Editor s Note: For our annual look at where to invest this year, we based our stock picks on three scenarios for the economy. Today: picks for investors anticipating the economy rebounding sharply.

The Premise: The most optimistic investment strategists point to several economic indicators as evidence that the economy can rebound strongly in 2010. Businesses are restocking inventories, exports are up, and consumers are still spending. Plus, companies have cut costs considerably, which could push profit margins higher. All that can bode well for the stock market, too.

Ingersoll Rand (

If the economy bounces back, industrial firms like Ingersoll Rand are going to have a lot of juice, says ING s Landesman. As manufacturers rev up idled factories and homeowners replace old appliances with more-efficient ones, demand for Ingersoll Rand s heating, ventilation, and air-conditioning systems and climate-control technologies should ramp up pushing sales and profits higher.

Even though the Irish firm said in October it was seeing signs of improvement in its residential business and some markets in China, demand was still sluggish. But the company said its efforts to cut costs and boost productivity would allow it to generate higher profits in 2010, even if markets stay weak. The extra cash those efforts are already producing has helped the company pay down its debt. Analysts on average forecast earnings could increase more than 30 percent in 2010. Even if the optimists are wrong, Ingersoll Rand s cost cutting will help it outperform its rivals, says Jeff Hammond, diversified industrials analyst at KeyBanc Capital Markets.

Jos. A. Bank Clothiers (

Men s clothier Jos. A. Bank has been wooing shoppers away from department stores and other specialty retailers with promotions like three suits for the price of one. The discounting has dented its margins, but the Hampstead, Md. based retailer has been able to offset some of that by striking deals with suit manufacturers in Asia, says Eric Marshall, comanager of the Hodges Small Cap fund. The promotions helped the company sell $329 million in the first half of its fiscal year, an 11 percent increase from the same time a year earlier. That bodes well for the $700 million company even as the economy recovers, because once a guy discovers a store, he stays with them, says Margaret Whitfield, retailing analyst at Sterne Agee.

The stock hit a 52-week high in the fall but still trades at, in Whitfield s estimation, a reasonable valuation, leaving plenty of upside for a company that is likely to increase its store count.

BB&T (

When it comes to investing in financials, sticking with the survivors is where you can make money, says David Ellison, manager of two financial funds for FBR Capital Markets. It s one reason he likes regional banks, including BB&T, a well-capitalized bank that bought failed Colonial BancGroup with government help to expand further into the Southeast.

While the Winston-Salem, N.C. based bank has faced rising loan losses as borrowers struggle to pay them back, it has managed to stay profitable. They have paid back the government and haven t lost money yet, which puts them in a better spot than others, says Jefferson Harralson, regional banking analyst at Keefe Bruyette & Woods. The company s construction and home-builder loans could pose a problem if the commercial real estate downturn gets worse, but it didn t bankroll many giant commercial projects where many of the most recent financial troubles have been centered. The average commercial real estate loan financed by BB&T is only about $543,000, Kelly King, the bank s CEO, told analysts this fall. Analysts on average expect profits to rise 41 percent in 2010 from 2009.

The stock surged since its low in March 2009 but still lags behind some other financial stocks. Some analysts see further upside, citing BB&T s mostly conservative loan underwriting and a capital cushion that should allow it to thrive while rivals struggle.

Kirby (

Kirby s business is decidedly unsexy it operates more than 900 barges, sending them up and down rivers throughout the U.S. But with two-thirds of its business coming from transporting plastics and other petrochemicals, this company is among the earliest beneficiaries of an economic recovery, analysts say.

Already this past fall, Kirby was shipping more than it had during the same period in 2008. Analysts were encouraged by company executives comments indicating 2010 would be an improvement over 2009. Coming from a conservative firm, the outlook carried weight. Kirby rarely goes out on a limb, says Jefferies shipping analyst Douglas Mavrinac. The Houston-based company reduced its debt ahead of the recession and was able to take some market share away from rivals. On a valuation basis, Kirby isn t expensive, either. They have staying power and will come out stronger than they were before the downturn, adds Hodges of the Hodges funds.

Where to Invest 2010:
* Intro / The Recession Returns
* Plodding Along
* The Economic Fast Track