With many favorable tailwinds, these two sectors should post large gains in the New Year. Bret Jensen has three favorite stocks in these sectors that he personally owns and wants to share with you today.

It is hard to believe 2015 is already coming to a close. It was a forgettable year as far as the economy and the markets were concerned. Major indices are largely flat as we turn the page on 2015. Without the outstanding performance turned in by the so-called FANG (Facebook, Amazon, Netflix, Google) stocks, most of these indexes would be significantly underwater. Roughly two-thirds of the largest 3,000 stocks in the market are currently off 15% or more off their yearly highs.

The global economy has not been anything to write home about this year as well. Worldwide growth is looking like it will clock in right at a three percent gain for 2015. This is the weakest global demand since the world started to emerge from the Great Recession in 2009. Worldwide activity is projected to tick up in 2016, but not by much. The domestic economy continues to muddle along at just over two percent growth for the year, about the average throughout what has been the weakest post-war recovery on record.

Manufacturing outside of auto production has been very punk this year and is hovering right at contractionary levels. The collapse of energy prices has slashed demand from that sector of the economy in 2015, a trend that will likely carry over into 2016 as energy producers continue to slash their capital budgets.  The implosion of other commodities like iron and copper has crushed demand for mining equipment and hurt several manufacturers like Caterpillar (NYSE: CAT) and Joy Global (NYSE: JOY). The strong dollar and tepid global demand have negatively impacted the vast majority of American manufacturers.

These headwinds should persist into the New Year. The one area of manufacturing I continue to like is auto production. 2015 will go into the books as one for record vehicle production with some 18 million vehicles produced.  Given the average age of a vehicle on the road is over a decade, plus solid job growth and low financing rate 2016 will be another good year for domestic auto sales.

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In addition, low gas prices have shifted the percent of overall sales going to high-margin trucks and SUVs up to levels not seen since 2005. Even the RV market is strong. It also appears the recent weakness in China vehicle sales is ebbing as vehicle purchases there are perking up again. Europe showed solid gains in auto registrations this year albeit off recessionary levels. Quantitative Easing should goose vehicle sales on the continent just like the Federal Reserve’s program did here over the past few years.  South America will remain problematic but that is a small part of global automotive pie and manufacturers have largely already took writedowns on their operations there due to currency impacts.

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I continue like and hold both Ford (NYSE: F) and General Motors (NYSE: GM). Despite improving fundamentals, neither stock did much in 2015 as it simply was not a market that rewarded value picks. That should change in 2016 and both equities will benefit as they are among the cheapest in the overall market. As importantly, both manufacturing icons should see solid increases in revenues and earnings in 2016. Both stocks go for less 7.5 times forward earnings, less than half the overall market multiple. In addition, both automakers provide yields right at four percent and could increase dividends again in the New Year. This is a better return than the overall market provided in 2015 and 2016 could be a similar story.

Homebuilders are another undervalued part of the market even as housing starts posted their highest levels since before the financial crisis.  If you look at the chart of homebuilder stocks in aggregate, you will see it has done nothing in 2015 despite nice earnings gains from myriad homebuilding companies.

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I think that changes in 2016. Despite housing starts posting their best numbers in years, we are still significantly below the 40-year average which has been the case since just before the financial crisis. This should mean years and years of pent up demand.  In addition, mortgage rates are near historical lows and credit standards are starting to loosen a bit. Add in solid job growth and the best household formation in nearly a decade, it is hard to see how housing does not continue to pick up outside of a recession.

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LGI Homes (NASDAQ: LGIH) remains one of my favorite homebuilders. The shares doubled earlier this year after I recommended them at $16.00 a share for the Small Cap Gems portfolio.  They have since given up some $10.00 a share on fears that because the company is based in Texas it would be negatively affected by the collapse in oil prices.

However, most of the company’s communities in Texas are not in energy dependent cities like Houston. In addition, about half the company’s new homes and most of its future growth is outside the Lone Star State. The company has consistently beat earnings expectations in 2015 and has a great growth ramp.  LGI Homes made just over $1.30 a share in FY2014 and should beat that by a buck a share or more in FY2015. The current consensus has LGI making $3.00 a share in profits next fiscal year. At a recent $23.00 a share, the stock can be had for less than eight times forward earnings despite that growth trajectory.