?4 Cheap Stocks To Buy That Will Beat The Market In 2016

My regular readers and subscribers know that I am not sanguine about the prospects for the New Year. I believe the same factors that caused profits in the S&P 500 to fall year-over-year in will still be firmly in place in 2016. This includes anemic global growth. Worldwide demand is at its lowest levels since 2009, and I don’t see much on the horizon that will change that in the upcoming year. Japan is back in an official recession, Europe is barely bumping, China’s growth is decelerating sharply, and the United States remains stuck in the weakest post-war recovery on record. In addition, if the collapse in energy and commodities continues in 2016, many emerging markets could find themselves under extreme credit distress. These markets include Argentina, Brazil, and Russia.

In addition, with the Federal Reserve about to raise interest rates for first time since 2006 and both Japanese and European central banks continuing to flood their markets with liquidity the only way for the greenback to go against major currencies is up in 2016. This trend is already beginning with the Euro posting its worst month against the dollar in November since March. The euro is now down 12% against our currency over the last year and King Dollar will continue to cut into the profits of the American multinationals that make up most of the S&P 500 in 2016.

On a somewhat brighter note, profits might be able to increase in the low to mid-single digits next year. Energy and commodity earnings should be easier in 2016 than they were this year since they already fell some 60% and cannot go much lower. In addition, companies are projected to buy a record amount of their own stock back in 2016 which will help boost earnings per share.

I think the way to play the market as we open 2016 is to have a higher than usual allocation to cash in one’s portfolio than normal as I believe there will be better buying opportunities as the year progresses. I am also allocating more of my portfolio to what I call cheap value stocks that should be able to navigate 2016 okay and do not have much downside should 2016 turn out even weaker than I expect. These stocks are already selling for significantly less than their intrinsic value and also pay a generous dividend yield of at or above four percent. Here are four of these type of equities I have recently initiated a position in or adding to an existing stake.