Tags: Goldman | Cohen | Shares | stocks

Goldman's Cohen: Investors Flock to Buy Undervalued Shares

Friday, 09 March 2012 08:07 AM

Stocks are undervalued, and investors are coming back in to buy, despite the recent plunge in the Dow, says Goldman Sachs strategist Abby Joseph Cohen.

The Dow Industrials Index touched 13,000 for the first time since May 2008 then promptly plunged several hundred points before recovering ground.

Nevertheless, Cohen figures the S&P 500 at its current level has priced in a 7 percent decline in corporate profits in the coming five years, she told CNBC

Editor's Note: Economist Unapologetically Calls Out Bernanke, Obama for Mishandling Economy. See What They Did

"That’s possible but it’s not likely," Cohen said, "but it gives you a sense of how nervous investors have been, and the sort of opportunities in equities if, in fact, the recession is over and profit growth continues."

Jobs numbers seem to suggest that the sluggish, but steady, recovery will continue. Official numbers are due tomorrow, but the private ADP report says that employers added 216,000 jobs in February, in line with expectations.

A separate Associated Press poll of economists predicts that the government figure will show 210,000 jobs added, but that the unemployment rate will stay at 8.3 percent. They added that the rate would likely fall to 8 percent by Election Day and to 7.4 percent by the end of 2013.

Meanwhile, employers are laying off fewer workers, down 3.3 percent in February from the month before according to consultant Challenger, Gray & Christmas, and reports are surfacing that manufacturers are struggling to find talent, even paying signing bonuses, a huge shift in the market.

A more downbeat assessment comes from Trim Tabs Investment Research. Its figures are based on daily income tax deposits by salaried employees in the United States.

Their call: The U.S. economy added 149,000 jobs in February, down from a January estimate of 181,000.

"To bring down the unemployment rate, the economy needs to generate at least 250,000 new jobs every month," says Madeline Schnapp, director of macroeconomic research at TrimTabs. "Job growth of 149,000 new jobs is not terrible, but it is also not a result worth celebrating either."

Editor's Note: Economist Unapologetically Calls Out Bernanke, Obama for Mishandling Economy. See What They Did

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Friday, 09 March 2012 08:07 AM
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