets related podcast?

The Compound and Friends.

What’s the first thing you read each morning?

John Authers’ Bloomberg column, Points of Return.

What is your favourite restaurant?

Wagyuto, Clovelly.

What’s something people are surprised to learn about you?

I’m learning Japanese!