The long-term economic outlook remains gloomy, but stocks should advance in 2010. Though 2009 had you on the edge of your seat, with the longest and steepest recession since World War II, gross domestic product eked out a modest growth of 3.5% in the third quarter. The stock market, which bottomed on March 9, 2009, soared 60% in the last seven months. For 2010, the growth will be anemic, with GDP predicted to be between two and three percent.
Investing in blue chip stocks is always a safe bet for any portfolio. Look for blue chip companies with strong foreign sales on their balance sheets, as well as those with a presence in China. Companies fitting this criterion include Apple Inc. (AAPL), Nike Inc. (NKE), Procter & Gamble (PG) and Monsanto Co. (MON).
Commodities such as oil and iron are traded globally and are priced in dollars. Demand from emerging markets, along with a weak dollar, will drive up prices, making this sector attractive in 2010. Natural resource producers will benefit significantly from these market trends. Players in this sector include Halliburton Company (HAL), Baker Hughes Inc. (BHI) and National Oilwell Varco Inc. (NOV).
Many investors are understandably skittish about the health of the U.S. dollar and other major currencies. Gold is a great choice to balance out any portfolio. Companies such as Barrick Gold (ABX) and Newmont Mining (NEM) are power plays. Not to be ignored, silver may outshine gold in 2010, as spot prices for the white metal rise due to a surge in industrial demand. Silver inventories will be replenished by the traditional industrial end users such as the electronics industry and that could take up to six months or more. Additionally, new market places for silver will be created, such as the demand for silver-zinc batteries used in “smart” automobiles. Silver Standard Resources Inc. (SSRI) is one player in the mining of silver.
Lastly, health care is an enormous and growing domestic industry. The focus should be on companies that benefit significantly from cost reduction and expanded insurance coverage, as these will be players in 2010. These companies include Quest Diagnostics (DGX), which provides testing services and drug distributor, McKesson Corporation (MCK). If investing in the individual stocks isn’t what you are looking for, then consider mutual funds that invest in those stocks.
