Investors should look past near-term headwinds for stocks – especially cyclical plays – to see upside through the year, Tom Lee of JPMorgan said Tuesday.
"If you look at history, they've generally been very good stocks to own when the economy is strengthening," he said.
"But they're also very good stocks to own when rates begin to rise partly because these aren't really search-for-yield instruments. This are really total-return investments."
On CNBC's "Fast Money," Lee noted that while he had been recommending cyclical stocks this year, they only started gaining traction since April.
Lee also said that companies had been adjusting guidance statements because of the federal sequestration, or across-the-board spending cuts.
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And although China has been weak, he added, European economic data was seeing improvement and could provide a positive surprise.
Lee's top sector picks included technology and health care.
While economies in Europe and emerging markets might still be lackluster, Lee added that cyclical companies could nevertheless continue to improve their bottom line from improvement in the United States.
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"We have to remember cyclical companies generate earnings wherever global growth takes place," he said.
Trader disclosure: On July 2, 2013, the following stocks and commodities mentioned or intended to be mentioned on CNBC's "Fast Money" were owned by the "Fast Money" traders: Steve Weiss is long M; Steve Weiss is long C; Steve Weiss is long BAC; Steve Weiss is long F; Stephanie Link is long AAPL; Stephanie Link is long GS; Stephanie Link is long JPM; Stephanie Link is long WFC; Stephanie Link is long CSCO; Stephanie Link is long EBAY; Josh Brown is long AAPL; Josh Brown is long WFC; Joe Terranova is long VRTS; Joe Terranova is long TRV; Joe Terranova is long AXP; Joe Terranova is long OXY; Joe Terranova is long CRUDE OIL FUTURES; Joe Terranova is long MINI S&P FUTURES.