Capital Spending Growth by US Companies to Take Years to See Levels Reached in 2006
May 13th, 2010
Unlike research and development (R&D), which, as we pointed out yesterday, has not seen severe budget cuts, the same cannot be said for capital expenditure budgets.
Although, for all S&P 500 companies, capital spending has rebounded from the Sept 2009 quarter, given lethargic top line and employment growth, we believe any quick snapback in capital spending is unlikely.
As the largest stock returns evolve from a turn of events, not a continuation of one, we are recommending investors (as we have) reduce their exposure to those effected sectors, and overweight sectors with ties to productivity improvements, low cost of capital and high ROIC.
For additional information call Kenneth Hackel, C.F.A. or Simon Adams
Categories: General
