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In Last Quarter Of Year, A Focus On What's Working

The weakening dollar could add additional fuel. While a falling dollar may make it more expensive for Americans to travel abroad, it's a benefit for companies that sell products to international clients whose euros and yens can buy more dollars. "With a falling dollar, a lot of these products that these companies make are going to be cheaper for buyers overseas," said Brian Washkowiak of Talon Asset Management.

There may be an opportunity, however slight, for increasing revenues in the United States, too. President Obama recently proposed a bill that would call for $50 billion to be spent over six years to rebuild roads, rails and airport runways in the United States, which could translate into additional dollars for the likes of Union Pacific Corp. and Deere & Co.

Industrial companies tend to have strong balance sheets, which means that they aren't taking on a lot of debt that could hurt them should growth not be as strong as anticipated.

"These companies have been very disciplined as they grow," said Mark Schultz, the portfolio manager of the MTB Mid-Cap Growth fund. "If homeowners would have been as disciplined as corporate America, we wouldn't have been struggling with half of the issues that we are."

Household balance sheets are a little murkier. High unemployment is persistent. Home prices are stagnant. And the market is still down about 20 percent from the boom days of 2007. Why, then, would anyone spend money on something as frivolous as a sweater at the Limited?

It was that argument that in the first half of 2009 pushed down so-called consumer discretionary companies â¿¿ which, unlike retailers such as Wal-Mart, profit from people splurging. This year, however, many of these companies have performed well as consumers made purchases they delayed during the darkest days of the recession. Consumers are expected to spend about $465 billion this holiday season, or about 3 percent more than last year, said Eileen Hoffman, an analyst at Janus Capital Management. That would bring spending back to about the same level as the 2006 holiday season.

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