“Using sophisticated valuation models always leads to the same conclusion: this market is still 10% underpriced between now and the next six to nine months,” she said.
Cohen conceded that the economic and profit expansion has slowed from its “torrid pace” of the past two years, but she maintained that growth is “still moving forward.”
Cohen believes the rotation away from housing and consumers will continue, following historical precedent. But she reminds analysts that while spending on residential construction has dropped 15%, non-residential construction spending has grown 15%, creating a “yin and yang” counterbalance. Nonetheless, the strategist will be looking at entities and sectors that benefit from exports and business investment, particularly technology and industrial goods.
Going forward, Cohen’s investment philosophy is simple: As the period of very low volatility ends, she will be looking at securities issued by “best-quality companies.”