The so-called “Magnificent Seven” were among the hottest stocks last year, but one wealth manager says they are “wildly overvalued” and has his sights elsewhere. “There is a possibility that the Magnificent Seven will continue to grow and generate positive returns for investors in the next decade, but I don’t think that’s the case with all the companies,” Tariq Dennison, co-founder and investment advisor at GFM Asset Management, told CNBC Pro on July 19. The Magnificent Seven comprises Alphabet , Amazon , Apple , Meta Platforms , Microsoft , Nvidia and Tesla , which continue to be in the spotlight thanks to the buzz around artificial intelligence. “I think the recent relative outperformance of the Magnificent Seven has largely been due to institutional flows into large caps, which drives a cycle of upward momentum,” Dennison said, adding that several are “priced at ridiculous valuations.” He said he’s now betting on lesser-known companies in “corners of the market that are harder to reach.” How to play U.S. small-caps In the U.S., investors have been favoring small-cap names after the Russell 2000 index made significant gains last week before tapering off. The benchmark is now up 8.5% year-to-date. For comparison, the S & P 500 is 15.4% higher, while the Nasdaq 100 has gained 24.4%. Dennison said he is playing small-cap stocks through exchange-traded funds such as the DFA Dimensional US Small Cap Value ETF and Avantis U.S. Small Cap Value ETF. “These ETFs will be my starting point – and I would look at companies within these ETFs for single names,” he said. DFA’s top holdings include Abercrombie & Fitch , Cadence Bank and Commercial Metals . And Avantis’ top holdings include KB Home , Jackson Financial and Warrior Met Coal . ‘Shoppers’ paradise’ Elsewhere, the wealth manager said he is watching markets that have fallen out of favor, such as China. Although China’s weight in the MSCI All Country World Index stands at just 2.5%, Dennison is overweight on the market as it’s “so cheap and has more upside than downside.” One way he is playing the market is through Hong Kong-listed stocks, which he says, are “trading at very cheap valuations.” “Hong Kong is a shoppers’ paradise and there are several good names there,” he said, naming jewelry chain Chow Tai Fook , public transport operator and property developer MTR Corp and tech giant Tencent as his “three top holdings” there. Tencent has been making headlines recently, with several analysts being bullish , including Goldman Sachs , which included the stock in its conviction list. All three stocks also trade as American Depositary Receipts (ADR). Other global stocks Global stocks Dennison is betting on include Fresenius Medical Care , a German health-care company, and Kazatomprom, a Kazakhstan-headquartered producer of uranium. “I have been accumulating shares in both companies for a while,” said the wealth manager, who has just under $100 million in assets under management. “Kazatomprom was a name we bought a lot of previously when it was cheap. It is no longer so cheap but I still find it a good and special company,” he said, adding that he will probably not buy it “as aggressively” right now. Kazatomprom has a dual listing on the Kazakhstan and London Stock Exchanges and trades as an ADR in the U.S. Swiss food and drink conglomerate Nestle is also on Dennison’s radar. “It is a top position in many pension portfolios and has become a value stock because of the strong Swiss Franc,” he said. Value stocks are often cheaper than so-called growth stocks and typically trade at a lower price than what the company’s performance indicates. Dennison added that he will continue to accumulate Nestle as long as its average share price remains under 100 Swiss francs ($112.48) a share. Shares in Nestle are traded on the Six Swiss Exchange and as an ADR in the U.S. Year-to-date its shares down some 3.1% to 94.50 Swiss francs a share. According to FactSet data, of 22 analysts covering the stock, 12 give it a buy or overweight rating, eight have a hold rating and two have a sell call. The average price target on the shares is 106.15 Swiss francs, which implies a 12.3% upside.