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After an extended bull run and with markets near all-time highs, it’s hard to find bargains in U.S. equities, says Chris Ibach, global portfolio manager for Principal Global Equities in Des Moines, Iowa.

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But business model changes in the software sector, oversold consumer staples brands and newly deregulated financials provide opportunities, says Ibach, whose firm is one of three managers of the Renaissance Global Equity Private Pool.

Tech stocks that have led the charge in U.S. equities will remain strong, as Facebook, Google and Amazon continue to disrupt other sectors, he says. “I think these companies are going to dominate and take share from the traditionals over the next five to 10 years.”

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Other tech companies, particularly in the software space, are adapting, he says. Microsoft, Intuit, Nintendo and Ubisoft are among those moving to a cloud distribution model, which uses subscriptions and “where piracy is virtually non-existent.”

“These tend to be more sticky, higher margin and more sustainable, so those are positive for the technology space,” he says.

The financial sector is another to consider, with banks benefiting from a rising yield curve and regulatory changes, Ibach says. In May, the U.S. Congress passed a bill that dismantled some of the rules from the 2010 Dodd-Frank Act, which increased government oversight of banks following the 2008 financial crisis.

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This deregulation “will free up capital in a very large sector of the economy and should be positive for the market,” he says. That will “only lead to higher profitability and higher stock prices in our opinion.”

In the quarter from January-March, U.S. banks’ net income increased 27.5% from a year earlier to reach $56 billion, helped by corporate tax cuts, the Federal Deposit Insurance Corp. reported.

Ibach’s also looking at consumer staples brands such as Procter & Gamble, Campbell’s and Reckitt Benckiser, where investors “have really sold off on the fears of Amazon, and competition and price pressures.

“At some point we’re going to get a signal that tells us it’s probably OK,” he says. “These companies aren’t going to disappear; they’re just going to have to adjust their business model and come out the other side.”

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Outside of the U.S., Ibach has found some “positive surprises” in Europe and certain emerging markets with the cyclical recovery since 2015-16. He’s also finding more opportunities in the U.K. since the Brexit vote.

“It looks like a lot of the fears have been overdone, so we’re seeing more opportunities appearing there as well,” he says.

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