A.G. Edwards: 2001 Market Outlook
By: USA Today
12/29/00 9:14:00 AM
Source: USA Today
Market outlook: The economy is slowing. Profit growth is declining. Price-earnings multiples are lower. The Internet boom is last year's news.
Ironically, all that bad news is good news for investors in 2001, strategist Stuart Freeman says.
''Stock prices are down, investor expectations are down, analysts have already slashed their earnings estimates, and the Federal Reserve is in loosening mode,'' a bullish Freeman says. ''We are starting the year with all these things on our side.''
With Standard & Poor's 500 profit growth of 8% expected, investors should focus on companies that can deliver solid earnings no matter what shape the economy is in, he says. ''The key is consistent growth,'' Freeman says. ''Pay attention to quality and buy real companies.''
Freeman likes drug companies, brokerages, retailers and selected techs, such as networking-equipment makers and chipmakers that don't depend just on PCs.
Don't expect tech stocks to regain Superman status overnight, he says. ''We've had a significant shift in psychology,'' Freeman says. ''When you have a frenzy like we had, it takes years to rebuild confidence; 2001 will be a year where investors are licking their wounds.''
2001 forecast: S&P 500: 1700; Dow: 12,500; Nasdaq: 2800.
Top stock picks: Texas Instruments, Nortel Networks, ADC Telecommunications, Pfizer, Schering-Plough, Wal-Mart, Capital One Financial, Fannie Mae. |
