Printer Friendly

STOCK MARKET OUTLOOK FAVORABLE, DESPITE RECENT RISE IN RATES, KEMPER PORTFOLIO STRATEGIST SAYS

 STOCK MARKET OUTLOOK FAVORABLE, DESPITE RECENT RISE IN RATES,
 KEMPER PORTFOLIO STRATEGIST SAYS
 CHICAGO, April 9 /PRNewswire/ -- Despite the recent rise in long- term interest rates, the outlook for the stock market continues to be favorable, according to Kemper Financial Services, Inc. (KFS) senior vice president and portfolio strategist James Neel.
 "Although the recent uptick in rates is disappointing, we continue to believe that the economic recovery is underway, and that 1992 will be a good year for the stock market," Neel said.
 "During the next three to six months, we look for interest rates to stabilize about where they are right now, with long-term interest rates as represented by the government's 30-year Treasury bond at the eight percent level. There has been a perceived lack of confidence in the fixed-income markets as of late, based on the perception that as the economy improves, inflation will increase. That fear of inflation, however, is simply not justified," he said.
 Recently, cyclical stocks have provided leadership within the stock market, while growth stocks have come under pressure. The prices of cyclical stocks have been buoyed by expectations of a strengthening economy. But according to Neel, current earnings expectations for cyclical stocks are too high. "The anticipated economic upturn will not be strong enough to support earnings expansion from the majority of cyclical companies," Neel maintains. "This is partly because these companies will not have the ability to pass along price increases to their customers. In almost every major economic cycle, cyclical stocks have needed a significant upturn in inflation to perform well.
 For the stocks of cyclical companies to maintain leadership within the market, they will have to experience either an increase in unit volume or an increase in pricing for their products. Consequently, earnings expectations for these companies, and therefore their stock prices, are unrealistically high.
 "The rotation to cyclicals has caused growth stocks to underperform," Neel continued, "but based on their expected growth rates, the price-to-earnings ratios (the price of a stock divided by its earnings per share) of many growth stocks are currently at discounts to their expected growth rates. Many of these companies are experiencing growth rates of anywhere from 15 percent and higher, while the P/Es of the stocks are actually lower. And yet, unlike cyclical stocks, these companies are unlikely to experience earnings disappointments.
 "Cyclical stocks, on the other hand, are overpriced based on their 1992 earnings expectations, and probably close to the end of their 'run-up' in prices. Growth stocks, by comparison, will have sustainable earnings growth for several years to come."
 Neel said he currently favored such large-capitalization blue-chip growth stocks as Bank America, Phillip Morris, Intel, Conrail, Telefonos de Mexico, Walt Disney, Pfizer, Hewlett Packard, Nike, Merrill Lynch, General Electric, Apple Computer and United States Surgical.
 "Provided interest rates do not move significantly higher -- which we do not anticipate given the Federal Reserve's more accommodative stance -- growth stocks remain an excellent place to be invested this year," he said.
 Kemper Financial Services is one of three financial services operating units of Kemper Corp. (NYSE: KEM). KFS currently has over $67 billion in assets under management. Kemper Corp. is a non-operating holding company with major subsidiaries in property casualty insurance, life insurance, reinsurance and investment services.
 -0- 4/9/92
 /CONTACT: Martin Gawne, 312-499-1905, or Steve Radis, 312-499-8393, both of Kemper/
 (KEM) CO: Kemper Financial Services Inc. ST: Illinois IN: FIN SU: ECO


SM -- NY035 -- 6687 04/09/92 10:32 EDT
COPYRIGHT 1992 PR Newswire Association LLC
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1992 Gale, Cengage Learning. All rights reserved.

Article Details
Printer friendly Cite/link Email Feedback
Publication:PR Newswire
Date:Apr 9, 1992
Words:579
Previous Article:FILENE'S BASEMENT REPORTS MARCH SALES
Next Article:ARCHER COMMUNICATIONS FINANCING RESTRUCTURED


Related Articles
SMALL CAP STOCKS STILL HOLD LONG-TERM POTENTIAL, SAYS KEMPER PORTFOLIO MANAGER
KFS CHIEF PORTFOLIO STRATEGIST TARGETS BEST INVESTMENT OPPORTUNITIES FOR THE REMAINDER OF 1992
KEMPER FINANCIAL SERVICES, INC. INTRODUCES KEMPER INVESTMENT PORTFOLIOS -- SMALL CAPITALIZATION EQUITY PORTFOLIO
KEMPER HIGH YIELD MUTUAL FUNDS REACH MILESTONES
KEMPER'S CHIEF PORTFOLIO STRATEGIST SAYS DON'T BE SPOOKED BY VOLATILITY -- BALANCE OF 1994 SHOULD BE PROMISING
Global Investment Strategist and Vice Chairman of Kemper Funds Group Bullish on NASDAQ Bear Market.
Kemper Funds Group* Global Investment Strategist Sees Promise in Global Small-Cap Stocks.
Kemper Funds Group* Global Investment Strategist Sees Renewed Promise In European Economic And Monetary Union.
Kemper Funds Group* Global Investment Strategist Sees Large-Company Performance Still Going Strong.
S&P Affirms Zurich Kemper Life Insurance Group Ratings; Stable.

Terms of use | Copyright © 2017 Farlex, Inc. | Feedback | For webmasters