Quickel's Picks: 5 Reasons to be Bullish
12/26/2016 9:00 am EST
We end 2016 with an impulsive, unpredictable man of hubris about to enter the White House; small wonder many are nervous about Donald Trump’s presidency, notes Stephen Quickel, editor of US Investment Report.
Yet from a stock market standpoint, where uncertainty is the worst-case scenario, we see reasons to be bullish heading into 2017. Let me tick off some of them:
First is the upturn in the rate of quarterly profit growth. The turnabout evident in the third quarter of 2016 is expected to continue in the fourth quarter and 2017.
Second, the U.S. economy has recovered steadily from the 2007-08 financial crisis and recession, despite political gridlock in Washington.
Third, Federal Reserve increases in short-term interest rates no longer hang like a sword of Damocles over stocks.
Fourth, stocks are rallying on president-elect Trump’s vows to lower corporate taxes, loosen government regulation and launch massive infrastructure spending. They will rise further if he actually delivers.
Fifth, stock investors large and small are in a buying mood—witness their willingness to embrace the uncertainties over what a Trump administration can actually accomplish.
Given the tenor of the market, our new stock picks include small- and mid-cap stocks. Here's a looks at 4 of our new ideas:
Coherent (COHR) — This little-noticed Silicon Valley laser systems provider is expected to lift earnings 83% in the next 12 months. Up from $100 to $135 since Election Day, it still trades at attractive P/E and PEG ratios.
MKS Instruments (MKSI) — Massachusetts-based, its process control systems are getting a large lift from booming semiconductor makers. Now at its 52-week high, its price valuations are still in ideal ranges.
Orbotech Ltd. (ORBK) — An Israeli technology manufacturer, it serves European, Asian and North American markets. With rock-bottom valuation ratios, it’s a Strong Buy for 5 of 6 U.S. analysts.
OSI Systems (OSIS) — This provider of security systems for airports, medical monitoring and other applications is expected to lift earnings 52% in the next12 months. All six analysts rate it a Strong Buy.