This article originally appeared on RealMoney.com on Sept. 2, 2014 at 8:30 a.m. To read more content like this AND see inside Jim Cramer's multi-million dollar portfolio for FREE... Click Here NOW.
Today is the first trading day of the last quarter of the year. Most of the market indices are at or near all-time highs, and the S&P 500 is up some 10% for a year, a very respectable return given the more-than-30% equity rally in 2013.
Earnings came in better than expected during the second quarter, but the market multiple has still increased somewhat in 2014, as it remains a bit ahead of earnings growth. It still seems as if undervalued stocks and sectors are harder to find than they had been earlier in the year, and they appear to be significantly less prevalent than they had been at the start of 2013.
One of the few sectors to which I am continuing to increase allocation is construction. New-home construction perked up a bit recently, but housing starts are around half what they had been during the recent boom, even after this number posted a big increase with July's annualized figure of just under 1.1 million starts. The current housing-start level is also substantially below the 1.5 million level that the country has averaged since 1959.
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Commercial construction also seems to be improving. Of course, maybe I am being overly optimistic on this part of the economy, seeing as I am based in South Florida. The skyline of downtown Miami is dotted with cranes putting up huge residential and commercial projects, and it is same throughout this region of the country. It is like the financial crisis never happened.