Solid Earnings Coupled with M&A Activity Illustrates Opportunity

Global markets have fluctuated wildly in recent weeks, as investors jockey to protect themselves amid an onslaught of debt problems, political bickering, and renewed recession concerns. Less spoken about is some of the better economic news that continuously pops up across the world. Earnings at many companies have progressed strongly since the financial meltdown of 2007-8, and more growth is projected. A pickup in mergers and acquisitions activity is also a positive indicator. On Monday alone, there were multiple $1 billion+ deals announced, as companies plunked down significant capital to add businesses. To be sure, consumer and business confidence is tepid at best. The economic environment still carries an element of uncertainty, and businesses have been reluctant to hire and invest. The nation's unemployment rate is proof-positive of that reality. More optimistically, however, there are opportunities in this business climate. There are examples of organic growth and growth through purchase or merger. Home Depot HD and Walmart WMT both posted respectable earnings Tuesday, especially in light of the consumer's propensity to close purse strings when clouds darken. The customer-driven companies also raised earnings guidance. M&A has allowed Google GOOG to further entrench itself in the mobile device market, with a stand-alone handset manufacturing business in Motorola. A $12.5 billion deal would have been unthinkable a few years ago. Time Warner TWC, Cargill CARG, and Transocean RIG all announced new deals this week. While there are obviously dark spots in the global economy, there are many opportunities to invest. New possibilities crop up every day, and astute investors are keeping an eye out. Are you one of them?