Tim Ghriskey, the CIO of the $2 billion Solaris Group, sees opportunity being created as the market teeters. With 90 percent of the S&P 500 having reported by the end of last week, earnings growth is coming in over 18 percent, well ahead of the 13 percent-plus that analysts had been expecting. While the recent slump in the tape suggests a classic "sell the news" investor response, Ghriskey says "stocks eventually follow earnings," which bodes well for equities in the longer term.
Of course Breakout isn't given to letting analysts talk in the abstract, much preferring specific picks to give readers and viewers something on which to chew. Ghriskey gave us a few, starting in the auto sector. The investment officer doesn't yet have exposure to the space but feels that, given the decent economy and Japan's obvious woes, there are opportunities in the long moribund sector. For evidence, he says that "used car prices are beginning to spike up," suggesting a long overdue surge in demand. (Breakout viewers may recall analyst Walter Stackow made much the same point recently.)
Other names Ghriskey is taking a shine to:
* Tractor Supply (TSCO): This is a retailer of agricultural equipment and supplies. Grishkey feels the "gentleman farmer" is a growing trend. Good retailers -- and Tractor Supply is one -- can gain share both by mowing down the mom and pop competition and feasting on organic growth in existing stores.
* CBS (CBS): Yes, the TV company. Grishkey says the upfronts (pre-sale of ads) have been much stronger than last year. CBS also has assets which can be spun off more readily in an economy where corporate balance sheets are strong. Grishkey isn't at all scared off by a near double of CBS in the past year.
* Apple (AAPL): Well... They're Apple. Grishkey is mildly concerned about the need for the Next Big Thing but says the stock simply isn't expensive by most measures.
It's impossible to say you'd be getting in at the bottom of these names, but stocks and corporations that are improving in both share price and operations have a tendency to move higher, often before traders have a chance to load up. Check out the video and let us know what you think in the comment section or via email at BreakoutCrew@yahoo.com.
- S&P 500
- Tractor Supply
- organic growth
- corporate balance sheets
- spike up