Industrials
“Industrials are a play on
business capital spending.” They’re no longer a play on China, he says,
as investors need to focus on growing infrastructure spending in the
U.S. and Europe. Despite yesterday’s poor GDP report, Canally says by
the end of the year we can expect to see 3% GDP growth in the U.S., and
that means industrials are one of his top plays for capitalizing on an
“accelerating” economy.
Small Caps
Canally’s last pick is an interesting one. Small caps (^RUT)
have been getting picked apart lately, after nearing all-time highs
earlier in April. They tend to do the best during periods of high
growth, and during those times investors are more willing to take on
risk for the possibility of higher returns.
The domestic focus is what
Cannaly is looking at. “Small Caps generally focus on the U.S… we’re
getting better job growth,” he says. “Small Caps are generally a good
play on the credit cycle, they’re in the sweet spot there,” as Canally
notes rates should stay low for quite some time.
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