[credit provider=”Bloomberg” url=”http://www.businessweek.com/videos/2012-11-26/auth-now-is-not-the-time-to-stick-your-neck-out”]
Wall Street has its popular long-time bulls on the stock market like JP Morgan’s Tom Lee and Deutsche Bank’s David Bianco.For 2013, Lee sees the S&P 500 ending the year at 1,580 while Bianco sees it going to 1,500.
Both targets are higher than the S&P’s recent close, but neither of those come close to 1,660, the year-end target for Federated Investors’ Stephen Auth.
Vito Racanelli spoke to Auth for this week’s Barron’s cover story:
Stephen Auth, Federated Investors’ chief investment officer, is concerned about the short term, as well, although his year-end S&P target, 1660, is a high for our group of 10. He’s betting investors eventually will return to the market in force as concerns about global growth ease. “A pullback of 5% to 10% is coming,” says Auth, who would view such a selloff as an opportunity to invest at lower prices. The market multiple, he says, could expand later if the “risk environment” improves.
“We like tech in the global cycle,” adds Federated’s Auth. “There are global U.S. companies in the sector that are better credits than the U.S. government.” He favours Qualcomm, which he calls the premier “arms dealer” to warring mobile-device makers Apple and Samsung Electronics (005930.Korea).
Auth sees S&P earnings climbing to $106 in 2013, assuming GDP grows 1.4 per cent and the 10-Year Treasury yield stays low at around 2 per cent.
Last year, Auth predicted the S&P would end 2012 at 1,450, 37 points away from Friday’s close.