New Edge Wealth's Jay Peters says 2026 will be the year of diversification

Brian Sullivan (Anchor) 00:00.000

All right, welcome back. Let's get a portfolio power check. Your first guest says that next year will be the year of diversification and to prove it, he has three ideas for the new year. Jay Peters, his fund manager at New Edge Wealth. And he joins us now on set. Jay, thanks for

Brian Sullivan (Anchor) 00:15.240

coming in. We know it's like near the end of the year. It's New Jersey, so we appreciate it. All

Jay Peters (Fund Manager) 00:18.800

right. Thanks for having me, Brian.

Brian Sullivan (Anchor) 00:19.840

Let's Let's start here. Stock number one that is Gilead Sciences biotechs, by the way, have been pretty red hot up 30% on the year, not doing great today, but But what about Gilead? Yes.

Jay Peters (Fund Manager) 00:32.560

You know, the healthcare sector has been been through a tough couple of years and and this has certainly been a bright spot. Um Gilead's a highly innovative pharma company known for a focus on high value you know deeply R&D intensive drugs and and they've certainly had a lot of

Jay Peters (Fund Manager) 00:44.680

success in in their core HIV pipeline and you know this is a company with two dozen drugs in market 50 drugs in their pipeline 11 of which are focused on oncology and we think that might provide some interesting upside in the coming years. But at the end of the day, Gilead's

Jay Peters (Fund Manager) 00:58.720

just a a stable grower company with a 2.8% dividend yield, trading at a reasonable 15 times earnings. And it's a very profitable biotech firm, about 35% free cash flow margin. So, I think when you're thinking about the rotation ways to diversify away from AI, there's there's

Jay Peters (Fund Manager) 01:12.760

certainly some high quality farmer names out there like

Brian Sullivan (Anchor) 01:14.640

Yeah, I mean listen, healthcare is going to be here for a long time and this company's been around for a long time as well. As has our next company. In fact, I think this company, Mueller Industries, is over a hundred years old. They're based sort of outside Nashville. They do

Brian Sullivan (Anchor) 01:28.640

stuff that we don't talk about a lot. HVAC, pipe fittings, things like this. Not a name I can recall talking about. What is it about Mueller Industries that attracts you?

Jay Peters (Fund Manager) 01:39.040

Yeah, so thinking about diversification not only across sectors, but in terms of capitalization, Mueller is a $13 billion company $13 billion market cap company, really a global leader in the manufacturing and distribution of copper pipes and fittings. So, yes, it is a storied

Jay Peters (Fund Manager) 01:54.400

company. It's been around for about 150 years. I

Brian Sullivan (Anchor) 01:56.840

cut I cut them short. I said only a 100 Sorry But

Jay Peters (Fund Manager) 02:01.840

maybe a straightforward business, but they are vertically integrated. So that obviously drives a lot of profitability, pricing power and it allows them for to manage their quality control. And historically is a business that's been highly correlated to construction activity and

Jay Peters (Fund Manager) 02:15.760

housing starts and

Brian Sullivan (Anchor) 02:16.720

It's like a data center play a little bit though. If they do HVAC, that's a huge part of the data So

Jay Peters (Fund Manager) 02:22.320

center business Yeah like like a lot of companies in recent years data center demand has certainly become a big part of their business and that's So I think in the near term, you have that data center story supporting some of the underlying growth. But if we do get a better

Jay Peters (Fund Manager) 02:35.760

economic environment next year, lower interest rates, maybe a little bit of activity in the housing market, their core business could start to reaccelerate. And the last piece of the puzzle is copper prices. So we've talked about how tight that market is. And I think, you've had

Jay Peters (Fund Manager) 02:48.680

a lot of supply disruption this year. Demand continues to be robust. And and ultimately for a company like Mueller, because they're able to manage their input costs, they do pass on a lot of price increases to to end market consumers. they're benefiting from higher copper

Jay Peters (Fund Manager) 03:01.440

prices.

Brian Sullivan (Anchor) 03:01.960

Speaking of power, your third pick and final pick, one that I know well. This is one of the biggest power producers in the United States. They do all kinds of stuff. They do a lot of coal too. The NRG kind of does everything. Stocks rocketed though this year, Jay, up 70%. You

Brian Sullivan (Anchor) 03:18.480

still see more upside, but how?

Jay Peters (Fund Manager) 03:20.200

We do. So, yeah, it definitely had a great first half of the year. It's been been kind of sideways here in the last six months. Um, you know, when we look at the AI infrastructure theme, the power generation story continues continues to be one of the biggest bottlenecks. If data

Jay Peters (Fund Manager) 03:32.040

center power consumption is expected to 3x over the next 5 years, there clearly isn't enough power supply in this country. It's why we're seeing higher electricity prices, why we saw another record PJM auction a few a few weeks ago. Yes.

Brian Sullivan (Anchor) 03:43.080

And By the way, thank you for bringing that up. We're the only show, I think, in America that talked about it, this show, because it's such a huge deal. And Okay NRG's a big seller into the Mid-Atlantic energy grid. So, I'm I'm really glad Yeah, you mentioned exactly.

Jay Peters (Fund Manager) 03:56.280

that I mean that's why some of these independent producers are are we think are great well positioned business is is the the fact that prices continue to be to rise and demand continues to be robust. And NRG, a company that is one of the largest independent producers, about 25

Jay Peters (Fund Manager) 04:09.000

gigawatts of of generation capacity. A lot of that is is focused on natural gas, which is a more efficient, cost-effective form of generation. We think that's going to be key to supplying data centers and the grid going forward. And ultimately, a high quality business, trades

Jay Peters (Fund Manager) 04:22.040

around 19 times earnings, you know, double-digit revenue and EBITDA growth and and positive free cash flow generation. So a lot to like for from a fundamental and