Jared Ablass

[music] >> Hello, I'm Greg Bonnell. Welcome to MoneyTalk Live, brought to you by TD Direct Investing.

Every day, I'll be joined by guests from across TD, many of whom you'll only see here.

We're going to take you through what's moving the markets and answer your questions about investing.

Coming up on today's show, we are going to talk about whether better days are ahead for the biotech sector. TD Asset Management Jared Ablass joins us.

MoneyTalk's Anthony Okolie is going to give us a preview of what to expect from tomorrow's US jobless report and in today's WebBroker education segment, Hiren Amin is going to shows how you can research healthcare stocks here on the platform. Here's how you can get in touch with us.

Just email moneytalklive@td.com or fill out the viewer response box under the video player on WebBroker.

Before we get to all that and our guest of the day, let's get you an update on the markets.

We will start with the TSX Composite Index.

Right now, putting on a healthy 136 points or more than half a percent to the upside.

We have some earnings to go through and let's check out the shares of Linamar, up almost 12%. Bit of a different story for Vermillion Energy.

Right now it $15.50, Vermillion is pulling back a little less than 3%. South of the border, we have been hearing from Jerome Powell the last couple of days, testimony in Washington. Markets are getting comfortable with the idea that they are going to get their rate cuts even though central bankers keep preaching patients on that front. We are seeing a resumption of the rally. A few days ago, there was a bit of a selloff south of the border, gained some back yesterday and getting back more today, the S&P 500 is up almost a full percent.

Tech heavy NASDAQ leading the charge percentage wise.

You're up about 1 1/3%. And it's the chipmakers, they are at the forefront of AI. People keep investing. Nvidia is up almost 3 1/2%. And that's your market update.

Equity markets keep reaching all-time highs, it's been a rough two year stretch for the biotech sector. There are some signs that better days could be ahead. The joining us now to discuss is Jared Ablass, VP, portfolio research, TD Asset Management. Let's dig in. We don't talk about biotech a lot of the show.

What has been driving that rough stretch?

>> Definitely a rough stretch. I brought a chart to demonstrate what we are seeing.

If you look up until 2022, it had been a pretty strong performer. It's the blacklight here. What you are seeing is a biotech index, an equal weight composite index, about 100 companies in the US, all words of $500 million market, a sharp drawdown, 60% drawdown over two years.

It's actually the largest for this index going back to 2008, 2009. A sharp drawdown. The green line is the US 10 year interest rate inverts on the left axis there.

You can see a pretty sharp correlation. As far as weather rates decreasing could help, it absolutely looks like that but I will give you context as to what drove that sharp downturn.

Really, the same driver but you can parse it three different ways. First, you had a flight to quality. The stocks that are performed in this. World large-caps like United Health, Johnson & Johnson, Merck.

This is a small tab killed being in equal weight so that definitely took a toll.

Secondly, I would say you had a duration impact. A lot of these are research companies, pre-revenue in a lot of cases, did not even just not earning money but pre-revenue, so if you dealing with the drug that might not make it to five years, it's difficult. The third places you've got the funding impact for these companies are negative free cash flow. They need to tap equity markets, whether to IPO or follow-on, to keep themselves going and that really dried up the last couple of years.

>> When you showed that correlation, you said it was the US 10 year bond yield. We are in a situation where markets are anticipating rate cuts.

Could that help turn the sector around?

>> Absently. I would say fingers crossed.

These are choppy data points but funding so far has looks really good. In January was up over 200% year-over-year.

That's IPOs plus all in funding.

Roll it to February, the number held. It was up to hundred percent again, up another 20% sequentially from January. If those numbers hold, he would be on track in Q1 four levels back to kind of 2021 peak as far as fundraising ability. So certainly the decrease in rates has investors more willing to lend their money to these type of companies.

I will point out when did Nalley a therapeutic, sub- $5 billion company, burning money in cash, but doing a lot of interesting research in the neurological space, they announced a $500 million pipe, private investment public equity. The stock was up 40% on the day.

Clearly, you have appetite for companies to raise cash.

Another aspect we haven't talked about is M&A. It does factor and when these companies are looking for ways to raise money, they are often selling themselves to large-cap Pharma. We saw that activity picking up at the end of 2023, like Amgen's acquisition of new Horizon, a billion-dollar deal for rare disease manufacture. The big one was Pfizer try to get over the downturn of COVID and now they are trying to find a new revenue stream to backfill that COVID vaccine, spent $40 billion on see Jen for targeted oncology therapy.

>> If we talk about a smaller company that could have gone the way of IPO, does that distort the IPO picture, the health of the sector? There are different ways of getting out there.

>> Yeah, not only through acquisitions, there's a lot of licensing tech that happens. I really hot space has been the GLP-1's. We had a lot of activity there for weight loss.

An example would be AstraZeneca. They went to China to license a GLP-1 candidate from acridine and China. A lot of activity whether it is public markets were private, companies have been able to access funding but certainly up taking in the past six months.

>> You mentioned the weight loss drugs.

This has been an interesting space. We had fresh news today out of Novo Nordisk.

They are saying they have a drug that promotes weight loss. They keep testing new ones. They are saying that at least at first glance that they are even more effective.

>> They showed data for their oral next generation asset that showed 13% weight loss at 12 weeks and that's in line with best in class injectables. If you can do that in an oral format, it's very attractive.

The question is to be seen how it's going to work out. You need a lot of the drug content in your system, being every day rather than once a weekly, so manufacturing will be a question but certainly an attractive proposition.

I did bring a chart as well on the obesity companies. It's really Novo Nordisk and Eli Lilly leading the charge. The top chart is total returns for these two companies.

There is multiple expansion.

The bottom plot is what I would draw your attention to.

That's the consensus 2025 estimate for sales and how that's evolved going back to 2019. Really what you see is what brokers were thinking about four years ago.

They now had to revise up their estimates for 2025 sales by double in the case of Novo Nordisk, 70% for Eli Lilly. These are real launches that are very meaningful drugs.

They are delivering follow-on stack can lose 20% plus of body weight.

>> What's the risk? Somebody else shows up with a more effective drug?

>> Definitely, the risk is the other ones getting involved. All told, there are more than 100 candidates in the pipeline. It's early. We had multiple expansion on the proposition of losing weight which is very attractive, 100 million people in the US are obese. Now we are seeing things were it's only weight loss that matters but it's also in August you had Novo Nordisk show a 20% benefit to cardiovascular risk, stroke, heart attack, 20% and reduction in that risk from taking a GLP-1. We have seen positive data on liver disease, we have seen positive data on orthopedics and joint pain, positive data on arthritis and sleep apnea as well.

It's very broad reaching and you're not sure whether the same mechanism will work as well in each indication, but it's still early. We will see what the others come out with.

>> We will get your questions about healthcare stocks for Jared Ablass and just moments time.

And a reminder that you can get in touch with us any time.

Just email moneytalklive@td.com or fill out the viewer response box under the video player on WebBroker.

Right now, let's get you updated on the top stories in the world of business and take a look at how the markets are trading.

New York Community Bank/its dividend by 80%, down to one penny per share. The beleaguered regional banks as a law 7% of its deposits in the past month before received that cash infusion of $1 billion from Liberty Strategic Capital. This is the second time this year that the bank has cut its dividend.

It is been a bouncy ride in the past couple of days with all of these developments. Today, it is up a little more than 8%.

Let's check in on shares of Novo Nordisk.

They are in spotlight today. The drugmakers sayings the phase I trial for its new anti-obesity pill showed 13% weight loss after 12 weeks, that's more than double the weight loss of its Wegovy treatment.

Novo Nordisk now at $137. I want to check in on American Eagle outfitters, it beat earnings expectations for the all-important holiday season. The retailer says a mix of strong demand, lower price markdowns and easing input costs boosted their bottom line. They are also announcing a new strategic plan aimed at boosting product. Put it all together, at $24 and change, you got American Eagle up almost 3%.

A quick check on the markets. We will look at Bay Street with the TSX Composite Index. A triple digit gain of 136 points, up more than half percent.

South of the border, there was a bit of a rally yesterday and we are building on it today.

50 points to the upside.

We are back with Jared Ablass, take your questions at healthcare stocks. If you want to get your take on Johnson & Johnson after the latest earnings report plus that talc litigation, is it a drag on the stock?

>> That's a good question.

Do you background on the talc litigation, there is an allegations stretching back decades that this talcum based baby powder had trace amounts of asbestos which then cause cancer. The latest on that is that we've had 60,000 claimants now signing on with a law firm of one sort or another that is now suing Johnson & Johnson.

Johnson & Johnson, it's been a persistent overhang. They say it's not linked to their drug and it's tough to make a causal link but it is an overhang on shares and what they are trying to get around it or resolve it, let's say, is actually make a subsidiary, but the liability in the subsidiary, LTL management, and funded with $9 billion of cash and try to file bankruptcy and deal with it that way.

That would put the issue behind them but it would cost them 9 billion so you can see how they are thinking of it, it is not a minor issue. It is a headwind but if you look at the rest of the business, the orthopedics business is doing well, rebounding out of COVID with delayed elective procedures that are starting to come back now.

So that's interesting. Really, it's a case of whether they can manage orthopedics recovery.

>> Challenges all the talc side. It's a big company.

When you are looking at a name like J&J, there might be a bit of headline risk but there's a lot of other things happening.

>> Exactly.

It's really the pharmaceutical business that kind of drives the stock. Talc is a headwind but it is trading at I think it's more related to what is happening on the pharma side.

>> Of your wants to know what stocks like Pfizer and Moderna look like post-COVID.

During COVID, it seemed like it was all that was talked about for a long time.

>> It's true. I would start by highlighting that they are very different companies. If you want to 2019, Moderna had 60 million and shares and it went up to billions in 2022. Pfizer was north of 50 billion in 2019 and is now, it actually took it hundred billion in 2020.

Moderna is now in a situation where it really need something to work because it is burning cash right now. It is cash flow negative.

But they are piling in on anything they can get their hands on, they are doing a flu vaccine, RC vaccine, pneumococcal vaccine. They are partnering with Merck on a cancer vaccine.

A lot of interesting stuff but a lot of interest saying that project. Pfizer is dealing with the typical large problems.

They have about 20% of their portfolio that will be rolling off of patents in the next three or four years. They are trying hard to backfill that.

They spent over 70 billion on M&A in the last three years so that's what they are turning to to kind of backfill their typical Pharma challenges.

>> You mentioned RNA, I think that's Moderna sticker.

This is technology to the general public including me really were not aware of until the pandemic hit.

It was through the technology they were able to get the vaccines together so fast.

Now they have to find another use for it.

Find another use for mRNA technology.

>> Find another use for it.

There will be use cases for it but it is definitely a different development process than a typical vaccine. One benefit in the case of flu is that you can develop it much more dynamically so if you are looking to the southern hemisphere and seeing which strains are developing, you can adjust and develop more quickly so that's what we would look to first.

>> Interesting stuff. Someone would like to know what the outlook for healthcare stocks would be in a recessionary environment?

>> It is a defensive sector but within, if you look within the sector, there is a lot going on.

Pharmaceuticals, very defensive. If you are relying on the government to pay your bills, they will keep paying through Medicare and Medicaid.

As well as insurance, your company will cut insurance too quickly.

Your bills will be paid. Medical devices is similar. If it's something that needs to be done, it will be done. But there are other things like hip replacement or knee replacement that can be pushed off six months, nine months.

That kind of stuff can be delayed and you will see those companies that are more levered to that that current recession.

You also have a more tax side where you have things like genome sequencing. Those kind of research projects will certainly be more sensitive.

But in general we expect healthcare to perform in a recession.

>> Earlier we were looking at the chart about the relationship between the sectors and interest rates.

Often we are not talking at the healthcare sector. Those praying for sharp interest rate cuts might be praying for the wrong thing because that might mean a recession.

>> If you are looking at where you can find growth as an investment, it is there in healthcare and parts of technology.

If you have a recession and some of your consumer levered sectors start to disappoint, you could get multiples there for healthcare.

>> Interesting stuff.

As always, make sure you do your own research before making any investment decisions.

we will get back to your questions on healthcare stocks for Jared Ablass in just a moment's time.

And a reminder that you can get in touch with us any time. Just email moneytalklive@td.com.

Now, let's get to our educational segment of the day.

We are discussing healthcare stocks on the show today. If you're interested in doing more research on the space, WebBroker has tools which can help. Joining us at or discusses Hiren Amin, Senior client education instructor with TD Direct Investing.

Great to see you. Let's talk about doing homework on the sector using the platform.

>> Absolutely. Great to be back.

If you are interested in researching the healthcare space, we've got you covered.

We've already chatted about it.

We know that it is a taxing sector.

Everyone needs or accesses welcome here at some point in their lives, so it is one of the most innovative sectors. As a crossover and AI leading into the sector with some of the innovations that are happening in us all fuelled by the secular trend that we now to help people live better and live longer. Where do we start?

It's jump into a broker and talk about it.

We are going to head onto our research tab appear at the top.

Under the markets column, we are going to go to the market sectors section. We are taking a top-down view. We want to assess the strength of the sector.

This is a good spot you can do that. You can see for example we've got these different sectors where traders or investors can look at four fundamentals.

If you go further down, you can see the breakdown of the sector. You have a choice between how are Canadian sectors as well as the US. We are going to look at our US ones today.

There is a healthcare sector here and a performance overview.

It measures things like P/E ratio, dividend yield. If you want to do further research, you can click on the sector and what that's going to do is take us deeper into the sector and give us a breakdown of the industry.

We know it's broken down between different companies so you will see that here.

This allows a traitor to first get a sense of where some of these multiples are in the sector and industry levels and then to do further research.

One thing I also mentioned is heading over to the report section. If someone wants to appear into what's happening were making use in the healthcare world, you can come here and have sector reports. MorningStar does.

You can open it by sector over here.

We also have the IN K research report.

The top one here is Canadian and the bottom one is US sector.

This is one way you can get started with your research.

>> How about screening for healthcare stocks? How do we do that on the platform?

>> Absolutely. This is taking the other side of the coin. We are going to the bottom up using the screeners tool.

You make some assessment at this point and find where the benchmark levels are, you might have some specific criteria.

That's where a screening tool will be handy. We go to research, tools, screeners.

We are going to go to screening. We are going to clear all data and then go in and add hours.

We are going to do a bulk edit.

We can click here and then clear all of this. Let's try this again.

Perfect. The first you want to do is choose sector and industry.

We are going to take everything off and does focus on healthcare.

You can even specify an industry that you want to look at.

We are going to keep the discussion broad-based and see what stocks are available.

From here you can parse out and say I want to focus on the Canadian or US markets.

Say we are looking at the US market in its entirety.

Then you can continue adding further research criteria, whether that be P/E ratio or any of those other kind.

Now you can see we have a holistic list of everything that falls under healthcare.

But this is how you can start using the screeners tool and get into the nitty-gritty of those fundamental measures you might want to look at.

>> Great stuff as always. Thanks for that.

>> My pleasure.

>> Hiren Amin, Senior client education instructor with TD Direct Investing.

And make sure to check out the learning centre in WebBroker for more educational videos, live, interactive master classes and upcoming webinars.

Now before you get back your questions about healthcare stocks for Jared Ablass, a reminder of how you can get in touch with us.

Do you have a question about investing or what's driving the markets?

Our guests are eager to hear what's on your mind, so send us your questions.

There are two ways you can get in touch with us.

You can send us an email anytime at moneytalklive@td.com or you can use the question box right below the screen here on WebBroker. Just write in your question and hit send.

We'll see if one of our guests can get you the answer right here at MoneyTalk Live.

Okay, we are back with Jared Ablass, taking your questions about healthcare stocks. This one just coming in in the past couple of moments.

First, a complement for Jared. Very smart analysis from Jared. Is there ongoing preparation by healthcare companies to prepare for future pandemics? This is an intriguing question.

It seemed like the industry got caught off guard even in terms of the rudimentary supplies you were supposed to have.

>> Kind comment, appreciated.

I think that's what is so exciting about this new mRNA technology.

It can be worked through development a lot faster than traditional vaccines.

We are, as a world, more prepared for pandemic that would come out of nowhere.

The supply issue is a separate topic.

But generally what we have seen is more resilient as a focus in supply chains.

We've got a lot of redundancy. Novo Nordisk was talking about that this morning and their supply chain discussion in the capital markets, just making sure you got supply coming from different geographies, different companies, not having all your eggs in one basket.

I think from a few different angles, we are well prepared or better prepared, let's say, and I think will be sort of the same actors if there was another pandemic that will kind of be at the forefront, Pfizer, Moderna, leading edge but there is another pharmaceutical giant in France, AstraZeneca, a big one in Europe, there are a lot of companies that are looking at these new ways of tackling outbreaks.

>> It's interesting that there are so many players in M RNA technology.

I've been doing this long enough that I cover the SARS outbreak in Toronto in 2003.

And then I covered the SARS investigation after about what went wrong and why we weren't prepared and they said they would never be caught unprepared again. A long time went by.

Is the passage of time with profit driven companies are riskier that when it does, if it takes 20 years before the pandemic, oh, we took our eye off the ball.

>> Profit driven companies that are free cash flow minded when you are maintaining excess inventory to make sure you are more resilient, you are treating your free cash flow margin for that.

It is a trade-off and investors are pushing for decreasing inventory and getting back to normal environment. I think there are some government mandated controls that will be higher.

If you look at what happened to banks after the financial crisis, with the capital requirements, I think there is more national interest in them being more ready but things can drift over the years.

>> What I didn't cover was the AC/DC concert. Thanks for the question.

Someone wants to know how to play an aging population that will probably need more knee and hip replacements?

>> The most direct and straightforward way would be the companies that are making the hips and knees. Those companies would be striker, Biomed, J&J has a big orthopedics business.

The most interesting thing looking at that is that the robots of those companies make that help install the hips and knees drive the market share gains. The last two years, striker has had the best robots so they been gaining market share. But there are other ways to tap the market if you don't want a first-order implication. You can look at hospital billings. Hips and knees are positive for hospital volumes.

Volumes have been elevated since COVID.

Those procedures are coming back.

Pain alleviation as well, companies are working on pain alleviation without addiction potential because they don't act on the nervous system.

More procedures that happen, the more pain meds given now, so there are a lot of different ways to look at it but you got companies that are making the robots that install the hips and knees are quite attractive.

>> Demographically speaking, this has been framed as a Boomer story.

I'm Generation X, I'm not there yet.

I haven't fessed up to my doctor that my knee hurts probably more than it should. I don't want him to know that.

But after that boom of the boomers goes through, I'm going to be older and by knees are going to be shot.

>> As the boomers demographic ages, some of them will very likely need multiple procedures so it is a long tale. We talked about obesity earlier. Thus the debate now, if you are losing weight, do you need the knee or hip replacement? We think it's actually a positive for the knees and hips replacements worry because you can't replace a hip or knee for somebody that's got a BMI over 40.

So you are actually having a group that is sizing into being eligible for replacements. There are a lot of different levers that you can pull.

It's a pretty attractive long-term opportunity.

>> That's the new angles of the weight-loss drugs. Another question. Well healthcare stocks outperform of COVID flares up again around the globe?

Not even the next pandemic, the one we just live through.

>> Great question. I think it's very relevant.

If you look to March 2020, healthcare was up 15% relative to the S&P 500.

You'd probably be surprised to hear most people over 2020, the full course of the year, healthcare underperformed by 5%.

You really have to look to a very narrow, Pfizer outperformed, selling vaccines.

Moderna would probably outperform.

For the broader space, you might have more delays in hips and knee replacement, those companies will all suffer from it.

There is cardiology procedures that can be delayed. Those companies could suffer.

It really puts and takes but not our base case if you have a big flareup that shuts the world down again, we would expect the initial healthcare sector would outperform.

>> Knock on wood.

Another question from the audience.

Medical devices industry saw a strong return to growth last year. What is driving the trend?

>> Yeah, this is a very interesting one where the immediate response to COVID, you had every doctor in the hospital, every bed in the hospital was allocated to COVID. You had businesses that were high-growth, good businesses.

You look at parts of cardio, up to 2019, it was doing very well and then dropped dramatically.

That's preventative cardiology procedures that could be pushed off. If you keep them out of the hospital, you do that Walt you are dealing with COVID. It was a tough.

For med tech.

The index traded down 35%.

It's coming back. There have been fits and starts as we've had winter, COVID we fix up, people stay home. But generally, procedure volumes are coming back.

If you try to assess how much one way there is, it's a tough question. If you extrapolate pre-COVID trend, you could say with we are about 70,000 hips shy of the replacements we were expecting and 3000 on knees. There still a ways to go.

It's also the older population that's most vulnerable to COVID, the ones who need the knees and hips. It's difficult math but it has been a tailwind and I think it will continue to be this year.

>> Interesting stuff. We'll get back to questions for Jared Ablass on healthcare stocks and just moments time.

As always, make sure you do your own research before making any investment decisions.

And a reminder that you can get in touch with us any time.

Do you have a question about investing or what's driving the markets?

Our guests are eager to hear what's on your mind, so send us your questions.

There are two ways you can get in touch with us.

You can send us an email anytime at moneytalklive@td.com or you can use the question box right below the screen here on WebBroker. Just write in your question and hit send.

We'll see if one of our guests can get you the answer right here at MoneyTalk Live.

Tomorrow is Friday. It may not be news to you but it might be news to you that it is jobs Friday. US jobs were obviously a big focus for investors looking for insights on the state of the labour market.

Now it will follow through to what the Fed is going to get up to this year. At the holy has been looking at TD Securities forecast.

>> TD Securities expect below consensus print of 190,000 jobs for February, that is after the surprise upside jobs we saw in January where the US economy added a gangbusters 353,000 net jobs.

TD Securities does expects unemployment rates to decline to 3.6%, that was slightly below consensus estimates.

TD Securities also believes that the average weekly hours will drag month over month growth lower in February due to normalization and it will likely drag wage growth lower, they are projecting below consensus wage growth of .1% month over month in February which will likely drive wage growth with a year-over-year measure drop as well.

But there is plenty of other US releases this week that sort of reinforce the idea that the US labour market is cooling but still remains on solid ground.

We will start with private payrolls on Wednesday, the numbers grew by 140,000 in February but that's below the 150,000 that was expected by Wall Street. ADP also noted that the annual pay increase which came in just as take about 5% was the smallest rise since August 2021, a potential sign of coolie inflationary pressures there.

We also bought some weekly jobless gains which came in unchanged from a week ago, it was exactly in line with expectations as the labour market continues to show strength among elevated interest rates.

Finally, we also bought the JOLTS Report, the JOLTS Survey, and this is an early look at the US drop states with the survey falling slightly in January coming in below expectations.

The openings to seekers ratio remain elevated at 1.45. This is seen as a measure of worker confidence in the ability to change jobs and find another one easily, it declined in January, suggesting a further slowing in it wage growth going forward.

>> A lot of data there. I was picture people go into that today Fed meeting with a big stack of papers under their arms, putting it on the table. Two weeks away, was the take on what might happen?

>> TD Securities says that the rapidly improving inflation outlook and the possibility of lowering interest rates has led the Fed to start considering easing for this year. It expects the committee to start using rate starting in May and the Fed will continue to pencil and another 250 basis points of cumulative cuts, 200 of those cuts this year as growth concerns will likely lead the Fed to frontload their easing cycle.

>> US jobs tomorrow morning, Stats Can tells me we are getting Canadian jobs as well and I imagine you will join me at the top of tomorrow show to break it all down.

>> We will cover it all.

>> Thanks for that.

>> My pleasure.

>> MoneyTalk Anthony Okolie.

And now for an update on the markets. We are looking at TD's Advanced Dashboard, a platform for active traders available on the WebBroker platform.

We are going to start with the TSX 60, screening by price and volume. What's going on? A bit of green on the screen. We did see gold push higher.

Cameco, the radio play, polls 5% today. So through the border, the rally continues.

Yesterday there was a bounce back from the selloff the day before that. Choppy week but we are making gains apparently led by the chipmakers. A lot of excitement around AI and these names.

Nvidia is up 3%, Intel up almost 4%. AMD legging the pack there. Some of the other tech names are taking part today including the parent company of Facebook, that would be Meta Platforms.

Also Google up a little more than 2%.

You can find more information on TD Advanced Dashboard by visiting TD.com/advanceddashboard.

We are back with Jared Ablass from TD Asset Management, talking healthcare.

Let's get to another question.

Someone wants to know, what is driving the performance of life science companies like Thermo Fisher Scientific and Danner? That industry perform poorly in 2022 and 2023 but is having a strong start in 2024.

What's happening?

>> Lots of puts and takes going on. If you overlay the performance it's a similar story to BioNTech which tells you something, there is a linkage there.

That linkage is supply. They supply petri dishes that you need to make a drug or the pets or beakers, anything you need to develop a drug, they supply.

So you have that cyber there is less money coming into biotech, therefore less money flowing through. But you also have a few other dynamics where it's the large Form of that's well-funded, lots of cash.

They actually pulled stuff ahead into 2021 and 2022 where they were trying to build resiliency through COVID, make sure they had enough to make all their own drugs.

Now you have a situation where the story looked really good for life sciences but it was too good to be true and now we are kind of normalizing down an destocking environment.

The other side is still choppy, fits and starts this year. Generally, it looks like multiples or running up. Sort of similar story that you would have in a semiconductor spot where your multiples get bit up as investors try to get ahead of the inflection. So that's where we are today.

There is also the covert dynamic, Danaher and Thermo Fisher, those companies were heavily involved in making the testing kits for COVID so you had that role down, affecting the topline in the last couple of years as well.

>> We are at a time for questions but before you leave now, let's run back to the top of the conversation.

What do investors need to be keeping their eye on this year?

>> Biotech, the rate sensitive stuff is what's most interesting step with potential rate cuts on the horizon.

Biotech would be that, certainly the small-cap bucket. It is very risky.

You've got data coming out that's up a lot and then Novo Nordisk came out this morning and the stock was down 20%. It's interesting directionally with rate cuts.

The other one would be the med tech and tool space. Tools because you are getting towards the other side of this destocking.

You can see how that goes there and then med tech we had a strong recovery and the question is how long that will last.

>> With those names in mind, when you're looking at individual stocks, what are you really looking for?

>> You are looking for revenue stream that can compound cash.

Anything tied to a COVID vaccine or testing, the multiples came very cheap because the revenue stream is viewed as transitory.

We did find that interesting. Going forward, it's what businesses are here to stay. In pharmaceuticals, you would look for a company that has an acid in his face with many follow-on's behind it to give them a competitive advantage.

>> Fascinating stuff. Great to have you.

Hope you come back.

>> Thank you.

>> Our thanks to Jared Ablass, VP for portfolio research at TD Asset Management.

As always, make sure you do your own research before making any investment decisions.

Stay tuned for tomorrow show. We'll be back with an update on the markets, we will break down the jobs numbers on both sides of the border, what it could mean for central bank policy going forward and I will bring you highlights from some of our best interviews of the week. Then on Monday's show, Jason Hnatyk will join us, senior client education instructor with TD Direct Investing. He wants to take your questions on how to get more out of the WebBroker and Advanced Dashboard platforms. You can get your questions in ahead of time. Just email MoneyTalkLive@TD.com. That's all the time we have for the show today. Thanks for watching. We will see you tomorrow.

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