Smaller Homebuilders Are Looking Attractive

In my columns earlier this week, I discussed the reasons I am significantly underweight financials and the retail sector within my own portfolio, as we get into first quarter earnings season. Financials have had a nice post-election rally until lately on hopes for higher interest rates, faster loan growth and significant regulatory reforms. However, loan growth continues to remain tepid and interest rates have declined from highs earlier in the year.

Major regulatory reform is also further out than investors were hoping for, in closing out 2016. Some banks have posted better-than-expected first-quarter earnings numbers so far, but this largely was the result of their trading operations. As for retail, the United States was the most "overstored" developed country in the world two decades ago. The rise of Amazon (AMZN)  and other online retailers have put most of the "brick & mortar" crowd under considerable duress, and will continue to do so. Retail sales so far in 2017 are nothing to write home about. I don't expect that to change....325 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.

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