Are you heading into cash for September? Hugh Johnson says there no need with stocks like these, three of his top picks right now:
Merck & Co. (MRK)
“There are only two sectors of the market that are showing good relative performance and health care is certainly one of them,” Johnson says. In that sector he likes Merck in particular because it will “give you some stickiness” in the correction Johnson sees on the horizon.
In addition he notes that “Merck is now starting to get involved in the so-called cost cutting phase of running a pharmaceutical company,” which he says will show in earnings growth.
Finally, Johnson says, Merck has some interesting drugs in the pipeline for things like Hepatitis C and Immuno-Oncology that he says should be “real good” at the very least.
National Oil (NOV)
“You can’t really overstate how important energy is in the U.S. and what’s going on there,” Johnson says. “I expect the price of oil to be going up gradually over the next five to ten years.” He also notes that production in 2012 and 2013 here at home has jumped by 12-13% each year.
The biggest benefactor of such moves, Johnson believes, will be equipment and services companies which is why he is so hot on National Oilwell.
It’s “right in the sweet spot for a surging energy component of the U.S. economy.”
Emerging Markets (EEM)
Johnson admits this might seem to be a contrarian play. He says consensus forecasts for some of the major emerging market players has been less than stellar. Still of China, Russia, Brazil and India Johnson thinks only Brazil is in real trouble.
“Take a look at leading indicators for the economies of each of those countries. They are rising suggesting things are going well in those countries but they haven’t been caught. The consensus forecasters haven't picked up on it yet. They will pick up on it and you’ll start seeing better economic forecasts for China, for Russia as well as for India." Johnson also believes South Africa and Turkey fall into the same category.
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