Share tip review of 2025 and what I’d do with them now

Rodney Hobson advises positioning into well‑capitalised US banks (singling out Citigroup after a move from ~$70 to a May dip < $60 and into ~$110), and favours banks tied to wealth/asset management and M&A ahead of 2025 results, noting the Fed's cautious quarter‑point easing. He recommends select housebuilders — KB Home (bottomed ~$50, now ~$64) and D.R. Horton (12‑month low $115, high $185, ~ $155 in December) — and income‑oriented utilities such as Duke Energy (tipped ~$126, fell to ~$115) and Southern Co (suggested ~$90, trading ~ $85) as long‑term holds. Technology and AI are seen as structurally strong but richly rated (Palantir a notable miss; Meta steadied ~ $650), while Boeing and Peloton are flagged as sells (Peloton trading near $7 with a prior $5 floor).

Analysis

Market Structure: Winners are US banks with strong wealth/M&A franchises (Citigroup C, Morgan Stanley MS) and select housebuilders (D.R. Horton DHI, KB Home KBH) if rates stabilise; utilities (Duke DUK, Southern SO) win as income plays if input costs decline. Losers include cyclical OEMs with operational/regulatory risk (Boeing BA) and structurally challenged consumer hardware (Peloton PTON). Lower-for-longer Fed guidance compresses deposit margins but supports asset values and housing demand; tech/AI winners (NVDA, META, PLTR) retain pricing power but face elevated absolute PE risk.

Risk Assessment: Key tail risks are a sudden Fed pivot cutting >50bp in <3 months (sharp NIM compression), a US recession within 6–12 months hitting home sales and mortgage credit, or a safety/regulatory shock to Boeing that forces multi-quarter production halts. Immediate catalysts: mid-Jan bank earnings, Jan CPI, and Fed minutes; medium-term: housing starts, 10y Treasury moves and Q1 corporate guidance. Hidden dependencies: bank earnings tied to trading & wealth flows (not just rates); builders rely on labour/material cost trajectory and mortgage availability.

Trade Implications: Tactical longs: establish 2–3% positions in C ahead of mid-Jan results, scaling in if price <100; accumulate DHI on pullbacks <150 targeting 180 in 6–12 months. Income sleeve: buy 3–4% positions in DUK/SO with reinvested dividends, trim if spreads tighten or DPS cut. Shorts/hedges: initiate a 1–2% short or buy 6–9 month puts on BA above 210, and buy cheap protection (1–2% notional) on banks if 10y yield falls below 3.5% (NIM risk).

Contrarian Angles: Consensus underestimates dispersion: wealth/M&A-focused banks can out-earn regional lenders even with NIM pressure — favour C/MS over BAC/regionals. Tech valuation panic could create buying windows; nevertheless PLTR price action suggests daily liquidity risk and should be treated as trading, not core. Historical parallel: 1999 tech bubble shows rapid sentiment shifts; here the key difference is real AI-driven revenue — but set strict valuation cutoffs (e.g., avoid tech names with forward PE>60 unless revenue CAGR >40%).

Key Decisions for Investors

• Establish a 2–3% long position in Citigroup (C) ahead of mid-January 2026 earnings; add on dips below $100, target 12–18% upside over 6–12 months, stop-loss at -12%.
• Accumulate D.R. Horton (DHI) to a 2% position, buying into weakness under $150 and adding up to $130; target $180 in 12 months while monitoring mortgage rates and housing starts monthly.
• Build a 3–4% income position split between Duke Energy (DUK) and Southern Co (SO) for dividend yield with a 12–24 month horizon; trim if payout coverage falls below 1.5x or if shares rally >25%.
• Initiate defensive hedges: buy 6–9 month BA 200–220 puts equal to 1–2% portfolio exposure (or short 1–2% notional) and purchase 3–6 month puts on broad bank exposure if 10y Treasury yield drops below 3.5% (signal for NIM compression).