As chief investment strategist at Standard & Poor's, Sam Stovall serves as analyst, publisher, and communicator of S&P's outlooks for the economy, market, sectors, and stocks. He is a member of the S&P Investment Policy Committee, where he focuses on market history and valuations, as well as sector and industry recommendations. Mr. Stovall is the author of "The Seven Rules of Wall Street," published in February 2009.
He discussed the U.S. equity market and investment opportunities in companies with low debt-to-equity ratios with Pimm Fox on Bloomberg Television's "Taking Stock." "What I like to do is remind investors that basically anything that is a decline of 0 to 5 percent is noise." he said. Stoval is very bullish about the stock market.
"When you look longer term, things still look pretty good. We're calling this a half-speed recovery but it seems like the economy is picking up speed, not only here in the U.S. but also around the globe. And I think from a corporate earnings perspective, sure we had a bang-up year in 2010, up 47% year over year, we think we're gonna see a 15% increase, bring us to 96$ for the S&P 500," he said. Stovall predicts S&P 500 to reach 1425.
He likes technology, energy, and healthcare sectors because they have the lowest debt-to-equity ratios and they are growing. SPDR Technology ETF (NYSEARCA:XLK), Energy ETF (NYSEARCA:XLE), and Healthcare ETF (NYSEARCA:XLV) are convenient alternatives for investors who would like to follow Stovall. Technology sector is also extremely popular among hedge funds. David Tepper’s Appaloosa, Chase Coleman’s Tiger Global, and Stephen Mandel’s Lone Pine invest heavily in technology stocks. John Burbank’s Passport Capital is extremely bullish about energy shares (See Passport’s bullish comments about oil). Roberto Mignone’s Bridger has various healthcare stocks in its portfolio.
Sam Stovall recommends EMC Corp (EMC), Exxon Mobil (NYSE:XOM), Chevron (NYSE:CVX), Thermo Fisher Scientific (NYSE:TMO) and Coach (NYSE:COH) in technology, energy and healthcare sectors. John Griffin’s Blue Ridge, and Larry Robbins‘ Glenview have TMO in their portfolios. Andreas Halvorsen’s Viking Global is bullish about EMC. None of the dozens of prominent hedge funds we follow has XOM, CVX, or COH in their portfolios, except Warren Buffett has a tiny $31 Million position in XOM.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.