Industrial plays for the second half, and why Netflix is primed to go even higher

CNBC

8 hours ago

(This is a wrap-up of the key money moving discussions on CNBC's "Worldwide Exchange" exclusive for PRO subscribers. Worldwide Exchange airs at 5 a.m. ET each day.) Investors are seeing opportunity in tech outside the "Magnificent Seven" and giving top picks in the industrials space after it finished the first half of 2025 as the top-performing sector. Worldwide Exchange pick: Netflix Victoria Greene of G Squared said Netflix still has more second half upside despite a more than 50% gain in the first six month of the year and a forward PE ratio of 50. "Bulls don't die from a big PE," Greene said. "You need to focus on the fact that linear TV is still under a lot of pressure, streaming is just now becoming the highest percentage of viewership." She added: "They are brilliant in what they are doing, look at their pricing tiers, their addition of ad-based which hasn't really made much. But we think ad revenue is going to be $3 billion and that is going to ramp up closer to $10 billion." In April, Netflix guided for ad revenue to "roughly double" this year while referring to it as "very small relative to subscription revenue." WEX pick: Johnson Controls Amit Mehrotra, industrials head at UBS, said Johnson Controls is one of his top picks. "It's really tied to the energy efficiency trade," said Mehrotra "Fifty-percent of it's business is commercial HVAC. When you think about data centers or all the demand for power in the U.S. as power prices go higher, the payback for upgrading commercial HVAC is meaningful." Johnson Controls has a consensus overweight rating and $105 price target, according to FactSet. Mehrotra's other top industrials picks for the second half of 2025 are 3M and Honeywell . Bullish on midcaps Alan McKnight of Regions Asset Management is bullish on midcap companies in the second half of the year, seeing a catchup trade after underperformance against the S & P 500. "When you think about it from an earnings growth perspective, they are almost on parity on growth, but the valuation disparity doesn't accurately the opportunity going forward in Midcap," said McKnight. "For those companies in the midcap space that have solid balance sheets, that have good earnings growth on par with what we are looking at in large cap, they should start to receive a garner a valuation that is more akin to what their large cap peers are receiving." The S & P 500 trades at approximately 23 times forward earnings while the S & P Midcap 400 trades at approximately 16 times forward earnings.