Investing in Capital-Goods Stocks. MARKETWATCH

WHEN it comes to the stock market, the consensus can be quite wrong, says Jeffrey Applegate. Mr. Applegate is executive vice-president and an investment strategist with Tucker, Anthony & R.L. Day Inc. The consensus for the moment is lining up behind consumer-goods stocks, he says. Applegate, however, believes that the underlying market fundamentals support an entirely different segment - capital-goods stocks.

According to Applegate's analysis, the market is in the third year of an economic cycle boosting capital goods. Historically, he says, ``the average capital-goods cycle runs 108 months.'' If his thesis is correct, the current capital-goods cycle has roughly five years yet to run. That cycle should continue, he argues, despite what happens to interest rates in the weeks and months ahead.

Not all market-watchers here agree with Applegate that capital goods stocks are dominating trading or are assured of the best growth potential.

``This is a very volatile, issue-oriented market,'' says Larry Wachtel, a market analyst with Prudential-Bache Securities. ``It's not an all-embracing market. The theme is constantly changing.''

One day, Mr. Wachtel says, ``the emphasis involves energy, say oil stocks. Another day it's consumer stocks, say food. Then technology, part of the capital-goods area. But it's not any one thing. The only thing we can say with certainty is that the market is a grudging success story, with a steady ascent.''

Both Wachtel and Applegate see stock prices going up over time. Indeed, Alan Shaw, who heads up the technical research branch of Smith Barney, Harris Upham & Co., argues that the market is on a long-range upswing. Earlier this year Mr. Shaw saw a ``new bull-market leg'' under way. But he concedes that there has been some ``near-term deterioration'' in the market's advance, with the Dow Jones industrial average as of late last week hovering in the 2,300-point range. (The post-crash high this year is 2,347 points, reached on Feb. 7.) But Shaw (and Smith Barney) still believe that the intermediate to long-term trends continue to favor growth and a new bull-market leg.

Assuming that the trend is long-range growth, no matter what happens to the overall economy, is there validity in concentrating on any one segment within the market, say capital goods?

Writing in this month's issue of the Mutual Fund News Service, Reg Green, a market analyst based in San Rafael, Calif., contends that ``investors who jump from sector to sector hoping to capitalize on market movements can make a lot of money - or lose their shirts.''

Mr. Green uses a table compiled from Standard & Poor's data to illustrate his point. Sectors that are on top of the market heap one year tend to fall the next, he says. ``Today's lackluster sectors, which investors generally shun, become tomorrow's stars.''

From 1984 through 1988, tobacco was the only sector to be on top more than once, says Green. Textile and apparel stood near the top two of the years and were close to the bottom in the other three. Entertainment ranked high one year, came in second another year, and was below average in each of the other three years. And so on.

Current market expectations are centered on consumer-goods stocks - especially consumer non-durables, such as food and beverage stocks. The reason: The economy has been slowing, and were there to be a recession - with a resultant slowdown in consumer spending - the one area where folks would presumably continue to spend would be in the food area. Economic slowdown or not, people have to eat.

Applegate agrees, but argues that underlying fundamentals within the economy, such as the slightly higher rate of savings within the United States and stepped-up US exports abroad, support the capital-goods sector. Since October 1988, he points out, capital-goods stocks have been outperforming consumer stocks. Production, he says, is replacing consumption as the ``primary engine of economic growth over a multiyear period.''

So Applegate is not saying that investors should overlook all consumer stocks or stocks in any other market segment. He is saying that, given underlying trends within the US economy, the majority of folks so heavily lined up in favor of consumer stocks instead of capital-goods stocks might soon find that they are on the wrong side of the railroad tracks.