Eaton Vance's Perkin: Buy quality cyclical names

Consumers help dictate best value plays
Consumers help dictate best value plays   

On the tailwind of a better-than-expected jobs report on Friday, Eaton Vance's chief equity investment officer believes now is a time to buy into cyclical, value stocks.

Eddie Perkin told CNBC's "Halftime Report" that recent data like Friday's nonfarm payrolls and last week's durable goods orders are signs of strength for the U.S. economy.

"There was too much fear that we were going into recession," he said, "There's a lot of signs now starting to build that the economy is in better shape than we think."

Given current economic conditions, Perkin thinks that value stocks are more interesting.

"Even if we're not in a booming economy, the relative valuation differences between value stocks and growth stocks both the sectors and within each sectors now heavily favor value and being more oriented to the value part of the market," he said.

Perkin's sector picks reflect his optimistic outlook on the economy and the U.S. consumer. He likes United Technologies, Target, and U.S. Bancorp, saying that they're all well-managed, quality companies with greater-than-average cyclical exposure. Perkin adds that they also have healthy balance sheets and intact dividend yields between 2.5 and 3 percent, which he points out is higher than the current yield of the 10-year U.S. Treasury.

"I like UTX for its exposure to elevators and air conditioners and aircraft engines and all those good-end markets. Honeywell is obviously interested in buying the company on the cheap. So are we. Whether it goes through acquisition and you get a premium out of a deal, that's fine. We're happy to own it for the next three years on an organic basis, as well," he said.

While Perkin likes the financial sector overall, he picked U.S. Bancorp because it is better positioned and less dependent on lending for revenue growth.

Disclosure: Eaton Vance owns shares of United Technologies, Target and U.S. Bancorp.