Prakash Hariharan is chairman, Analytixinsight. His focus is global equities and dividend-paying stocks.
Top Picks:
American International Group (AIG-NYSE)
Aecon Group (ARE-TSX)
Nestle (NSRGY-5)
Past Picks: November 4, 2014
Manulife Financial (MFC-TSX)
Then: $21.22; Now: $22.01 +3.72%; Total return: +5.20%
Corning (GLW-NYSE)
Then: $20.68; Now: $24.78 +19.83%; Total return: +20.40%
Rakuten (4755-JP)
Then: JPY1296.00; Now:JPY1917.00 +47.92%; Total return: +48.30%
Total Return Average: +24.63%
Market outlook:
As oil prices fluctuate, bouncing from January lows, the U.S. manufacturing index keeps getting stronger. As expected, the pullback in commodity prices has had a huge tailwind effect on U.S./North American retailers and such names as Starbucks, Nike, UnderArmour, Canadian Tire and Loblaws have been reaching new highs. The equity markets are beginning to look for earnings tailwinds now, and the high earnings multiples could correct quickly if the first-quarter numbers come in light. Until then, we could see a positive momentum continue into the earnings season. Based on market metrics tracked by CapitalCube, we are seeing some additional tailwinds with stocks benefiting from the pullback in commodities and continued expectations for a benign interest rate environment. Valuations appear high for equities on a relative and historical basis as earnings multiples for retailers and manufacturers soar. These high multiples will have to translate into earnings growth to sustain the momentum.
*NOTE: Analytixinsight does not manage money*