My colleagues and I have just completed our Spring 2010 Quarterly Report, in which we review the first quarter, offer our outlook for the economy and market, and discuss three of the stocks we are currently buying (Automatic Data Processing (ADP), Exelon (EXC), and Thermo Fisher Scientific (TMO)). We are encouraged by the positive trends in the economy and strong performance of the stock market, which we expect to continue, and we are still finding attractive long-term investments.
A few highlights from the report:
- As we expected, economic conditions continue to improve, leading to better corporate earnings.
- The S&P 500 responded with its best first quarter since 1998, rising 5.4%.
- The Conference Board’s Leading Economic Index rose again in March, indicating further economic growth ahead.
- Other economic gauges, including bullish manufacturing and service sector data, rising retail sales, low inventories, and tame inflation, also point to a sustained rebound.
- It’s still too soon to sound the all clear, with unemployment high, the real estate sector struggling, and the strength of the economic recovery uncertain, but we expect good news to outweigh the bad.
- The broad stock market remains fairly valued, but we continue to find attractively priced shares of excellent companies.
- Starting from a point of reasonable valuation and expecting solid corporate earnings growth, we believe market returns over the coming years will be at least as good as the long-term historical average of about 10% annually. Selective investors who buy securities below fair value, the core of our approach, should do significantly better.
For more details of our views and outlook, you can read the Quarterly Report in its entirety.
As always, feel free to contact us or visit our website if you have any questions or comments.
Jordan Smyth and the Edgemoor Investment Advisors Team
