The stock market continues to grind higher. And you can give the U.S. economy the tip of the cap for the recent gains. Recent data points imply that the incipient economic strength we saw last fall has continued into 2012. If this trend remains in place, then the economically-sensitive stocks in my $100,000 real-money portfolio will surely benefit.



Ford (NYSE: F) is a great example. Though I recently took stock of a subpar fourth quarter, I also think many investors underestimate the rising demand for cars and trucks. Ford saw its sales rise 7% in January (compared with a year ago), in line with the industry’s growth rate. And if the full year’s sales grow at this pace, then Ford is well-positioned to meet or exceed 2012 estimates — assuming Europe doesn’t fall off a cliff. The fact that Europe is inching closer to a resolution of its various crises could also boost results as European consumers feel comfortable enough to purchase new cars and trucks again.

Perhaps one of the best data points around to gauge the economy‘s health is the spot price of aluminum, which appears to have bottomed out at around $0.91 a pound in early January, but recently moved back up above $1. Alcoa (NYSE: AA) and other aluminum stocks have responded in kind, though they remain far below levels seen last spring. The Dow Jones U.S. Aluminum Index has moved above its 100-day moving average, a bullish sign.

To push aluminum prices higher, the industry’s key players are showing great discipline. Alcoa announced a series of production cuts in January, and just this week (Jan. 30), Russia-based United Co. Rusal announced plans to trim its output by roughly 5% in the next 18 months. These cuts are in tandem with moves by China to further curtail its aluminum output this year. This could help push aluminum prices back to $1.10 or even $1.15 a pound, which explains why I think Alcoa’s stock will likely post solid gains this year.

The stock is already up 20% this year, but at a recent $10.40, it’s well below the 52-week high of $18. Frankly, investors should brace for a slow climb, so a return to the $18 mark might still be a year or two away. 
 
Yet investors also need to brace themselves for a bumpy ride when it comes to some stocks. For example, LED lighting (light-emitting diodes) prices continue to drop, which sets the stage for a possible earnings shortfall for Cree (Nasdaq: CREE). The fact this stock is already up 23% in 2011 makes me anxious. All of these gains could be disgorged if Cree indeed delivers a subpar quarter. Still, I love this company’s long-term positioning and don’t intend to trade in and out of this stock based on short-term gyrations.

As for my other portfolio holdings, here are some other key events to watch in the coming month:

• Hasbro (NYSE: HAS) will deliver a more detailed quarterly report this coming Monday, Feb. 6. A week after that, I will be meeting with the company at the annual New York Toy Fair, which the company uses as a platform to discuss its goals for the coming year.

• On Friday, Feb. 10, battery maker Exide Technologies (Nasdaq: XIDE) will release quarterly results. This will be a nail-biter. If Exide delivers yet another bad quarter, then shares could quickly fall back to the 52-week low of $2.34 (from a recent $3.60). Yet if results are at least decent, then the stage could be set for a sharp rebound in the stock in the coming quarters.

•  The following Tuesday, Feb. 14, we’ll hear from Zipcar (NYSE: ZIP), which appears to have posted a solid quarter. It’s not a seasonally-important period — Zipcar does the bulk of its business in the spring, summer and fall — but investors want to see that all of the operating metrics are still moving in the right direction.

Action to Take –> More than half of my $100,000 allotted to this portfolio is now in play. As I get closer to being “fully-invested,” it may be time to cull certain names from the portfolio to raise fresh cash. (So make sure you don’t miss a single update.) It’s crucial to always have cash in reserve, as great opportunities arise unexpectedly, and it’s no fun to lack the funds to capitalize on them.

P.S. — We’re making David Sterman’s $100,000 Portfolio available at no cost, but only for a limited time. As a StreetAuthority.com reader, you’re getting the first look at my best picks. If you have any questions or comments, feel free to send me your feedback.