After a 5 year bull market run paired with growing geopolitical uncertainties, many are predicting a correction in the market. Hugh Johnson told Jeff Macke of Yahoo about 3 picks that will do well in a correction.
Merck (MRK) is in the healthcare industry, which is going well, and tends to do well in a slowing economy. Hugh Johnson likes Merck in particular for its pipeline and because it has more “stickiness” than other pharmas. Merck is also undertaking an aggressive cost cutting and has a strong pipeline, with Hepatitis C and Immuno-Oncology drugs.
National Oilwell Varco (NOV) provides equipment to oil and gas companies and Johnson said, “You can’t overstate how important energy is int the U.S. and what is going on there.” He sees oil and gas prices rising, and that is good news for stocks like NOV which is in the “sweet spot” of surging energy production.
Emerging Markets might seem to be a contrarian play, because many of these economies are lagging, but Johnson says the only one to be really concerned about is Brazil. China and India should see more strength, as well as South Africa and Turkey as consensus forecasters catch up with the actual economic data.