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Four Investing Themes to Watch in 2011

Stocks in this article: GM EMC JCI AXP

The stock has been a monster this year, but the company's strong restructuring effort has yielded impressive operating leverage, which will lead to higher earnings than analysts expect - -- I believe the company can post $8 a share next year, making this still a cheap stock.

Aerospace: In aerospace, the best play is Boeing (BA), the dominant U.S. company in the sector. Not only will BA gain from growing demand (and financially healthier customers), but the company will also benefit from the eventual launch of its 787 Dreamliner airplane --- the world's largest and most efficient wide- body aircraft. Although the plane has seen several delays, it will likely be delivered in 2011. In 2012, research-and-development costs will decline and margins will improve, providing significant earnings power to the company for years to come.

Technology: The cheapest way to play the data center and storage market is through EMC, the largest name in the industry. EMC's full suite of data-center products -- hardware, software and services -- makes it the vendor of choice in the industry because it offers a total solution for its customers, - and its portfolio just expanded with the acquisition of Isilon. It also has an 80% stake in the hottest server virtualization company in the game, VMware (VMW). EMC is poised for double -digit earnings and revenues growth next year, and excluding the cash and the VMW stake, the stock trades at seven times earnings (below its long-term average of 9.6 times).

Another cheap technology play with positive catalysts is Oracle (ORCL) -- it plans to launch two new products next year as it integrates the recent Sun Microsystems acquisition.

Financials: Other ideas we like are the deep -value financials. Our favorite is American Express (AXP), which is trading at 12 times earnings for a company poised to deliver double -digit earnings growth. The company should benefit from an improving credit cost cycle (that has just begun) and the return of the consumer and business customer.

-- Written by Stephanie Link, director of research & vice president of strategy for TheStreet.

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Stephanie Link is the director of research & vice president of strategy for She is the co-portfolio manager for Jim Cramer's premium investing service, Action Alerts PLUS and works daily on the strategy and stock picks chosen for the portfolio. Stephanie is also responsible for recruiting talent for the paid sites including options, technicians and fundamental contributors. Prior to joining, Link worked on Wall Street for 16 years. She spent nine years at the Prudential Equity Group as a managing director in U.S. institutional sales and as the New York sales manager covering top national accounts. She was the managing director of equity research in her final year at the firm. Prior to that position, she worked at Dean Witter as an institutional sales person for six years. Link's investment specialties include large-cap core stocks as well as value ideas.
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