The impressive trading action on Wednesday holds an important lesson for investors. In the absence of any dire economic news, investors are playing a bullish hand.

Earlier in the week, economic woes in Europe had pushed many to the sidelines. With a sense that a fresh crisis in Europe can be averted (at least as seen by the euro’s rebound on Wednesday), investors marked up stocks with big gains across the broad. By that logic, a reasonably benign global economic picture in 2011 could keep investors in a buying mood.

Where will they turn? Growth stocks. At this phase of the economic cycle, investors tend to gravitate toward companies with the most robust growth prospects. With that in mind, here’s a look at companies in the S&P 500 that are expected to at least double their profits in 2011. If we are indeed on the cusp of an economic upturn that lasts into 2012 and beyond, then profits for these firms are likely to keep growing.
 

Even as these companies are expected to post solid profit rebounds next year, their share prices have also been on the rise and most don’t appear to be bargains in the context of near-term profits. Instead, if you think that 2011 is just the start of a profit rebound, then it pays to look at these stocks in terms of their peak earnings performance (I went back and looked at the strongest year of profits of the last decade for each company).

When viewed in that light, some of these stocks are quite cheap: The major steel and aluminum makers and a number of banks trade for less than five times peak earnings. Then again, staffing stocks Monster Worldwide (NYSE: MWW) and Robert Half (NYSE: RHI) are no bargain, trading for more than 15 times their best year ever.

Looking at peak profitability may be a bit misleading. Alcoa (NYSE: AA) and U.S. Steel (NYSE: X) benefited from runaway prices in 2007, and it’s unlikely we’ll see such a bubble again anytime soon. I still think Alcoa can earn more than $2 a share within a few years, which makes the stock pretty appealing at a recent $13. [Read why I think it’s the best rebound play in the Dow]

In a similar vein, I’m bullish on online brokers if individual investors continue to show their enthusiasm for stocks once again. E*Trade (Nasdaq: ETFC), which has rebounded from a very bad bet on mortgages, remains one of the leading choices for retail investors, which I noted recently.

The long-term winners
Yet it’s the regional banks and financial services firms that may be the most appealing names in this group, as they have yet to truly rebound from the 2008 economic crisis but are poised for significant sales and profit growth in the next five years if the U.S. economy can generate a sustained rebound.

For example, analysts think Comerica (NYSE: CMA) can boost earnings per share (EPS) sharply next year to around $1.70, yet they also think profits can rise more than +50% again in 2012 to around $2.80 a share. By next year, analysts may start to look even further out, projecting EPS of north of $4 within a few years. Meanwhile, shares trade not far above tangible book value of $32.

Comerica routinely offered a dividend in the $2.00-$2.50 range until the dividend was sharply cut in 2009. It may be a year or two before the dividend payout moves back north of $2, but shares would yield close to 6% if profits rise as expected and the dividend is restored.

In a similar vein, Huntington Bancshares (Nasdaq: HBAN) may appear reasonably valued at around 13 times projected 2011 profits. But the fact that shares trade for just three times peak profits should get your attention. Huntington is heavily exposed to the auto loan market, and if auto sales rebound in coming years as many suspect, then this segment should be a solid driver for profits. The company has long been bandied about as takeover fodder, but it could also look to make acquisitions, as many smaller regional banks could be digested in a profit-boosting fashion. As a last bit of context, Huntington used to offer an annual dividend of around $1 a share. With shares now below $6, an eventual return to that payout would be a major boost for shares.

Action to Take –> It’s important to play close attention to the economy. We may be on track for further muddled growth in 2011 — or we just might be at the start of a robust economic upturn.
 
If we are indeed headed for faster economic growth, then many investors will start to look ahead to find the great growth stories of 2012 and beyond. The companies in the table above look like the names to watch.