As the quest for yield continues, investors are favoring stocks over bonds. However, over the past few months they have shown an increased appetite for stocks that are more sensitive to economic growth—such as financials, energy and technology companies—versus those in the more defensive utility and telecommunications sectors. Validea CEO John Reese shares his insights on this shift in a recent article for The Globe and Mail.

While the movement toward cyclicals comes at a time when corporate earnings for the S&P 500 are falling, it may reflect expectations for better times ahead. A decision by the Fed to raise rates in the coming months would be interpreted by the market as an indicator of a positive economic outlook.

Reese offers the following high-scoring picks from the Validea database that are poised to benefit from this trend:

• HP Inc. (HPQ), which manufactures personal computers, imaging and printing machines, stands to benefit from an uptick in tech spending. A strong cash position and positive relative strength trend make this stock a strong momentum play.
• Hooker Furniture (HOFT) is a home furnishing and design retailer that boasts a favorable price to sales ratio, reflecting its discounted valuation.
• Fossil Group (FOSL) makes popular consumer fashion accessories and recently introduced a second generation of its smart watch, a growth market in the consumer gadget category. The company earns high marks for solid financials and a modest valuation.
• Robert Half International (RHI) is a staffing and human resources provider that could benefit from favorable job and hiring trends Its price to earnings ratio is also attractive.