James Stack’s Latest Investment Outlook

By on September 14, 2012

James Stack - Investech ResearchInvesTech Research founder James Stack was interviewed on the Nightly Business Report last week (see video below). Stack is distinguished as being NBR’s longest running guest market monitor and a top-rated wealth advisor according to Barron’s.

Stack pointed out that the market is right at the median or average bull market duration, as it has been moving up for 3 ½ years now. That doesn’t mean the bull market is going to end on Tuesday, but it does suggest it’s becoming increasingly important to manage risks, particularly if you look out past the election, said Stack.

According to Stack, if the market is up between now and election day, Obama has a 90 percent chance of being re-elected. While if the market is down, Romney has an overwhelming chance of being elected, he added.

Regarding the fiscal cliff, politically and historically, the odds are high there will be some kind of a compromise that lessens the risk, Stack said.

Stack said the next four months are critical to the market and consumer confidence is a key indicator investors should watch.

Regarding stocks, Stack mentioned generic drug maker Teva Pharmaceuticals (TEVA) as being attractive with a PE of 7.1. It’s at its lowest valuation in 20 years and is growing revenue at a double-digit rate.

Stack also spoke highly of Pepsico (PEP); “a solid value company.” It’s number two in food and beverages in the world, next to Coke. Revenues will slow from 13 percent annualized over the past five years down to just under 10 percent for 2013 and 2014, but Pepsco is selling at a 20 percent discount to its average historical valuation and it’s paying a three percent dividend yield which is more than you can get on a 30-year Treasury bond, Stack added.

Back in February, Stack provided an upbeat outlook for the market based on the historical upward bias in an election year (link).

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