Bob Doll, chief equity strategist for BlackRock, views second-quarter earnings reports as positive and thinks the good news will continue.
Both bulls and bears have a case to make, he tells CNBC. “The bulls are going to say … earnings were better than expected by a wide margin, and the guidance has been a bunch better and more of it than we saw three months ago.”
And the bears will counter: “Yeah, but the comparisons are still negative. It’s all about cost cutting, not revenue growth,” Doll says.
“I tend to think the former story makes sense. We will get some revenue growth as we emerge from this recession.”
Doll recommends technology stocks, including IBM, Cisco, and Hewlett-Packard. He likes IBM best.
“We still think the stock hasn’t revalued for how it’s changed its business. Five years ago this company was largely a hardware company. Today: much more recurring revenue, software services.”
BlackRock owns Cisco and HP too, as they’re both gaining market share, Doll says.
He says BlackRock’s most successful recent purchase was healthcare stocks.
“They were left in the dust because they were too defensive, because the healthcare reform was going to … strike them all dead. Those stocks have come roaring back.”
Some experts choose both the bullish and bearish cases.
The market looks set to rise further on earnings news, ETX Capital trader Manoj Ladwa tells AFP. But much of the improvement represents cost cutting, he says. “Confidence is fragile."
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