Equities have gained ground after being pummeled in the market crash, and valuations are still cheap. If you’re still sitting in the sidelines, don’t let the recovery in the markets and exchange traded funds (ETFs) pass you by.
Large, well-established companies are trading, on average, at a low 14.8 price-to-earnings valuation, write Reshma Kapadia & Russell Pearlman for SmartMoney.
Consumer Discretionary. Based on recent economic data, American shoppers and emerging market consumers are spending again. While spending may not be as high as they use to be, discretionary spending could begin to pick up. Fund managers are also bargain shopping on retailers that have expanded abroad while keeping costs down.
- SPDR Consumer Discretionary Select Sector Fund (NYSEArca: XLY)
Consumer Staples. On the other hand, consumer staples remain profitable because people will need to by the basic necessities no matter what the economic climate, and analysts believe the the sector is reasonably priced.
- Consumer Staples Select Sector SPDR (NYSEArca: XLP)
Food & Beverage. Fast food companies have also made headway abroad, garnering greater revenue from emerging countries like China as compared to their domestic operations. Emerging Market ETF Trend: The Consumer Is King.]
- PowerShares Dynamic Food & Beverage (NYSEArca: PBJ)
Tech. Technology firms are sitting on a lot of cash, expanding overseas and some are still trading at bargain prices – the sector is trading at half the value it did 15 years ago. Consumers will likely see increasing internet usage and companies will start to shift toward “cloud,” or inter-based, computing.
- Technology Select Sector SPDR (NYSEArca: XLK)
Industrials. Cash-heavy companies are starting to help the industrial economy. Companies are continuing to grow while keeping their balance sheets in check. Research and development has become a greater priority. A higher percentage of overseas sales also provides a nice bump to revenue, but this could be vulnerable to currency fluctuations. Any slowdown in the global economy or protectionist measures could businesses abroad, too.
- SPDR Dow Jones Industrial Average (NYSEArca: DIA)
Max Chen contributed to this article.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.