By Barbara Kollmeyer, MarketWatch
As we watch for further developments on the U.S.-Iran conflict that jolted investors awake a few days into 2020, it’s worth remembering that during this lengthy bull market, geopolitical worries have not pulled stocks off their upward path for too long.
That seemed to play out Monday, though we could always be looking at a “different-this-time” scenario. If the conflict doesn’t escalate, “markets should push higher with oil and gold prices moving lower,” South Africa-based Vestact Asset Management told clients on Tuesday.
Well before Iran-related headlines, strategists were heard advising investors to keep an eye on the global economy this year, as a healthy one is vital to keep markets rising.
That brings us to our call of the day , from strategists at investment bank Jefferies who are bullish on certain consumer-related companies.
Strategists Sean Darby and Steven DeSanctis predicted in a note that in 2020, bigger organizations will begin to take market share from smaller to medium-sized companies. That is, those with more size, scale and technology which can use that to their advantage to reach more customers.
Companies that have been investing in technology are able to watch digital engagement and consumer data closely, and have more marketing power, say Jefferies’ strategists.
So, what are the companies with scale that they like? In beauty products, they are fans of Ulta /zigman2/quotes/210513442/lastsale ULTA -2.86% ; for consumer packaged goods, Constellation Brands /zigman2/quotes/207737284/lastsale STZ +0.72% ; among convenience stores, Casey’s General Stores /zigman2/quotes/208156554/lastsale CASY -4.35% ; for gaming and lodging, Eldorado Resorts /zigman2/quotes/205281174/lastsale ERI -4.78% ; among mass retailers, Walmart /zigman2/quotes/207374728/lastsale WMT +0.70% ; for restaurants they like McDonald’s /zigman2/quotes/203508018/lastsale MCD -0.72% and Starbucks /zigman2/quotes/207508890/lastsale SBUX -3.00% ; and they offer three in the hardline retail space — Home Depot /zigman2/quotes/208081807/lastsale HD -1.44% , Lowe’s /zigman2/quotes/205563664/lastsale LOW -0.80% and Best Buy /zigman2/quotes/205918291/lastsale BBY +1.36% .
After a multi-month peak, U.S. oil prices /zigman2/quotes/209723049/delayed CL00 +2.33% are down.The Dow /zigman2/quotes/210598065/realtime DJIA -1.69% , S&P and Nasdaq /zigman2/quotes/210598365/realtime COMP -1.53% are slipping, while European stocks /zigman2/quotes/210599654/delayed XX:SXXP -0.97% is holding onto green. Asian markets /zigman2/quotes/211618636/realtime XX:ADOW -0.71% have risen.
One of last year’s worst-performing sectors has been looking up, and that could keep going in 2020, says Larry Tentarelli, trader and publisher of the Blue Chip Daily Trend Report . He makes his point with this chart of the S&P Oil & Gas Exploration and Production exchange-traded fund /zigman2/quotes/203527521/lastsale XOP +3.77% :
Blue Chip Daily Trend Report
“XOP [the S&P Oil & Gas Exploration and Production ETF] did make an all-time low in December, and has been up five weeks in a row since then, a sign of a potential major long-term bottom,” Tentarelli writes.
He’s also positive on some related large-cap names in that sector — ConocoPhillips /zigman2/quotes/207605056/lastsale COP -2.81% , BP /zigman2/quotes/207305210/lastsale BP -5.03% , Halliburton /zigman2/quotes/210488727/lastsale HAL +1.20% , Schlumberger /zigman2/quotes/201012972/lastsale SLB +2.95% , and Transocean /zigman2/quotes/208905612/lastsale RIG -1.82% — and Diamond Offshore /zigman2/quotes/210455719/lastsale DO -3.93% among smaller to midcap companies.