Houghton and Atkeson

3 Best Sectors for an Economic Recovery

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Prices are a powerful indicator. If a stock is actively trading, the price is the point where buyer and seller demand is at equilibrium. Both buyers and sellers are willing to trade at that price at that point in time given all available information. Price is one of the most complete and objective sources of information about the condition of a stock and the market overall.

From the March 2009 lows, the major indices rallied about 40%, before pulling back last week. Still, the price of the market is clearly saying that the economic prospects of the United States appear much brighter today than they did three months ago.

Assuming the bounce was not driven entirely by short-covering and irrational exuberance, it appears our economy is in the process of returning to positive growth.

So we're going to give you a list of the sectors that will likely benefit most from an economic recovery and the stocks that stood out as most attractive right now.

Our Method for Picking Winners

In an effort to objectively identify the best-of-the-best economic recovery beneficiaries, we decided to use price as our indicator. Strong stock price performance is the quantification of the optimism market participants have for the future performance of the underlying company.