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In its Tuesday publication, Argus provided the analysis of several asset classes and top picks.
• Equities. The analysts believe the large-cap stocks represent the better value compared to small-caps, based on estimated trends in P/E, P/S and dividend yields, stating their 15 percent small and mid-caps equity allocation recommendation. They also favored value stocks versus growth stocks.
• Bonds, Interest rates. Taking into consideration the recent developments, the analysts expect 1 or 2 Fed rate hikes this year and favor high-rated corporate bonds. "We also recommend that investors seeking higher yields and willing to take on a higher degree of risk consider diversifying bond portfolios by including an allocation to preferred stocks." wrote Argus.
• Commodities. The analysts look for a recovery in this asset class over the next two years. According to them, oil prices will range from $32 to $55 per barrel and gold prices in a range of $1000-$1,400 this year. "Low oil prices are not good for highly indebted exploration & production companies. Avoid them. But low oil prices are good for refiners, and we would not be surprised to see well-capitalized integrated oil companies snap up assets on the cheap." suggested the analysts. They mentioned Valero Energy Corporation
VLO, Phillips 66
PSX, Chevron Corporation
, Occidental Petroleum Corporation
OXY and EOG Resources Inc
EOG, as their top oil picks.
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