Randy Lert, chief portfolio strategist for Russell Investment Group, told CNBC’s “Morning Call” that he believes valuations are now attractive for large-cap stocks.
“If you believe, as I do, that the economy is going to slow a bit, then growth rates will come down,” Lert said. “Historically, that’s large-cap territory in the market.”
He likes Goldman Sachs, Hewlett-Packard and Apple.
“What we’re seeing is dominant companies with franchises that matter and which have been able to increase their market share at the expense of competitors,” Lert said. “While they’ve done well, their stocks have not had the same level of valuation recognition that we’ve seen in small- and mid-cap names.”
Lert said he believes the market can rise another 10%. He expects interest rates to remain steady or decline a little by the end of the year.
“In that environment, you can support higher multiples,” he said.
Mark Keeley, vice president, Keeley Asset Management, said he continues to see value in small- and mid-cap stocks.
“We have always found some of our greatest investment ideas in the small-cap space just because of the market inefficiencies,” Keeley said. “The small-caps have definitely out-performed over many years. The mid-caps seem to be the best performing part of the market this year. I think that’s a natural progression. A lot of these smaller companies have morphed into mid-cap names over the last three-to-four years.”