Friday, September 30, 2005

Q4=Energy and Financials

They should be growing their earning like gangbusters in this upcoming quarter. According to the article we should be selling off retailers, consumer-discretionary, and materials.

Meanwhile, retailers and consumer-goods wholesalers are especially vulnerable to rising gasoline prices as consumers put more of their income into their gas tanks, leaving less to spend at stores

As for consumer-discretionary companies, they are seen posting earrings growth of just 1%. That is the second-worst performer only to the materials sector, which is expected to decline.

Still, that's better than what's expected out of the materials sector, which is projected to post and earnings decline of 5%, according to Thomson Financial. Dow Chemical, DuPont and U.S. Steel Corp. (X) will be responsible for most of the fall-off. Natural gas is the primary fuel used to run factories, and it's the most-used raw material in manufacturing.

However here is why we should be buying:

As a result, the energy sector has delivered the most substantial upward estimate revisions of any sector of the economy since the first quarter of 2003. ExxonMobil, Chevron and ConocoPhillips (COP) are the three biggest factors behind the sector's bullish profit outlook, according to Thomson data.

After the energy sector, financial firms are expected to post the second-highest growth rate, up 21%, with total earnings coming in at $45.7 billion vs. $37.1 billion in 2004.

Seems like sound advice to me. I like this company myself:

Then there's Goldman Sachs Group Inc. (GS) , which on Sept. 20 reported an 84% gain in third-quarter earnings, booking a record profit of $1.6 billion, or $3.25 a share, and greatly lifting the sector's overall prospects.

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