4 top global market themes: Strategist
Four themes will provide the next leg of the four-year stock market rally, Savita Subramanian of Bank of America Merrill Lynch said Tuesday.
"Our four themes are pretty simple," she said. "We think it's time to move out of the more U.S.-centric stocks and sectors and go globally diversified."
On CNBC's "Fast Money," Subramanian said that there was significant potential in buying global diversification, low-fundamental beta, cyclical growth and dividend growth.
"In every sector of the market right now, the stocks that only sell to the U.S. are trading at higher valuations than the stocks that trade outside of the U.S.," she said. "And I think it's because in the last several years, investors have shunned Europe, they've shunned China, and they've all kind of moved into this very safe, you know, the best house on a bad block.
"The U.S. has been the beneficiary of a lot of funds fleeing other regions of the world."
Subramanian said that stocks with foreign exposure are trading at the lowest valuations in a decade, and that would create more upside.
"We're going from negative to positive, and normally regions that go from negative GDP to positive GDP have the strongest returns," she said. "You have to get more cyclical. Our favorite sectors are tech, industrials and energy."
Subramanian said that energy was her top contrarian play.
"We're now at a point where investors have the biggest 'underweight' in energy we've seen in at least five years," she added. "So, if anything even remotely positive happens on the global economic backdrop, energy's going to move, industrials is going to do well, and tech is going to be a beneficiary, as well."
Industrials, too, held promise, Subramanian said.
"The way I see industrials, you want to buy the big, globally diversified names that nobody really owns. That would basically be the conglomerates," she added. "It would be the GEs, the 3Ms. I'm not a stock person, but I think that if you buy the conglomerates, you're getting the advantages of being globally diversified."
— CNBC's Michael Newberg contributed research to this report. Follow him on Twitter @mikenewberg.
Trader disclosure: On July 30, 2013, the following stocks and commodities mentioned or intended to be mentioned on CNBC's "Fast Money" were owned by the "Fast Money" traders: Guy Adami is long C; Guy Adami is long GS; Guy Adami is long INTC; Guy Adami is long MSFT; Guy Adami is long AGU; Guy Adami is long NUE; Guy Adami is long BTU; Guy Adami's wife, Linda Snow, works at Merck; Karen Finerman is long AAPL; Karen Finerman is long BAC; Karen Finerman is long C; Karen Finerman is long JPM; Karen Finerman is long GOOG; Karen Finerman is long EBAY; Tim Seymour is long BAC; Tim Seymour is long INTC; Tim Seymour is long SBUX; Brian Kelly is long Yen; Brian Kelly is short US dollar; Brian Kelly is short Copper; Brian Kelly is short Silver; Brian Kelly is short British Pound; Brian Kelly is short Aussie; Mark Mahaney is long TRLA; Mark Mahaney is long EBAY; Mark Mahaney is long EXPE; Mark Mahaney is long FB; Mark Mahaney is long RATE; Mark Mahaney is long GOOG; Mark Mahaney is long IACI; Savita Subramanian is long BAC.