US stocks have potential even after record month
The US stock market continued its record-breaking trajectory in May, with the broad S&P 500 index hitting its highest levels ever. But it still has potential, claims an portfolio Manager from Danske Invest.
It was smiles all round for investors in US stocks in May as the S&P 500 hit new highs. Wellington Management's Edward Bousa, portfolio advisor to Danske Invest's US equities sub-fund, believes that US stocks are generally fairly valued, but also picks out a number of sectors and industries that could put even bigger smiles on investors' faces.
New billion-dollar market for drugmakers
Bousa is excited about the emergence of immuno-oncology, a new field of cancer medicine that could revolutionise the way some forms of the disease are treated.
"Immuno-oncology is a key trend, and companies not currently involved in this area are desperate to clamber on board," he says. "We reckon it has the potential to become a multibillion-dollar segment and one of the biggest growth areas in the pharma industry."
Promising growth in Asian air traffic
The aviation industry is another growth sector that Edward Bousa and his colleagues at Wellington are keeping an eye on. This is due partly to an increase in air traffic worldwide, which is opening up opportunities for both operators and manufacturers.
"We think this an interesting area and are looking at it closely," he says. "The aviation industry has particular potential in light of the strong growth in air traffic, especially in Asia."
M&A good news for banks
Mergers and acquisitions bring in a lot of money for the investment banks that advise companies on the financial aspects of these transactions. This is making financial stocks interesting.
"The recent rise in M&A activity is good news for US investment banks. Financial stocks in general are also attractive due to their valuation," says Bousa.
Renewed interest in social media
Edward Bousa and his colleagues are once again turning their attentions to social media and Internet companies in general. These stocks were quite simply overpriced before, but the sector has now become interesting again, he believes.
"Following the market correction in this segment, we've once again begun to look more closely at some of these companies," Bousa explains.
