Four Investing Themes to Watch in 2011

Editor's note: As part of our partnership with PBS's Nightly Business Report, TheStreet's Director of Research Stephanie Link joined NBR to discuss transportation and aerospace stock picks for 2011. (Watch video and see transcript)

NEW YORK (TheStreet) -- This has been a year for theme investing.

The themes we are most bullish on are the auto industry, aerospace and within technology, the data center. There are also a few opportunities to be had in deep-value financials.

The auto and truck markets are recovering after years of underproduction and plant closures that has left the industry with fewer companies. The aerospace story is also one of better demand and less supply, as well as new product introductions from the leading manufacturers.

And within technology, corporate IT spending continues to improve, and as managers look to reduce costs, increase productivity and improve return on invested capital, they turn to storage and the data center for help.

Auto industry: We've chosen to play the auto industry through Johnson Controls (JCI) and General Motors (GM). Johnson Controls is the leader in auto parts, batteries, and heating, ventilation and air conditioning equipment and has the dominant market share in all three divisions. It has a strong balance sheet and built a better company during the downturn through multiple acquisitions, expanding its overseas presence. The stock has had a nice run but still remains a core position in the fund.

GM is our other car name because it is a cheap way to play the economic cycle, and offers an interesting turnaround story. It has new products, more efficient manufacturing, an improved balance sheet, and terrific exposure in the international markets (boasting No. 1 share in key emerging markets).

In the truck market, we've chosen Cummins (CMI), the world's leader in engines for trucks and large industrial equipment. Demand has been improving over the past year thanks to the age of the truck fleet (it's at 20 -year highs), changes to emission standards around the world and the recovering global economies. More than half of Cummins' revenues come from international and the company is dominant in the BRIC nations (Brazil, Russia, India and China), but 2011 will be the year of the North American truck recovery -- management expects this market to grow 60%.

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