NEW YORK (TheStreet) -- Lower energy costs and a strong U.S. dollar are likely to benefit select retailers in the fourth quarter, Margie Patel, senior portfolio manager for Wells Capital Management, told TheStreet TV.
Furthermore, Home Depot should benefit from an increasing number of consumers looking to improve their homes, while CVS should continue to reap the benefits of an improving outlook for the lower and middle class.
CVS Health is somewhat of a "double play" too, she added. The company will continue to ride the coattails of the improving health care trend. The sector may continues its rally in 2015, but investors should be more selective about where they put their money to work, she said.
Turning to energy stocks, Patel likes shale-related infrastructure companies. They have "very competitive cost structures," she said, even with oil prices near $75 per barrel or even lower.
These shale companies will continue to increase production and continue growing revenues, she said. If they cut capital expenditures, then cash flow will increase as well.
However, highly levered oil producers and debt-loaded oil services stocks may be in trouble. Investors will want to be careful with these types of companies, especially in the high-yield bond space.
High-credit companies continue to outperform low-credit companies. Overall, Patel expects the high-yield bond sector to do well going forward.
In the overall market, earnings growth may be somewhat "muted" in 2015, but that doesn't mean multiple expansion can't occur. Don't be surprised to see the U.S. stock market climb by single- or even double-digit percentage points, Patel concluded.
-- Written by Bret Kenwell
TheStreet Ratings team rates CVS HEALTH CORP as a Buy with a ratings score of A+. TheStreet Ratings Team has this to say about their recommendation:
"We rate CVS HEALTH CORP (CVS) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its revenue growth, solid stock price performance, largely solid financial position with reasonable debt levels by most measures and notable return on equity. We feel these strengths outweigh the fact that the company has had sub par growth in net income."
You can view the full analysis from the report here: CVS Ratings Report