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Apple, Boeing, Merck, and More: Top Stocks for the Fourth Quarter
By
Oliver Pursche Oct 03, 2013 11:52 am
A look at the sectors and companies that are likely to benefit from the global economic growth cycle.
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Three days into the fourth quarter and investors are growing increasingly nervous that the politicians in Washington, DC, will derail a perfectly good bull market. While I don't think the shutdown will last past next week, the upcoming debt-ceiling deadline is sure to cause additional anxiety. Investors must ignore this political theater and focus on the market fundamentals, which have actually been improving. While it is true that very recent economic data (e.g., the ADP employment report and ISM non-manufacturing data) has been slightly disappointing, the overall trend continues to be positive, and is in fact accelerating:
Follow Oliver Pursche on Twitter: @opursche, and see Gary Goldberg Financial Services for more.
- US economic growth will likely accelerate to 2.8% in the fourth quarter and should top 3% in 2014 – all the while benefiting from an absence of inflationary pressure.
- Corporate earnings growth looks solid as companies continue to benefit from an improving business cycle, historically low interest rates, and a favorable labor market (at least from an employer's perspective).
- While equity valuations aren't as attractive as they were in 2010 or 2011, they are still attractive – a historically mild PE of 15x puts the S&P (INDEXSP:.INX) at 1,750 by year end and over 1,950 by the end of 2014.
- While profit margin growth has decelerated in the past two quarters, consensus expects a renewed expansion in 2014.
- Europe's and Asian economies are surprising on the upside, favoring multi-national and economically sensitive companies.
- Technology: International Business Machines (NYSE:IBM), Google (NASDAQ:GOOG), Apple (NASDAQ:AAPL)
- Health Care: Johnson & Johnson (NYSE:JNJ), Merck (NYSE:MRK), Express Scripts (NASDAQ:ESRX)
Follow Oliver Pursche on Twitter: @opursche, and see Gary Goldberg Financial Services for more.
Stocks and sector ETFs mentioned are holdings within GMG Defensive Beta Fund (MPDAX) as well as separate accounts at Gary Goldberg Financial Services.
