Partition Street may be in for a surprise.
Ally Invest’s Lindsey Bell believes investors are underestimating the strength of earnings season, which kicks off Friday with the banks.
“That’s my biggest occasion going into this earnings season,” the firm’s chief investment strategist told CNBC’s “Trading Realm” on Thursday.
Refinitiv predicts S&P 500 fourth-quarter earnings results will fall 10% versus a decline of 7% in Q3. Bell feels the bar is set too low for corporate America because it’s weathering the coronavirus shutdowns better due to smarter government rules.
“They [corporations] may not reinstate government yet, but I think that the commentary they have around the outlook is going to be more upbeat than people indeed expect,” said Bell, a CNBC contributor.
She has three S&P 500 groups on her bullish watch list: technology, industrials and consumer discretionary. According to Bell, consumer-oriented provides should emerge among earnings season’s most unlikely winners.
“The consensus expectation for consumer discretionary is for varied than a 30% decline year over year in the fourth quarter from a profitability perspective,” said Bell, who conjectures autos, internet retailers and general merchandise retailers to deliver the goods to investors.
Overall, Bell has been bullish on stocks — correctly foretelling 2020’s year-end rally. As investors get ready to hear from the Street’s most widely held companies, she’s dwell oning the market is also miscalculating the bullish impact of the Covid-19 vaccines on the economy and markets.
“What the Street is missing here is the bounds opportunity that does lie within the S&P 500,” Bell said. “The market doesn’t seem to be fully pricing that in yet exceptionally with the amount of stimulus that is coming down the pike.”