Corporate America's Stuff Is Just So Old
BMO Capital's Brian Belski is among the top Wall Street strategist who sees more gains for this already 5-year old bull market.
"Given the combination of improving economic conditions and rebounding earnings growth, we believe 2015 will represent another year of solid gains for US stocks," Belski wrote in a December 1 note to clients. "Our models suggest a year-end S&P 500 price target of 2,250 on EPS of $126."
Belski's target represents a respectable 8.5% gain from today's levels. And it makes him the third most bullish strategist followed by Business Insider.
So, what's behind his bullish call?
Among other things, Belski expects corporations to spend less on share buybacks and spend more on investing in their businesses, that is ramp up capital expenditures (capex).
In addition to investing for growth, companies need to replace their old stuff.
"[T]he average age of plant and equipment is at its highest levels in 50 and 15 years, respectively," Belski wrote. "The way we see it is that there is a tremendous amount of pent-up investment spending demand and ... we believe the next logical step for companies to improve growth prospects is to invest in their businesses."
Remember, many of America's big companies like General Electric and United Technologies supply the stuff that categorized as capex. So, more capex is good for jobs, profits, and ultimately stocks.
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