Jason Trennert, often ranked among Wall Street's top strategists, guides investing strategy at Strategas Research Partners, which advises institutional investors.
One that I like is L-3 Communications. It's a defense contractor. Unfortunately the world is a more dangerous place, and L3 is cheap relative to its peers. It's trading at about 10 times earnings. It has a 1.8% dividend yield, and it's had a very good record of both increasing dividends and buying back shares.
I think we've moved from an income-statement to a balance-sheet world -- access to and cost of credit is going to be one of the most significant determinants of which stocks outperform.
That, plus having access to foreign markets, which are probably going to grow faster than the U.S., are likely to be the most significant competitive advantages for companies over the next decade.
The big quality companies that have very strong balance sheets, access to foreign markets, and recognizable brands should win. Brands are extremely important in the developing world because they convey quality -- they give people confidence. I think the "big uglies," as in U.S. multinationals, are good places to be defensive.
As a strategist, I don't recommend individual names, but we have created what we call our Bull Dog Index of companies that have very strong balance sheets as well as great sources of foreign revenue.
Companies like Schlumberger, Coca-Cola, and Colgate-Palmolive are on our list. These stocks are not going to blow anyone away, but they should allow you to sleep well at night.