In Last Quarter Of Year, A Focus On What's Working
The recession also forced many luxury boutiques and small businesses to close, which has translated into greater market share and higher profits for the companies that were able to survive.
"What a lot of people are missing is that they shouldn't be looking at the overall consumer spending numbers but the strong companies that have made it through," Hoffman said. "Even if the overall spending numbers are flat, you're going to get massive market share gains for the ones that are still here."
You only need to go to the mall to see this in action. Macy's is up 44 percent for the year and J.C. Penney Co. is up 27 percent. Shares of teen retailer Abercrombie and Fitch Co. are up 30 percent.
It is true that industrials and discretionary consumer stocks tend to be the first ones that show growth after a recession, which means that their strong performance this year could be seen as something as unnoteworthy as October following September. So an argument can be made that their rallies are following a historical pattern and will peak soon.But here's something else to consider. The industrial companies in the S&P 500 index are trading at 15.9 times their expected earnings, which is 20 percent less than the category's average over the past 15 years, said Howard Silverblatt, the senior index analyst at Standard and Poor's. Shares in the consumer spending segment of the index, meanwhile, are trading at 15.3 times their expected earnings, which is 34 percent less than their historical average.
Select the service that is right for you!COMPARE ALL SERVICES
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV