Bill Nygren, portfolio manager at Oakmark Funds since the 1980s, said Tuesday that investors should look outside of the S & P 500 for opportunities, as it has effectively become a megacap tech fund. The longtime value investor said he is picking up hidden gems outside the dominant technology sector, prioritizing strong companies with single-digit price-to-earnings multiples. The S & P 500 has recently rallied to record highs, powered by a handful of megacap tech stocks, from Nvidia to Alphabet . Nygren said he likes retirement services firm Corebridge Financial , which has a robust buyback program. “It’s a competitive space, but we’re not arguing it’s worth 20 times earnings,” he said on CNBC’s ” Closing Bell .” “It’s at five times earnings today and they’re putting most of their capital into share repurchases in five to seven years.” CRBG YTD mountain Corebridge Financial year to date Another stock Nygren finds appealing now is Delta Air Lines , whose shares have underperformed significantly this year, falling 4%. “We like the management at Delta. The balance sheet is stronger than the other major airlines, and we like the demand for travel,” Nygren said. “It’s been a tough environment for the discount airlines, and that’s given the major airlines more of an opportunity to increase their prices a little bit and get back to normal margins. At a single digit PE, it’s not asking that much of the company.” In July, Delta Air Lines reported third-quarter earnings and revenue forecasts that topped estimates. CEO Ed Bastian said bookings had stabilized after months of lower-than-expected demand. DAL YTD mountain Delta Air Lines year to date Nygren’s last pick was pharmaceutical giant Merck , saying he is bullish on the New Jersey-based drugmaker’s different assets, including vaccines, animal health and cancer treatments. “We think [vaccines] will continue to be a good profit source for them,” Nygren said. “They have a good business in animal health and then, in the pipeline, they have a lot of experiment[s] combining Keytruda with other drugs to … target specific cancers. And we think there’s a reasonable chance that at least one of those will be successful.” MRK YTD mountain Merck year to date
