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Which Sectors, Companies Will Continue to Benefit From the Recovery?

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You don't want to be in stocks where the expectations have been modeled...you want to find the companies that can still surprise to the upside when they report earnings.

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The answer is company-specific. We don't own a lot of the health-care provider services companies right now, but we do have some tech, we do have some specific plays. We own Allergan (NYSE:AGN). Allergan, which is the Botox and lap-band company, a lot of cosmetics, and medical usage firms. Allergan has been growing pretty nicely.

We own Lexicon Pharmaceuticals (NASDAQ:LXRX). It's a blood drug company. They have a very expensive set of drugs that address some very specific, rare, and deadly blood diseases. There are places in health care that are very company specific, but we don't own a lot of the hospitals or insurance providers.

Gregg Early: I noticed that you're underweighted customer staples but overweighted customer discretionary. In this kind of economy, I would almost think the opposite. What's your view there?

Michael Sansoterra: The staples companies that we own we believe will continue to exceed investor expectations and take market share. The problem is that a lot of the staples companies are relatively expensive for their growth rates.

There are a lot of people hiding in staples from an investor standpoint, and we don't typically do that. We don't believe the economy is so bad that there is no return opportunity in other sectors...you may just have to take a little bit of risk to get that return.

So in staples, when we look across the board and we look at some of the Mega Cap stocks, we see they're pretty expensive for their growth rates and the places where we'll own those companies, be it in a Monster (NASDAQ:MNST) or be it in a Philip Morris (NYSE:PM) or an Estee Lauder (NYSE:EL), there are some companies that we think will continue to do well.

No positions in stocks mentioned.
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