Wed, May 23, 2012, 1:33 AM EDT - U.S. Markets open in 7 hrs 57 mins

Growth Stocks for a Weak Economic Environment

Eric Shoenstein, co-portfolio manager of the Jensen Quality Growth Fund (JENSX), feels investors' pain. He understands the uncertainty in the financial markets and that people trying to grow a nest-egg are "worried that there isn't anyplace to put their money." Bonds don't have much yield, cash has no returns, and equities as an asset class are terrifying.

All that said, you have to put your money somewhere and stocks are the best of an uninspiring lot. He's not just making random bets but instead focusing on companies based in America but putting money to work in "places where the growth is actually available."

Schoenstein loves cash-rich Blue Chips with strong cash reserves, both in the U.S. and abroad. The money housed in the States, where growth opportunities seem somewhat rare at the moment, can be returned to shareholders via dividend or buybacks. It's the money "trapped overseas" due to what the fund manager calls a "policy issue" (read: the highest corporate tax rate in the world) that gets Schoenstein excited. This trapped cash almost forces a company to invest overseas, giving them a foothold in emerging markets.

It would be better for America if the money were repatriated. It's better for the shareholders if the money isn't taxed at 35% then invested in America, with our lamentable sub- 1% GDP growth. Policy issue indeed.

Schoenstein's favored sectors are Consumer Staples (XLP), Industrial (XLI) concerns involved in infrastructure build-outs, and Healthcare (XLV). In terms of specifics, he likes Pepsi (PEP), Proctor & Gamble (PG), Colgate-Palmolive (CL), Emerson (EMR), United Tech (UTX), 3M (MMM), Becton Dickinson (BDX), and Bard (BCR).

Check out the video for his quite sound reasoning and let us know how you're finding growth in this environment. Drop us a comment in the space below.

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30 comments

  • geomoney2008  •  7 months ago
    I'm in a no load mutual fund (VEGAS) that uses the capital to gamble with in Las Vegas. It is diversified over several games like Craps, Blackjack, Roulette and Texas Holdum. So far I'm up 11% YTD.
    • Aaron 7 months ago
      Plus free drinks!
    • xtra 7 months ago
      im down on the year in MGM....!
    • Jack 7 months ago
      very funny!
  • xtra  •  7 months ago
    been clasified as a nut..implying the fractional reserve bank system may run prices by a factor of times 10 to 100......and has taken a collapse...perhaps mostly by housing debtors..?
    • xtra 7 months ago
      80 percent are housing debtors...!
    • xtra 7 months ago
      pardon?...C or BAC nationalization implied continuation of fractional reserve banking..? derivitives hedged against fractional reserve banking inhouse at a quadrillion?........tout..?/looting?
  • Chris  •  7 months ago
    The problem with this "repatriation" theory is that companies would want to return the overseas cash to the USA even with tax breaks or tax forgiveness. Money goes where the growth and capital spending is and right now growth and capital spending are not in the USA for the large caps sitting on all that money.
    • Macke 7 months ago
      The problem is they wouldn't bring the money back regardless of the tax rate. Which they probably wouldn't, for the exact reasons you mention. Nonetheless, lowering the tax rate would lower the hurdle for investment. It makes more sense than what we have in place now.
  • Wise One  •  7 months ago
    He likes Pepsi, let's invest our future in soda pop. You can clean your battery terminals with Pepsi or Coke but should keep it far away from your stomach...
    • Macke 7 months ago
      I've been in mcdonald's for years. I was a walking happy meal on Friday. I wouldn't eat there at gunpoint.

      Investing is confusing that way.
  • Barbara  •  7 months ago
    Jeff, earnings growth has peaked.
  • Anonymous  •  7 months ago
    weak economy? really?... weak means depression for the libtards
    • joe 7 months ago
      by goptard
    • cody 7 months ago
      libtards are stupid...as they try to take the economy of this great country to the cliff's edge!!!!
    • ALbert 7 months ago
      Wait, its not at cliffs edge NOW?
      Where you been, Cody...praying for rain?
  • whome?  •  7 months ago
    I invested in 5 star mutual funds...now they are worth 50% -60% less
  • whome?  •  7 months ago
    blah blah blah...
  • carolee44  •  7 months ago
    Bringing money back to the US. It would be nice to talk with customer support and have him or her understand what you are saying. The scripts need to be updated daily. I try to do business with America and English spoken here.
  • Patriot  •  7 months ago
    Put your money into the credit union! Let the WS casinos run their game into the ground.
  • SRM-03  •  7 months ago
    I have some no load mutual funds, but maybe I would have done better investing in Vegas...at least I could have enjoyed losing the money! The large profits are being made by market, currency, option, and commodities manipulators. And, there is no place left in the financial market for the small, hard-working, honest investor.
  • biomedlives  •  7 months ago
    If the companies Shoenstein is talking about find investment opportunities in the U. S., they can borrow at very low interest rates to finance the investments. Repatriating money from overseas isn't necessary for investment here. The last time the government allowed cash from overseas to come in at low tax rates, doing so did virtually nothing to create jobs.
  • G  •  7 months ago
    Seems to me that the "flatness" with which all the equities have been trading for the last 4 weeks can only mean one thing: the wealthy insiders are selling. I wouldn't be surprised if we have a major selloff in the next few weeks, and all those wealthy people buying back at the lower prices. If you are reading this, you too should sell everything you own and buy back later. You've been warned.
  • *** ****  •  7 months ago
    the unemployment was worse in half the states.
    the unemployment is still over 9%, double that if you counted all the unemployed and
    underemployed. the great majority of americans are worse off then they were
    three years ago. foreclosures are still out of control. america is still being sold out by
    corrupt politicians.
  • Mister Z  •  7 months ago
    These are huge blue chip companies.
    Very safe picks. At least he didn't pick MSFT.
  • Big Mama  •  7 months ago
    The Markets are not capitalist any more remember they tell you capitalism as long as profits are being generated, but as soon as losses occur they are socialized. So we are living a system of socialized losses to keep the rich get richer, but the capitalism part is not shared with many mid and low class citizens. This leaves the intelligent and cautious investor feeling stupid. Because as soon as there are losses they are socialized and money is snatched from the ordinary people to support the market profits.
  • Anonymous  •  7 months ago
    The way the market is churning up and down. The serious risk of Europe. Believe me if Bernake is worried there is alot of problems that you can't see. The market is not where you want to be. Look out 3-8 years. The biggest bulk of the Baby boomers will be exiting the market. They have the most monies invested. The jobs currently available to the younger generation pale in comparison to what the baby boomers had. No pension, Limited 401's, They just won't have the monies to invest like the boomers did. So what will happen. The market will probably trend downward.
  • Marc  •  7 months ago
    Here in reality... Getting something for nothing doesn't really make a lot of sense. If you have cash in hand and aren't sure what to do with it? Do nothing with it. Why should interest rates be high? Why should someone get more money just for having it? Don't buy into the get rich quick scheme also know as the Stock Market.
  • Big Mama  •  7 months ago
    If these fellows really care about people they would never remove food and energy cost from the inflation evaluation number. The trouble is the FED has determined only one way to prove it is working and go down in history books, by popping the rally. It can only do that by hiding the inflation and making us all look capitalist, but as soon as looses occur they turn socialist to help the failing corporations. There are not many countries that have removed FOOD and Energy cost from inflation numbers. Only in America can the looting be helpful as people are strongly controlled by power of law and rallies are ignored as meaningless. Bernanke should never have popped this rally so far higher. As we all noticed the power of greed rally chalked up 20% to 40% on individual stocks in a matter of five days despite companies only beating the lowered earnings.
  • RegimeChange2012  •  7 months ago
    Growth? These companies barely move. I'll go along with BDX, EMR and UTX, but PEP, CL, PG? Maybe for their dividends, but I would hardly consider them "growth stocks."

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