What Type of Stocks Are Good Bets For a Rebounding Economy?

[Jade Wayans]

The US stock markets have already rebounded considerable in the last
few months, however, it is likely that the rebound will continue in
the mid term. As the economy starts hinting at an end to the
recession, and jobs start coming back to Americans, there are many
stocks in a position to likely eclipse their highs before the whole
market mess started back in November of 2008. Here are a few things to
look for:
Companies that Benefit from Economies of Scope Stocks with huge market
caps that have cheaper costs due to their size will perform very well,
both in the recession, and when the recession ends. Because of their
sizes, they can produce products or services cheaper, and pass those
savings along to consumers who will leave the smaller companies for
the cheaper priced goods and services of the larger ones.
Survivors Companies which have survived the recession, while their
competitors may have not, will be able to take on the market share of
those failed companies and grow. For instance, look for Best Buy and
Radio Shack to benefit from the bankruptcy of Circuit City, and look
for Ford to take parts of Chevy's and Chrysler's market shares.
Smaller Innovative Companies During a recession it is hard for new
companies to start up. This means that companies with unique products
or services have had a good 6-8 months of worry free operations in
terms of competition. This window can often put them well ahead of any
emerging competition, and when the recession ends, they should
flourish.
Remember to always look the balance sheets of possible investments. In
a time of economic uncertainty you want a company with very little
debt, and a lot of cash flow.

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