Get all the latest news on coronavirus and more delivered daily to your inbox. Sign up here.
The major U.S. indexes have soared off their March lows, but that doesn’t mean investors can stop exercising caution when picking stocks, according to Mohamed El-Erian.
“There are opportunities, but they are selective,” El-Erian, chief economic adviser at Allianz Global Investors, told FOX Business’ Maria Bartiromo on Tuesday.
El-Erian says investors should look for companies with strong balance sheets, lots of cash and positive cash generation. A number of firms still meet those conditions despite a virtual economic shutdown to limit the spread of the COVID-19 pandemic and “are going to emerge even stronger," he said.
While investors shouldn’t sell good companies, they are going to want to have cash for “selective opportunities down the road," he said.
While stocks are an option, El-Erian's preferred trade at the moment is to increase the quality of corporate bonds rather than taking as much risk as possible as the world is still "very, very uncertain."