It won’t be too long before we get a look at first quarter earnings. The Street is anxiously awaiting corporate earnings reports. Even though the market’s in a lackluster state right now, I think it has held up extremely well. After the big move last year, it is not unreasonable for the market to experience a period of consolidation. It doesn’t make things exciting for investors, but, at the end of the day, some consolidation is good for the overall health of stocks.
Earlier this year, I was complaining that there weren’t as many attractive stocks around, especially as compared to the first half of 2006. I’m noticing a slight change now, as several more attractive stocks recently caught my attention.
I can’t wait to see what first quarter earnings will bring. In particular, I want to see what companies are saying about the state of the economy. The raw numbers are always important, but, in this earnings season, institutional investors will be most interested in corporate outlooks for the future.
Even though I’m not expecting much, I have to say that my outlook for stock prices is positive. As the last quarter demonstrated, even with a slowing economy, corporate earnings were strong due to increased pricing power by companies.
The real catalyst for the broader market will continue to be any action from the Federal Reserve. I don’t see how even the most robust corporate earnings will light any fires under this market.
So, in short, my view is that the future for stocks looks modest. You just have to own the right stocks in order to outperform. Fortunately, there’s no shortage of great companies out there from which to choose. Whether it be in alternative energy, pet care, technology, or China stocks, this market still has lots to offer.