![Expected peak market performers for 2010 [photo: webhoster.co.uk]](http://www.getmoneyenergy.com/wp-content/uploads/2010/01/peakperformers.jpg "Expected peak market performers for 2010 [photo: webhoster.co.uk]")
Earlier this week we had two Canadian reports on stock market expectations for 2010 – what sectors should outperform in 2010 compared to the stock market highs in 2007 – as well as which Canadian equities are expected to do well in 2010.
Top 10 Canadian Dividend-Paying Multinationals
Best Sectors To Invest In for 2010
.
Frances Horodelski reported for BNN that, when we compare current estimates on sector profitability in 2010 to sector profitability in 2007 (at the stock market peaks in October 2007), five sectors stand out for their probability of generating the most increase in profitability relative to their former highs.
Based on the quarterly earnings in the S&P 500 from 2005 through 2009, peak profitability occurred in the third quarter of 2007. Over the upcoming year, the following sectors’ profitability growth is expected to surpass the profitability they saw in 2007 (the percentages refer to the amount of increase expected over their 2007 highs):
Consumer Discretionary – Up 7%
In this category, think of stocks that provide consumer goods that are not as necessary to daily living, but which can garner the premiums of more luxury and surplus spending. Think Home Depot (NYSE: HD), Lowe’s (NYSE: LOW), and Bed, Bath and Beyond (NSDQ: BBBY).
Utilities – Up 11%
Utilities have something in common with consumer staples – you can’t give up on them, even in a recession. Look at the pipelines, electricity and other power companies. Think Exelon Corp (NYSE: EXC), Southern Co. (NYSE: SO), and Duke Energy (NYSE: DUK).
Consumer Staples – Up 24%
The items you literally can’t live without. Could these companies go bankrupt? Theoretically, yes – but not because of a lack of demand. Think about Kraft (NYSE: KFT), Proctor & Gamble (NYSE: PG), Walgreen’s (NYSE: WAG), Johnson & Johnson (NYSE: JNJ).
Info Technology – Up 24%
Invest in what you understand – and likely you’ll have no hard time understanding the services IT companies provide. Microsoft (NSDQ: MSFT)? Check. Intel (NSDQ: INTC)? Check. Dell (NSDQ: DELL)? Check. One stock getting more attention lately is Cisco (NSDQ: CSCO). You don’t have to chase the Apples (NSDQ: AAPL) and Googles (NSDQ: GOOG) to find some good returns.
Healthcare – Up 32%
With an aging populus, but also improved medical technologies, it’s no wonder healthcare is expected to outperform in 2010. In fact, I’d say healthcare is going to be a top performer over the next decade as well. There will be real growth and innovation in this sector as it will be one of the fastest growing market niches as well. Look at stocks like Abbott Laboratories (NYSE: ABT), Pfizer (NYSE: PFE), and Merck (NYSE: MRK).
Currently, each of these sectors are still “underwater” relative to their 2007 peaks, but this is expected to change over the course of 2010.
TD Waterhouse Economic Forecast
.
Bob Gorman, VP of TD Waterhouse (Canada) believes that equities will continue to be the place to be in 2010 – not bonds. Although we’ve had a large run-up in equities in 2009, he notes that stocks are only now back at fair value levels. Going forward into 2010 Gorman sees more modest growth to come.
Outlook For Canadian Stocks in 2010
Rotation of Market Leadership.
The stocks that were most volatile and hurt most in the downturn are the ones that pop back up first. Now that that’s happened, we need to look to the second and third tiers of stocks for growth opportunities. This is why some have been turning back to consumer staples stocks lately, like Shoppers Drug Mart (TSX: SC).
Gorman thinks we’ll see value and dividend stocks in particular come more into favour in 2010 – look at consumer staples, for example. (And on this point, Gorman echoes Horodelski’s report, too). South of the border, Gorman cites companies like Pepsi-Co (NYSE: PEP), but also utilities and telcos. In Canada, look at BCE (TSX: BCE) and Shaw Communications (TSX: SJR.B).
10 Best Defensive Canadian Stocks
So, if you’re looking for some new stock ideas (to fit into the existing research you’ve already done, of course! – these aren’t “hot stock” tips) – consider looking at names that fit into both of these forecasts. Combine these with other forecasts you’ve read about and see what overlaps. I’m thinking any staples stocks that relate to health care might be really good options.
Best Canadian Stocks and ETFs From the Past Decade (1999-2009)
If you liked this article, please retweet it on Twitter or consider adding me to your blogroll. I’d also love it if you subscribe to my RSS feed for free tips and posts like this one delivered right to your reader or by email (posts are not for duplication).
Related Posts - The Second Stock Market Crash: February 19-23, 2009
- Comparing Canada's Big 5 Banks
- Top Stock Picks from BNN Guest Analysts
- Canadian Stocks Composing the S&P/TSX 60
- This Downturn Maybe Not the Real Big One: My Top 5 Stock Picks for Making it Through 2015-2030
Related Articles From Other Websites
-
{ 6 comments }
No shock that the health care companies would be high, I think they are safe for some time. Surprised the consumer companies are so high.
Yes, health care makes a lot of sense. As for consumer stocks, it’s hard to say – in the U.S., you’d think it might not be the case since spending has dropped, etc. In Canada spending hasn’t slowed as much, it’s even picked up again recently. And in China, it’s apparently overheating with all the money they have sloshing around in loans, etc. right now.
Another useful post! thank you thank you thank you lol
Interesting. It can be difficult to find sector-specific information in the news today—but a recent book written by a client of mine is dedicated entirely to the Consumer Staples sector: http://consumerstaples.fisherinvestments.com/. It covers everything from a background on the sector and its various industries to investing techniques.
Every stock mentioned in thie article has done the exact opposite of what it was “expected” to do. How could you be more wrong?
Wow, This was the worst advise for last year I came across. How did you even come up with these expectation for 2010? I bet you were just reiterating the hype and news that was spoonfed by the media to you last year. Also the two companies you implied not to go for were the ones with the biggest gains(APPL and GOOG). Truly terrible . Goes to show you should usually not follow the herd. However, there is one or two companies here that have good fundamentals and might see a bright if not steady 2011. cheers.
Comments on this entry are closed.