3 stocks perfectly sum up the ‘conundrum’ facing investors right now, fund manager says

Three stocks at the moment encapsulate the “conundrum” faced by equity investors and fund managers in 2020, according to Embark Group Chief Investment Officer Peter Toogood.

Despite the global economic downturn caused by the coronavirus pandemic, stock markets have mostly recovered to almost the levels seen before Covid-19 swept through the world in March, with the outperformance of U.S. tech megastocks driving the broader rally.

Speaking to CNBC’s “Squawk Box Europe” on Thursday, Toogood highlighted Tesla, British Airways-parent IAG and Unilever as the three stocks which represent the “battle writ large between the growth and the value stocks.”

“There are the bulls on IAG because it is going to come back one day and there are the bulls on Tesla because it is going to win the EV (electric vehicle) market,” he said, adding that this highlights the “binary” nature of equities at present.

Toogood suggested consumer goods firm Unilever was seen as the “dreamboat of stability” while Tesla and IAG both represented different forms of “hope.”

IAG shares are down more than 76% since the turn of the year, one of the key casualties of a travel sector ravaged by restrictions and lockdown measures around the world. The company posted a 1.3 billion euro ($1.5 billion) third-quarter loss on Thursday and was forced to cut more of its flying schedule due to a resurgence in the pandemic and subsequent restrictions.

Unilever’s sales leaped back to growth in the third quarter and the company’s stock is roughly at the same level as it was at the beginning of 2020, while Tesla, which reported its fifth consecutive quarter of profit on Wednesday, has surged 405% year-to-date.

“That is pretty much the conundrum that most managers are going through as we tread this Covid path,” Toogood added.