A while back, I recommended the Financials stocks because I thought they were going to be severely depressed and should have the potential to give out the great returns as market recovers. We are undergoing that process now.
Once these under appreciated have been realized, what would be the next set of plays? I would like to suggest these three areas: Inflation/dollars plays, Media Phone and Devices, and Green energy plays.
To battle againist inflation and falling of dollars, I am looking at currency plays and growth stocks. I am considering Brazil Agriculture, China Med Caps, European ADRs. A good link for Brazil and China Agriculture http://www.idb.int/intal/aplicaciones/uploads/publicaciones/i_INTALITD_OP_44_2006_Jank_Jales_Yao_Carter_.pdf and for top 500 Latin Comanies: http://www.thefreelibrary.com/The+Top+500+companies+in+Latin+America-a0134781814 for ADRs http://site-by-site.com/adr/latin/adr_bra.htm
For Media Device and infrastructure, I like GRMN, AAPL, RIMM, Goog, CHL, ATT, CHU. Some of these might be great companies, but the price is also up there. I see GRMN with some potentials and is only one offered at a decent price.
Lastly, Green Energy. A number of ways you can play this. One is of course the source play, go for solar or wind directly, I like STP, SPWRA and FSLR are a little pricey. Or you can go for the industry that would benefit from CO2 reductions, I like Rails in this sense. The more rails they build, the bigger their market, with limited players in this field, domestic rails are operating in a local duopoly environment.
Generally speaking, values stocks outperform in period of slow expansion, and once the market starts to grow, we should start to shift from values stocks to growth stocks, large caps to smaller caps.