July 2008 Roundtable Part 4

Today marks the first of two days where our panel will examine the outlook for specific sectors. Our experts share their favorite sectors to deploy capital in for the second half of the year. We’ll also drill down into their thoughts on technology and energy. (This is part four of a five part series.)

What sectors do you favor for the second half of the year?

Lisanti: “If energy comes down in price, then consumers are going to go up. 

“Historically, after the Fed has stopped raising rates, the stocks that tend to do the best are tech, health care and energy. The sleeper is probably healthcare. The traditional growth sectors look to me like the sectors that make the most sense right now. They tend to have high intellectual properties, high profit margins, high barriers to entry and high returns on capital. Those are the kinds of attributes you want in this environment. 

“In energy, I would look at solar. Think of it as all along the energy spectrum. With [oil] at $140 it’s what we do to get more efficient. I’d put a little on the energy continuum. 

“Then there’s health care, which has been a really bad area. It hasn’t worked for two reasons. I don’t think health care outperformed until 2002, so, people have to believe that this is not going to be the quick rebound. As this plays out and after we get [a new president], it probably sets up 2009 as a much better year for health care. For the next 18 months health care will probably be a much better sector than it has been. My guess is it’s been starting to work a little better this past month, and I think that’ll continue.  

“I think we’ve probably bottomed in health care. [Some] health-care stocks are at a 10-year multiple lows. The last time we had 10-year multiple lows on anything, usually it’s a bottom. It was the case for retail in 2001 and 2002. Anytime you get that kind of a washout, usually it provides you with opportunities.

“I think materials and industrials will be more difficult areas as the rest of the world slows.” 

Oberweis: “Technology valuations continue to remain below average and, quite frankly, if you were a believer that the recent sell off in the first quarter . . .

For access to the full article, you must be a registered member - it's FREE.

Already a member? Please log in below