Investors need to be vigilant with their money, and right now there is a major tide shifting in the market. Energy and commodities are dead and big multinationals are weighed down by the strong dollar. If you’re looking for growth opportunities in this market, you need to own these three stocks.
It has been a turbulent third quarter so far for investors. Even as the market continues to be stuck in a historically narrow trading range, as it has throughout 2015, volatility has increased markedly with a notable increase in days equities going down or up one percent or more. China, as I predicted months ago, has emerged as a major concern for global markets. Negative import and export growth, as well as falling vehicle sales in the Middle Kingdom, show that the economy is growing far below the “official†seven percent GDP target.
This is a primary reason commodities and energy have been absolutely crushed over the last year and are likely to continue to be severely challenged in the quarters ahead. I continue to be substantially underweight both the materials and energy sector. The slowdown in China is also just one more challenge the global economy and markets are going to have to overcome.
Not that domestic economic conditions are anything to write home about right now. First half GDP growth came in at just under 1.5% as the weakest post-war recovery continues more than six years after the recession “officially†ended in June 2009. Year-over-year earnings & revenue growth for the S&P 500 are actually negative for the first half of 2015 due primarily to tepid global growth, a strong dollar, and the collapse of profits in the energy sector as crude prices have collapsed.
The only of the 10 industry sectors in the market to show double-digit earnings growth this quarter was healthcare. Given healthcare sub-sectors like biotech are up more than 50% over the past year, this performance seems fully priced into the market.
