Episode 416: U.S. Stocks Have Limited Upside From Here

By Dan Ferris
Published June 2, 2025 |  Updated June 2, 2025
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On this week's Stansberry Investor Hour, Dan and Corey welcome Mike Barrett back to the show. Mike is the editor of Select Value Opportunities and senior analyst for Extreme Value. He has decades of cash-flow modeling and valuation expertise that he uses to find underappreciated, high-quality growth stocks.

Mike kicks things off by discussing President Donald Trump's tariffs, their implication in the context of broad market cycles, and a potential 2026 low. He explains that he believes stocks have limited upside from here because of extreme positive sentiment and rampant overvaluation. And because there's so much uncertainty, Mike advises investors to make sure they have high-quality businesses in their portfolios. He also points out that the most overvalued stocks today are the defensive ones, but that could change once the tariff situation eases...

Back in 2022, the most overvalued stocks were the big tech stocks – the Adobes and the Microsofts and so forth. Those stocks now are mostly showing up on the undervalued or fairly valued list. The more defensive stocks are showing up on the overvalued list. So I suspect that if there is a resolution to this [tariff drama] and stocks begin to take off, you're going to see the Walmarts and the Costcos and the O'Reillys and the AutoZones and so forth pulling back as people pull out of those positions and move into more risky stocks.

Next, Mike breaks down his personal investing philosophy and why he uses macroeconomic factors to look ahead only a few weeks rather than longer term. He also talks about the importance of momentum, taking risks to find out what works best for you as an investor, Nvidia being undervalued today, one company he likes that offers a good way to compound your wealth, and the optionality baked into Sprouts Farmers Market thanks to the rising popularity of weight-loss drugs...

Now that people are losing 100 pounds, 150 pounds, 250 pounds, they don't want to put it back on. They're eating better. They're staying away from ultra-processed foods. They're eating more fruits and vegetables. They're eating the things that Sprouts focuses on and is a leader in. And so it has kickstarted that stock.

Finally, Mike discusses Costco Wholesale's fantastic business growth, the importance of finding companies that perform consistently well, his recommendation of Constellation Brands that earned a triple-digit return for subscribers, crypto, and generative AI. Speaking about Costco, Mike notes...

[The company] throws off a couple of billion dollars... and like 99% profit. And so it turns into pure cash flow. And so they already operate on a very thin [margin]. I think their operating margin's even lower than Walmart's, which creates this wonderful moat around the business. Who in the world can compete with a company that's earning a 3% profit margin?

Click here or on the image below to watch the video interview with Mike right now. For the full audio episode, click here.

Additional past episodes are located here.)

The transcript is coming soon.


This Week's Guest

Mike Barrett is the editor of Select Value Opportunities and senior analyst of Extreme Value. He uses decades of cash-flow modeling and valuation expertise to find stocks with multibagger potential and underappreciated, high-quality growth stories for subscribers. During Mike's decade-plus tenure with Stansberry Research, he has uncovered some of the firm's highest-returning recommendations.

Mike attended the University of Georgia and earned his Bachelor of Science in agricultural engineering. He received his Master of Business Administration from Florida State University. He also received his MAI and Senior Residential Appraiser designations from the Appraisal Institute. (The MAI designation is often considered the equivalent of doctorate-level work in the field of commercial real estate valuation.)

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