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Expect 20% Profit Rebound in 2010: Strategist

This is going to be a ‘W-shaped’ recovery and investors should brace themselves for another dip in the next 12 months, said Jeffrey Kleintop, chief market strategist at LPL Financial.

“We’ve got a big down-draft, we’re getting a big bounce back but there’s a lot of issues that can lead to another dip in the next 12 months given the fade of the fiscal stimulus and the withdrawal of monetary stimulus and that’s going to be a real challenge,” Kleintop told CNBC.

However, Kleintop said he eventually expects a 20 percent profit rebound in 2010.

“Right now, we’ve got costs cut to the bone in corporate America, and costs are so low that even on very modest revenue growth, we can get a very powerful earnings rebound,” he said.

“Just getting rid of the write-offs, seeing that bounce-back in manufacturing activity and with costs cut to the bone…I think we can see a 20 percent profit rebound in 2010 over 2009, and that’s the real key support for this market keeping us around 1,000 on the S&P.”

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No immediate information was available for Kleintop or his firm.

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