There are no classically "cheap" stocks on the new high list, but you could still find some good buying ideas.
I listed the first four groups in my first article; here are the remaining four:
5. Information technology outsourcing companies like Accenture (ACN), Cognizant (CTSH), Equifax (EFX) and Fiserv (FISV) are working. I think that's an indictment of the tech sector in general. Portfolio managers dedicated to having some tech are hiding in these stocks because they are so scared of actual tech, in part because of the strong dollar and in part because Apple (AAPL) ¿ a holding in the Action Alerts PLUS charity portfolio that I co-manage -- has caused a panic in the world of what was once the strongest part of tech: cellphones, all because it failed to crack the bar of 50 million phones, coming in at 47 million. I never trust traditional tech until September, anyway. So chicken tech ¿ outsourcing -- remains a strong theme even if you, like me, aren't that crazy about these offerings. Remember Chinese weakness hurts all, but this secular growth tech subset, too.
6. The financials should be anticipating a Fed rate hike and banks should be roaring. But they aren't. That's another sign that investors fear the Fed will push up rates but the spreads will narrow, not widen, because demand for money will fall off and the recovery will collapse. Understandable, given how an already strong dollar will go nuts on tightening. What's working? The property casualty and life insurers and their brokers are doing well, but as we saw from Berkshire Hathaway's (BRK.A) Geico this weekend and Allstate (ALL) last week, the auto insurance business has been beset by rising claims because there's more driving and, I suspect, more texting. My only recommendation here is Chubb (CB), because I like that combination with ACE (ACE) that was just announced.
7. Huge strength? Try athletic apparel: there's something going on here that Nike (NKE) and UnderArmour (UA) ¿ which is held in the Growth Seeker portfolio -- keep showing up as well Skechers (SKX) and Foot Locker (FL), even as the rest of apparel doesn't rate. It's like the consumer's only willing to pay up for fitness -- no doubt a millennial behavior shift. Best to play it safe and wait for a pullback, as this group is way too extended.
8. Finally, there is the group I call special situations because they defy rubrics. Here I see Snap-on (SNA), which has been a multi-year horse because it combines the theme of older cars and technology, as well as Advance Auto Parts (AAP) and AutoZone (AZO). They are all buys. Netflix (NFLX) is on the list, too, as a function of the new way worldwide to consumer entertainment. Video games, as represented by Electronic Arts (EA), seem to be worth buying on any pullback no matter how small, as we have seen all of 2015.
It's a slim group, narrow and not for the faint of heart. But given that these are rate hike winners, they make plenty of sense, that is, until we get one. Then we have to rethink everything.
