Back On Track

4/19/08 Saturday 7:18 PM CT

By Dave Harris

Strong quarterly results of late have confirmed the blue chips are doing just fine despite the credit crisis. Inflation isn't too bad either, with the core figure up .2 percent in March. What a week for stocks! The Dow 30 gained 4 and a quarter percent, the broader S&P also well over 4 percent. And the NAZ gained almost 5. Equities are obviously turning around here. Look at the Google (GOOG) action. EPS was 4.84 p/s and well above expectations, as the stock soared above $540 a share. Despite the sour economic conditions, earnings from companies have been pretty good from the likes of equipment maker Caterpillar (CAT) and IBM (IBM) to name a few.  This week we've got more to come from the big cats like Halliburton (HAL), drug companies Merck (MRK) and Norvartis (NVS) on Monday. Tuesday it's AT&T (T), paper maker Kimberly Clark (KMB), McDonalds (MCD), and the KFC and Taco Bell master YUM brands (YUM). Aerospace company General Dynamics (GD) is Wednesday. Thursday it’s American Express (AXP), 3M (MMM), Bristol Meyers (BMY) the pharmaceutical, and Microsoft (MSFT).

As far as economic data, existing home sales come out early this week and Thursday initial jobless claims and new home sales are revealed. I doubt they we’ll be major market movers. It's all about earnings.

Let's get into some of these earnings. Caterpillar (CAT) is looking pretty good here. Full year's earnings and sales look strong going into the next year. EPS of 1.45 was well above views and the first quarter was hot. I would buy the stock here. CAT is at 85.28 and should go to $90. It's not too late to get Google (GOOG) despite the recent run-up. Drug-maker Abbott Labs (ABT) had a decent quarter up by 34 percent. Last week ITT Corp (ITT) the machine producer raised its full-year and first quarter earnings guidance.  That stock is a buy in my book.

I'm not as bullish about the home builders despite some recent upside. March home construction was horrible. That means stay away from KB Home (KBH) Lennar (LEN) and DR Horton (DHI). Housing is going to take a while to cycle back. There are plenty of good companies to buy. I would stay away from the losers.