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Mortgage News |
Mortgage News You Can Use EARLY STAGES OF RECOVERYBut Ghriskey said that the best time to be in the market is in the early stages of an economic recovery. The expansion is still young, meaning there are solid gains to be had, though perhaps not as dramatic as last year. In 2003, after a 3-year-long bear market, stocks were picking themselves up off the floor, said David Sowerby, portfolio manager at Loomis Sayles & Co. The gains came easily, he said. "A stock went from $3 to $6 back then. But it's harder for a $30 stock to go to $60," Sowerby said. Sowerby said the market's upward movement will continue but at a more sustainable speed. Investors should follow a strategy of searching for high-quality stocks, with good cash flow, return on capital and return on equity. Companies he recommends include radio and television operator Saga Communications Inc. , food services company Aramark Corp. and drugmaker Pfizer Inc. BASIC MATERIALS, FINANCIALS Ghriskey said he favors companies that do well when the economy improves -- basic materials, industrials and consumer discretionary stocks, including retailers. He says to stay away from or be cautious about stocks that don't particularly benefit from a strengthening economy, such as consumer staples or health care. Among his recommendations of stocks to own are United States Steel Corp. , industrial Honeywell International Ltd. and clothing retailer Pacific Sunwear of California Inc. Delaware Investment's Connors said investors should pick stocks with strong cash flow that can be returned to shareholders in the form of higher dividend yields or share repurchases. The stocks also should have attractive price/earnings ratios. Connors said he likes financial stocks, including J.P. Morgan Chase & Co. ) and Bank of America Corp. For the week, the blue-chip Dow Jones industrial average gained 1 percent to end at 10,593.03. The broad Standard & Poor's 500 index also rose 1 percent for the week, closing Friday at 1,142.76. But the tech-laced Nasdaq composite index dipped 0.1 percent to end the week at 2,064.01.
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