Large Cap Growth Securities Are Due For Recovery
Investing in individual stocks over the past several years has definitely been a challenging task for a lot of investors.
But buying individual stocks, regardless of how "strong" they were and how much our logic suggested they should be producing adequate returns has been difficult for a variety of reasons.
Large and Giant cap securities have lagged their small cap counterparts and, probably most surprisingly, they have not performed all that well at all when compared to high yield investments.
However, the signs suggest that large cap securities are destined for turnaround in the months or year to come.
There are several indicators pointing to such suggestions, which we look at here: 1) Consumer spending is at extremely encouraging levels.
Since a lot of large cap securities rely heavily on consumer spending before they start building inventories, the last few years have meant that these larger companies have had to eat their way through what was uncharacteristically high inventories.
With consumer spending within a percentage point of historic records, manufacturers, which have recently been shunned as out-of-favor compared to other types of value or speculative securities, are in position to start seeing production and revenues increasing.
To some investors, this is nothing new -- prices on such securities have already started to appreciate and may not pose as much value as many would have hoped.
2) A lot of these larger and giant cap companies are already starting to see improvements to their bottom.
One does not need to look very far to see that some of the largest companies that have previously been out of favor are starting to show signs of revenue growth again.
Companies like General Electric are not only posting huge revenue growth over previous quarters or on year over year bases, but are actually increasing their dividends.
This type of optimism speaks highly of the fact that demands for domestic products and services is increasing.
3) Large and Giant cap securities have been out of favor for too long.
While this is nothing that can be supported by anything more than investor sentiment, the fact that large and giant cap securities have been out of favor for so long simply points to the fact that they are "due" for a recovery.
With this in mind, investors should be looking for growth opportunities rather than small cap value plays, which may have seen enough value appreciation that they have potentially become overbought.
These three indications point to the fact that investors should be looking at large cap growth investments rather than high flying value plays, regardless of capitalization.
While the large cap segment did not perform all that well in 2009, their recovery is just a matter of time and that time might very well be upon us.
But buying individual stocks, regardless of how "strong" they were and how much our logic suggested they should be producing adequate returns has been difficult for a variety of reasons.
Large and Giant cap securities have lagged their small cap counterparts and, probably most surprisingly, they have not performed all that well at all when compared to high yield investments.
However, the signs suggest that large cap securities are destined for turnaround in the months or year to come.
There are several indicators pointing to such suggestions, which we look at here: 1) Consumer spending is at extremely encouraging levels.
Since a lot of large cap securities rely heavily on consumer spending before they start building inventories, the last few years have meant that these larger companies have had to eat their way through what was uncharacteristically high inventories.
With consumer spending within a percentage point of historic records, manufacturers, which have recently been shunned as out-of-favor compared to other types of value or speculative securities, are in position to start seeing production and revenues increasing.
To some investors, this is nothing new -- prices on such securities have already started to appreciate and may not pose as much value as many would have hoped.
2) A lot of these larger and giant cap companies are already starting to see improvements to their bottom.
One does not need to look very far to see that some of the largest companies that have previously been out of favor are starting to show signs of revenue growth again.
Companies like General Electric are not only posting huge revenue growth over previous quarters or on year over year bases, but are actually increasing their dividends.
This type of optimism speaks highly of the fact that demands for domestic products and services is increasing.
3) Large and Giant cap securities have been out of favor for too long.
While this is nothing that can be supported by anything more than investor sentiment, the fact that large and giant cap securities have been out of favor for so long simply points to the fact that they are "due" for a recovery.
With this in mind, investors should be looking for growth opportunities rather than small cap value plays, which may have seen enough value appreciation that they have potentially become overbought.
These three indications point to the fact that investors should be looking at large cap growth investments rather than high flying value plays, regardless of capitalization.
While the large cap segment did not perform all that well in 2009, their recovery is just a matter of time and that time might very well be upon us.
