The outlook for large-cap securities for next year appears stable as the U.S. economy continues to slowly recover and corporate earnings inch higher, says Frederick J. Ruopp Sr., CFA, Chairman and Chief Executive Officer at Chelsea Management Company.
“I told clients at the beginning of this year that I thought we would be able to do 6% to 8%, maybe 10%, and I think it’s going to be somewhere between the 6% to 8%. I don’t feel too differently for next year,” Ruopp said. “With additional growth and with the market not being wildly overpriced right now, we ought to be able to do 6% to 8% this coming year.”
Ruopp likes Johnson & Johnson (JNJ) because it is selling at 12 times earnings with a 3.5% dividend yield and shows several years of increasing its dividend. He says pharma is looking interesting for the first time in a long time and he is looking for companies with strong balance sheets and a solid record of rising earnings, dividends and good industry position.
“If everybody has some residual worries about the economic cycle in this country, pharmaceuticals pretty well exist outside of the economic cycle, because we have to have them. So those are interesting companies that have done well and continue to do well,” Ruopp said.
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