After 15 years of cutting costs, hoarding cash and lowering debt, it's go time for corporate America.
That's the crux of a bullish investment case being fostered by Brian Belski, chief investment strategist at BMO Capital Markets. He says we are on the cusp of a major cycle of Capex or corporate reinvestment. "We want to see them invest in their own company, and we think it's actually going to be forced upon them," Belski says in the attached video.
While much has been said about the country's cash-rich corporations, Belski says there are really only four things companies can do with their money: buy back stock, initiate/increase/continue to pay dividends, buy other companies or invest in themselves. While we have seen numerous examples of the first three cash uses, the fourth has been largely MIA, and Belski thinks that's going to change.
"This trade has a very long tail and will last at least for the first three to five years of this new bull market," he predicts. Further driving this pent-up demand, he says, will be a furthering of the onshoring trend, so to speak.
"We believe because of the consistency and stability of U.S. corporate fundamentals that business volumes will come back to America because of the volatility (overseas)," says Belski. "We believe that we're in the midst of the beginning stages of a super bull market that could be 15 to 18 years in length, and this is the first stage of it."
In terms of strategy, Belski recommends playing the Capex trend through the Industrial, Energy and Technology sectors and taking a fundamentally-based stock picking approach that's less reliant on indexing.