Market Guru Teal Linde's Top Picks for May 2024

Teal Linde's Insightful Investment Picks Amidst Market Challenges

Editorial Team (ET)May 16, 2025

Teal Linde, manager of Linde Equity Fund, has shared his insights and top stock picks for May 13, 2024. In a market fraught with challenges, Linde's expertise offers valuable guidance. Let’s delve into his market outlook and the stocks he believes hold the most promise.

Understanding the Current Market

Investors are grappling with a tough market. Interest rates have hit their highest levels in decades, pushing hopes for rate cuts further into the future. Both domestic and international economic growth is either stagnant or slowing. Despite these headwinds, a peculiar bullishness persists, driving markets to new highs.

Momentum investing has surged in popularity. This strategy focuses on stocks with strong price action, where buying leads to more buying. The iShares USA Momentum Factor ETF (MTUM) epitomizes this trend, as investors flock to stocks showing sharp upward movement. Surprisingly, even traditionally stable stocks like Costco have become momentum plays, with both MTUM and Costco up about 30% since November 1. However, this strategy has its limits and appears to have peaked in March.

The market’s hunt for the "next big thing" often ends poorly. In 2000, it was the internet. Despite the internet’s eventual massive growth, stocks anticipating its potential crashed by over 90% in 2001-2002. Similarly, 3D printing, marijuana, and plant-based foods saw massive booms followed by dramatic busts. Now, AI is in the spotlight. While AI’s potential is undeniable, its full development will take time.

Teal Linde’s Investment Philosophy

In a market filled with traps, Linde emphasizes the importance of strong fundamentals. Rather than chasing fleeting trends, he advises focusing on companies with solid growth prospects and sound financials.

Linde’s approach is shaped by historical market trends. By learning from past booms and busts, he identifies stocks with real, sustainable potential.

Teal Linde's Top Picks for May 13, 2024

Linde’s top picks include Kinsale Capital, Five Below, and Linamar. Each of these companies has unique strengths and growth opportunities.

Kinsale Capital (KNSL NYSE)

Founded fifteen years ago, Kinsale Capital is a U.S. property and casualty (P&C) insurance provider specializing in excess and surplus (E&S) insurance. This niche market offers significant growth potential.

Kinsale models itself after Progressive and Geico, low-cost leaders in personal auto insurance. Like these giants, Kinsale aims to grow its market share through efficient, cost-effective strategies. Currently holding around 2% of the specialty insurance market, Kinsale is poised for substantial growth.

With revenues and EPS expected to grow at least 18% annually for the next two years, Kinsale’s financial performance is strong. The company’s strategic focus and market positioning make it a standout pick in the insurance sector.

Five Below (FIVE NASD)

Five Below operates a value merchandise business, appealing to cost-conscious consumers. With around 1,500 stores in 43 states, the company has significant room for expansion.

Five Below’s unique value proposition and efficient store development process drive consistent demand. The company aims to expand to over 3,500 stores, supported by a strong financial foundation and predictable revenue streams.

Recent financial results showed a slight reduction in revenue and EPS guidance, leading to a 31% drop in stock price. However, this dip presents a buying opportunity, as the company’s long-term growth prospects remain robust.

Linamar (LNR TSX)

Linamar is a diversified manufacturing company with significant operations in the industrial and auto parts sectors.

The industrial segment, including the Skyjack aerial lift business and agricultural machinery, is performing exceptionally well. This success offsets weaker performance in the auto parts division.

The auto parts business has struggled with low margins but shows signs of recovery. Linamar’s strategic focus and market positioning provide a foundation for future growth.

Recent quarterly results exceeded expectations, with strong organic growth, successful acquisitions, and improved margins. Linamar’s auto parts business appears to have turned a corner, with management raising its margin outlook.

Conclusion

Teal Linde’s top picks—Kinsale Capital, Five Below, and Linamar—offer compelling investment opportunities in a challenging market. By focusing on fundamentals and learning from past market trends, investors can navigate the current environment more effectively.

Bloomberg

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