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CNBC News Associate
Nearly 80 percent of S&P companies have beat earnings expectations—is this due to low earnings estimates or is it a sign that the recovery is real? Michael Cuggino, president and portfolio manager at Permanent Portfolio Funds, and Tyler Dann, senior research analyst at Invesco Aim, shared their ideas. (See their stock picks, below.)
“To some extent, there are some bright spots in the quarter,” Dann told CNBC.
“At the same time, it’s getting beaten over the head repeatedly—and then finally not having that happen. Things are really not better, but you don’t feel as bad. That’s kind of how things have been.”
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Dann said far fewer companies are exceeding sales estimates and investors are giving a “hall pass for better earnings with a little tepid sales.”
“We look for growth value anomalies,” he said. “Companies that are still growing, but are facing temporary controversy, which means that valuation have become depressed.”
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In the meantime, Cuggino said investors shouldn’t discount the cost-cutting effects on earnings, adding that it’s “a healthy thing.”
“Sales forecasts continue to be light in most cases. That is an overhang on potential future growth, although I think that’s going to take care of itself with the growing economy going forward,” he said.
Dann Likes:
Nokia [NOK
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Symantec [SYMC
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Cuggino Likes:
Morgan Stanley [MS
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FedEx [FDX
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BHP Billiton [BHP
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Cuggino Avoids:
Big Banks
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Disclosure:
No immediate information was available for Cuggino or Dan.
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Data is a real-time snapshot *Data is delayed at least 15 minutes