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Could it be? More growth in the U.S. economy than expected?

It looks increasingly possible. If until recently I was looking for a growth rate of "muddle through," now I'm anticipating something like "muddle through plus" for the rest of 2012 and into 2013.

In numbers, that means I now think the U.S. economy has a good chance to grow faster in the first quarter of 2013 than the 1.6% consensus among economists surveyed by Reuters. And to better the 2.1% growth forecast in the second quarter of next year. Not by much, mind you. The 2.5% top in the Federal Reserve's long-term growth forecast for the United States probably will continue to elude us. And a 2% or 2.25% growth rate is pitiful for a recovery from a recession --or even a bounce from a slowdown from a recovery from a recession.

There's nothing here to get giddy about; 2% instead of 1.6% isn't going to send job growth rocketing or make stressed consumers suddenly feel flush. At 2% or 2.25% growth, people are still going to be looking for bargains and watching dimes, if not pennies.

But even this kind of very modest improvement will change the investment landscape -- and it should be reflected in your portfolio. Let's talk about how.

image: Jim Jubak

Jim Jubak

A slow-growth portfolio

I'm not talking about so much growth that I'd go out and load up on cyclical stocks, those most sensitive to the economy, or on high price-to-earnings-ratio growth rockets. The recovery from the global financial crisis hasn't been that kind of recovery. And I don't think this bump-up in growth will change that.

But it does mean that consumer and retail companies that offer the right combination of savings, service and quality could be the stars of the stock market over the next six to eight months. Stocks that fit that description don't necessarily trip off investors' tongues, and they don't have an automatic place in most portfolios. But at this juncture, with the economy looking like it might be better than "muddling," I think it's worth taking a look around at potential candidates for a "slow growth" portfolio.

Before we get to individual stocks -- and I'm going to give you five -- let's take a brief survey of why things might be ever so slightly better than they seem.

Home, auto sales look strong -- sort of

One place to start is "surprise" indexes, such as the Bloomberg Economic Surprise Index and the Citigroup Economic Surprise Index. The Bloomberg index compares 38 economic indicators with analyst predictions. The index was up on Oct. 12 to a minus 0.06, from the low for 2012, earned in July, of minus 0.42. The Citigroup index is even more positive -- if you can say that about an index scored in negative numbers. In its Oct. 12 report, the index rose to a minus 49.4 from its low of a minus 65.3 on July 19. (The negative numbers suggest the analysts have been too pessimistic.)

Where are the surprises in the economy? One place is sales of previously owned homes, which climbed 7.8% in August, to a two-year high. Another is the S&P/Case-Shiller index of home prices in 20 cities, which is up 8% since March. Or auto sales, which reached an annual rate of 14.9 million in September. That's the fastest pace since 2008.

This is good news, but let's keep it in context. We're talking about two-year highs that compare current levels to those of 2010. Or a 14.9 million annual rate that looks really, really good against an annual rate of auto sales that bottomed in the 9 million-to-10 million range in 2009. That 14.9 million number, however, looks pitiful against the 17.6 million annual rate of January 2006. That was BGFC -- before the global financial crisis.

The single biggest reason to think that growth might be better than expected is the pent-up demand in the housing sector. When workers were afraid of losing their jobs, when families were cutting back on expenses, when neighbors were losing their homes, demand for housing as housing -- that is, not as an investment or a financial asset -- was below historical trends.

For example, the rate of household formation had been remarkably steady from 1958 to 2007 at about 1.4 million new households a year, according to JPMorgan Chase. But in the three years following the global financial crisis, the rate in the United States fell to 500,000 a year. We all know why and how -- younger people without jobs, unable to find good-paying jobs or saddled with big debt moved in with their parents or doubled up with roommates. The rate of household formation has, however, doubled from that bottom, and it is likely to climb even higher as the rate returns to something near its historical trend.

The population didn't stop growing during the Great Recession, either. The fastest-growing demographics are the over-55s, who by and large already own homes, and the grandchildren of the baby boomers, who by and large don't. JPMorgan Chase estimates that the United States will need 6 million new housing units by 2017 to meet the demands of a larger population.

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5 stocks worth a look

In picking a slow-growth portfolio, housing is a good place to start. In the sector, I'd suggest taking a look at these stocks first:

PulteGroup (PHM), which focuses on the over-55 and first-time-buyer segments. (In 2001 PulteGroup acquired Del Webb, the biggest builder of active adult communities.) Offering homes with an average selling price of $259,000 in 2011, down from $322,000 in 2007, the company is counting on first-time buyers, who are more likely to benefit from what looks like a gradual loosening of credit requirements for mortgages at U.S. banks.

Lumber Liquidators (LL), which is the largest retailer of hardwood flooring in the United States with more than 280 stores -- up by 40 stores in 2011. The company uses its size to buy big volumes directly from mills and then sells flooring at "liquidator" prices. Comparable-store sales climbed by 7.5% in the first quarter of 2012 and by 12.4% in the second quarter.

In more general retailing I'd suggest:

Costco Wholesale (COST), which just reported third-quarter results that included a 5% increase in same-store sales on a 4.5% increase in store traffic. This comes despite higher membership fees. Operating margins increased by 0.2 percentage point. Costco runs relatively few stores -- just 439 in the United States -- in comparison with competitors such as Wal-Mart Stores (WMT), with more than 3,800 outlets in the U.S. and more than 5,000 in other countries. (Add in Sam's Clubs, and Wal-Mart's retail outlets top 10,000.) But Costco scores about 2.3 times as much in sales per square foot as Wal-Mart.

Dollar General (DG), which is the largest dollar store operator in the United States. Because it offers more consumables than its competitors, it is the most likely to be on the weekly shopping run of families looking to stretch their dollars. In the second quarter, the company posted comparable-store sales growth of 5.1%. That was impressive, since it came after hard-to-match 5.9% sales growth in the year-earlier quarter. Because the company continues to expand the share of consumables in its sales mix, gross margin fell to 32% in the second quarter, down 0.13 percentage point from the second quarter of 2011. But the company was able to cut costs to keep the EBIT (earnings before interest and taxes) margin at 9.8%, a historic high for a second quarter.

For my last slow-growth pick, I suggest:

Zipcar (ZIP), which has slowed down quite a bit from the heady days in April 2011, when its initial public offering soared from $18 to $30. The stock closed at $7.34 on Oct. 12. Even at that price, Zipcar isn't exactly cheap, with a trailing 12-month price-to-earnings ratio of 245 and a projected forward P/E of 37. And I wouldn't buy it here -- I'd like to see the results of the company's Oct. 31 earnings report, at a minimum.

But the company's concept might be a great match for a slow-growth economy. The company rents cars by the hour in major cities and at universities in the U.S. and overseas. The cars are garaged in neighborhoods, and instead of going to a central car rental office, a member books over the Internet and then calls the garage where the car is stored (or goes to the parking spot on the street) and swipes a "zipcard" into the car's onboard controller. The company's computers have told the car to expect the driver.

What's neat about the service isn't just that it's perfect for running an errand and convenient for an overnight trip, but also that you can sample cars that are a long way from the standard rent-a-car Camry or Chevy. Here in New York, a member can drive a Mini Cooper, a Honda hybrid, an electric Ford Escape, an Audi A3 or Q5, a Volkswagen Golf or a BMW 328i -- as well as a more typical mix of Nissans and Mazdas. It's a way to sample a cool car without shelling out the big bucks to own or even rent one from a conventional rental car company.

I think there's an economic model here that's exactly suited to a slower growing, more constrained economy -- but one in which consumers haven't lost their desire for fun. (And I wouldn't mind finding a few more companies in this vein.) I'd like to see how the company handles growth and its capital spending plans for a few more quarters -- or longer. But this is one pioneer that I think might be worth watching both for its own prospects and for the insight it provides on a new economic model made possible by the Internet and a less-than-exuberant economy.

Updates to Jubak's Picks

These recent blog posts contain updates to the stocks in Jubak's market-beating portfolios:

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At the time of publication, Jim Jubak did not own or control shares of any company mentioned in this column in his personal portfolio. The mutual fund he manages, Jubak Global Equity Fund (JUBAX), may or may not now own positions in any stock mentioned in this column. The fund did not own shares of any stock mentioned in this column as of the end of June (although Jubak is a member of both Costco and Zipcar). Find a full list of the stocks in the fund as of the end of June here.

Jim Jubak's column has run on MSN Money since 1997. He is the author of the book "The Jubak Picks," based on his market-beating Jubak's Picks portfolio; the writer of the Jubak's Picks blog; and the senior markets editor at MoneyShow.com. Get a free 60-day trial subscription to JAM, his premium investment letter, by using this code: MSN60 when you register at the Jubak Asset Management website.

Click here to find Jubak's most recent articles, blog posts and stock picks.

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