In a recent article in Kiplinger’s Personal Finance Magazine, associate editor Amy Bickers looked at Stocks to Buy Before the Recovery.
Bickers notes that in the last recovery, retailers like Nordstrom and Penney shot up 60% in the 6 months after the recession of 2001 ended. Rather than buy individual retailers, she recommends State Street’s Consumer Discretionary Select Sector SPDR (XLY), that has holdings in big-store chains and also in brand names, such as Disney and Nike.
To benefit from a pick-up in business spending, Bickers suggests ETFs that focus on materials or equipment makers. Vanguard Materials ETF (VAW) owns DuPont, Dow Chemical, Alcoa and seed producer Monsanto. Another industrial play is the Vanguard Industrials ETF (VIS).
Since technology also usually leads a recovery, Bickers includes iShares Dow Jones U.S. Technology Sector ETF (IYW) in the article.