DAVE HARRIS: Welcome to another podcast of Dave On Stocks. I'm Dave Harris. This is show #46 for Wednesday March 7, 2007. I'm a long term investor with a diversified portfolio of stocks.

It looks like the market is in rebound mode. Despite some discouraging economic news, I think investors are simply doing some bargain hunting after last week's tremendous sell off. I think the correction will be a short one, and expect the broader indicators to continue their rebound. The volatility will go on for a few weeks. I'm also encouraged by the recovery of the Asian and European markets.

Labor costs in the fourth quarter were up 6.6% and higher than expected. The Fed watches this to determine inflation pressures. I would like to have seen a stronger productivity reading. The 1.6% increase was slightly lower than expected. Still, I wasn't too surprised because the latest GDP was lower at 2.2% as reported earlier. Is the economy slowing down too quickly? Sure, factory orders fell by 5.6% which was more than the 4% decline expected. But I encourage you to keep in mind what Fed chairman Ben Bernanke said. We should expect moderate economic growth this year.

So what do you do in the economic environment? I encourage you to do some buying and think large cap stocks are the way to go. Here are my favorite areas now: Tech, Healthcare, Consumer and Industrial Goods.

I think technology stocks look great going forward and recommend Apple (ticker AAPL), maker of iPods and PCs. The last earnings for the fiscal first quarter beat expectations. Most recently, Google (GOOG) said they would work more closely with Apple. I think Apple is a steal here at $88.19 per share. That stock is going to $105. I also like Microsoft (MSFT) and semiconductor company Intel (INTC), which is much better than AMD as a long term investment.

For healthcare I like Johnson & Johnson (JNJ). They recently had a great fourth quarter with a 3.5% increase in profit. JNJ is going to $75. It closed Tuesday at $61.70 per share.

The best stocks in consumer goods include home and laundry products maker Proctor & Gamble (PG). Last quarter's 11% increase in sales and solid full year guidance of a 10-12% sales rise tells me this stock is really cheap now. It closed yesterday at $62.94 per share. It's a buy and I think it's headed to $80. I also like Pepsi Co (PEP) here at $63.26 per share. It should be going to $75.

Look at Caterpillar (CAT), maker of construction and farming machines. The company has a $7.5 billion stock buyback program in play, and you'll want to own this one especially once the Fed cuts rates. The stock has been lower because of their involvement in China. But as I mentioned, the Asian market is recovering. They are also in correction mode. I like CAT here at $63.62 per share.

The shopping mall REIT Simon Property Group (SPG) is a steal here at $109.07 per share. Just last week it was around $112. This is my favorite real estate investment trust with strong fourth quarter results recently. It's going to $120 per share.

We still have some important economic data ahead. Thursday, it's a report on initial jobless claims. Then on Friday it's non-farm payrolls, average hourly earnings and average workweek data for last month. We'll also see how the labor market is shaping up with a read on unemployment. A report on international trade from the Commerce Department is also Friday.

Yesterday, the DOW gained 157.18 points to close at 12,207.59. The NAZ went up 44.46 to 2,385.14. The S&P climbed 21.29 to 1,395.41.

That's all for today's podcast of Dave On Stocks. I'm Dave Harris. I'll talk to you again soon with another show. Write me with any comments or questions at the "contact us" link on this page. My website is www.daveonstocks.com. This is Dave On Stocks.