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His idea: Energy stocks
Lutts predicts that domestic energy production will continue to expand, fueled by new technology. He's especially interested in companies that make equipment for specialized production methods, and has an eye on a Houston-based company called Dril-Quip Inc., which makes equipment for deepwater drilling.
The U.S. is producing more crude and natural gas. The International Energy Agency predicts the U.S. will become the world's biggest oil producer by 2017, and will produce all the energy it needs by 2035.
"If you're going to pick one cost that impacts all of America, it's energy," Lutts says. "And it's unappreciated, how the energy industry has been turned upside down by new innovation."
Margie Patel, senior portfolio manager at Wells Fargo Capital Management in Boston
Her idea: Consumer stocks
Patel likes companies that make "the products we all consume every day," from groceries and cosmetics to cleaning supplies. Returns can be more modest than in other sectors, at least when the market is rising, but they're also more stable in bad times. Lower prices for some of the commodities that companies need to make their products will trim costs. On Friday, the Thomson Reuters/University of Michigan monthly survey reported that while consumer sentiment came in slightly below expectations in June, May was at a nearly six-year high.
"The population is growing, and people have a little bit more money in their pocket to spend on a range of products," Patel says. And while the U.S. economic growth looks only moderate, she says, "it's still positive growth, and it's still sustainable."
Mickey Segal, managing partner at Nigro Karlin Segal & Feldstein in Los Angeles
His idea: Apartments
To Segal, it's a great time to buy apartment-related investments, thanks to a combination of high demand and low supply.
He thinks that more people will have to rent apartments because it's tough to qualify for a home loan. And with higher mortgage rates all but inevitable as the Fed prepares to pull back on bond buying, some lower-income buyers may not be able to afford a home. Already, U.S. homeownership is at 65 percent, its lowest rate since 1995, according to the Census Bureau.
Another trend that could encourage renting is the tighter supply of homes. In some areas, investor groups are buying up houses for rental properties and hoping to sell them later for a profit. That limits the number of homes for sale. The National Association of Realtors, which advocates for home buying, says there aren't enough existing homes to keep up with demand.
There also aren't as many new apartment units coming on line. Builders broke ground on new apartments at an annualized rate of 234,000 in April, compared with 351,000 at the same period in 2005. And while construction was up this April compared with a year ago, it was still down 40 percent from the previous month.
Put it all together and you can expect higher rental prices. The median asking rent for a vacant apartment was $718 per month in the first quarter, according to the Census. That was roughly flat from the year before, but up 5 percent from two years ago.
"You have more people looking for a place to live who either lost their homes or couldn't afford their homes," Segal says. "And there's been no new real development happening for a few years."
AP Business Writer Jonathan Fahey contributed.