Industrials have been my favorite sector for the fourth quarter of this year; my latest recommendati...
3 Sectors to Focus On
11/24/2011 11:30 am EST
While ups and downs in Europe and Asia dominate the headlines, these US sectors are changing just as quickly, says David Callaway, who explains where investors should be focused in this exclusive interview with MoneyShow.com.
David, do you have a favorite sector or area or even individual stock ticker that you think is a good opportunity these days?
Well, I really do not do individual stocks, but I’ll give you some sectors if that’s OK. Underneath this kind of global concern
about Greece and Europe and stuff like that, there’s a lot happening in a lot of sectors in the US that investors need to pay attention to.
Let’s look at the tech sector. There’s a bunch of IPOs coming. You can like them or hate them, but they’re coming to market. They’re going to create a lot more opportunity in tech.
There is some consolidation on the bigger stuff. I think the Yahoo! (YHOO) situation is really interesting. Whatever happens there, AOL (AOL) is an interesting situation, so we’re going to have some fundamental changes in technology in the next year or so that are going to be great for investors to take advantage of.
Another sector would be energy, right? Lots of consolidation going on in natural gas and oil. Energy is a long-term sector for investors. I believe over the next 20 years it’s going to be even bigger than financial services in terms of what it means to the health of the overall economy.
Finally, financial services…the most troubled, begotten sector in the US economy, but also one of the most important for the health of the economy. That’s a trade play. Eventually, it will get better, but it could get far worse. You got to make your bets now if you want to buy the big banks like JPMorgan Chase (JPM) or Bank of America (BAC) or Goldman Sachs (GS) and stuff.
Are they going to go out of business? I don’t think so. Are they trading in low multiples? Absolutely. It’s a risk, but it is an interesting sector to look at if you’re a trader or investor right now.
Is it a stock pickers’ market? Do I need to pick individual companies, or do you think an ETF or even a mutual fund is the way I can play those sectors?
Well,it’s always a stock pickers’ market, but you can certainly play them in terms of sector growth. And ETFs or mutual funds are a great way to diversify your bets and your speculation and stuff.
Back to tech, finally. Apple (AAPL) recently released earnings, and for the first time in a very long time missed them by a bit and the stock was hammered. Do you see that as a troubling sign, or just a blip?
I see it as a troubling sign, actually, and I’m probably in the minority.
Apple is going to continue to be a pretty good investment. I think it’s a little overvalued where it is right now. It will come down, it will go back up. Just because Jobs passed away does not mean it doesn’t have several good years in its future.
I don’t think it’s going to be the skyrocket that it’s been I the last ten years—I mean it just can’t. I think tech investors who are looking for that type of growth are going to have to find it elsewhere.
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