Equity Analyst, Industrial Team
Morningstar Research Inc.
Any sign that the financial companies are getting healthier and stronger is good for the overall economy. The bounce in the market over the last five weeks has definitely been the result of stronger earnings expectations coming out of the financial sector. Whether or not it is a sustainable market rally really depends on how strong the banks will be going forward. That’s the key piece.
Things also are starting to get better for companies that have exposure to infrastructure —roads and bridges. It’s hard to pinpoint when the market will be bullish again. There are so many behavioral aspects to it. But some of the best indicators are earnings. On a macro level, I look at corporate profits. I look at volumes in terms of products that were shipped. Other leading indicators are consumer spending and employment. I’m more geared toward looking at the fundamentals that are driving companies, and thinking less about market fluctuations. I think more about how companies’ balance sheets and income statements are faring. There are still plenty of opportunities out there in the marketplace for investors. It’s not like the run is over. I would tilt more toward companies that make parts in places where the government is trying to stimulate the economy.
Where Holland sees opportunities for investors: energy, industrial companies