This quarter, the market shrugged off geopolitical uncertainty and has moved back to the top end of its trading range that it first set in February. A lack of progress in Washington, international conflict, and the French elections has not been able to derail the markets. The S&P 500 is back to 2400, its record level set on March 1.

The market’s charge has been led by the NASDAQ 100 which is mostly comprised of the mega cap technology stocks Amazon, Apple, Facebook, Google, and Netflix. These companies all share impressive earnings reports delivered over the past month.

It is noteworthy that the NASDAQ finally pierced its 2000 highs so it has taken 17 years for this index to fully recover! Certainly, it could go higher and we should plan on it.

While economic growth slowed to .8% in the first quarter, corporate earnings accelerated from 9.5% to 12.5% according to Factset Research. If any one of tax cuts, repatriation, an infrastructure spending bill, and deregulation occur, it could add one or two percentages to GDP and this could mean tens of billions of more dollars coming into the stock market.  

The recent earnings announcements are revealing because they illuminate the stocks that are best poised to rise in the ensuing weeks. Using criteria based on earnings and sales gains, there are over 50 companies whose reports were favorably received by analysts. A few examples are McDonalds, American Express, MMM, Visa, Lam Research, Twitter, Sherwin Williams, Thermo Fischer, and United Healthcare.

Areas of the market to avoid would be energy, media, materials, utilities, telecom, and consumer staples.

We should be enjoying better results than we have seen this year. These new additions to our client portfolios should boost client portfolios to a better growth path.

Peregrine Asset Advisers ● 9755 SW Barnes Rd. Suite 295 ● Portland Oregon 97225
503.459.4651 ● 800.278.1420 ● www.peregrineaa.com