We are two-thirds through the current quarter, and while there are signs it is far stronger than the March quarter, we’re still looking in the rear-view mirror this week. By that, I mean we’ve gotten our second snapshot of how dismal the level of growth was in the first quarter of the year. Remember, economists originally forecasted it would come in near +1.3%, and the initial reading at 0.1% was just above no growth. Yesterday, we received our “second look,” which supposedly gives us a clearer picture of the quarter’s economic activity. It came as no surprise the revision painted an ever-darker picture of the economy during the March quarter with its -1% reading.
Now we can get all down and dour looking at that figure, but as I just mentioned, it’s now behind us.
Stock prices have moved up, down or not at all in the first quarter. Companies have reported their revenue and earnings per share (EPS) results for that time period and the stock market has moved on. In other words, the stock market is a forward-looking animal with a view of three to nine months ahead. Sometimes that lens gets a little foggy and sometimes a little jaded, but it usually comes back into focus over a period of time. That’s what’s happening now, as the economic data around the globe paints the picture of a better and improving economy for the current quarter.
Anytime we see a shift from contraction to expansion when it comes to the economy, it means looking at companies whose business models are tied to a pickup in economic activity. One simple example is trucking — as the economy heats up, more goods need to get to more places, plain and simple. While rail is part of the solution, goods need to get to and from rail to or from distribution points, companies and individual homes. I’ve positioned subscribers of my investment newsletter PowerTrend Profits accordingly. There are other examples, from industrial conglomerates like General Electric (GE) to even sensor companies that are seeing their product embedded in more and more industrial and consumer applications.
We’re profiting from those investments at PowerTrend Profits… can you say the same?
Chris Versace is the editor of PowerTrend Brief — a FREE, weekly electronic newsletter. He also writes PowerTrend Profits, a paid monthly newsletter that helps individual investors profit through buying shares of companies poised to win big in the 8 PowerTrends, as well as writes the PowerTrader trading service that seeks to deliver short-term gains using stocks, ETFs and options. Chris has been ranked an All Star Analyst by Zacks Investment Research.