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Rally Will Survive Second-Quarter Earnings Dip: Strategist

Monday, 9 Jul 2007 | 12:35 PM ET

Peter Andersen, portfolio manager at Dreman Value Management, told CNBC’s “Morning Call” that a slight dip in second-quarter earnings won’t kill the rally.

Market Panel
Discussing what it will take to keep stocks at lofty levels, with Alan Lancz, Alan B. Lancz & Associates president; Peter Andersen, Dreman Value Management portfolio manager and CNBC's Mark Haines

“I think [earnings will] probably will slow down a bit,” Andersen said Monday. “We’ve had a phenomenal rate of increase over the past two years. To take a little bit of a breather in one quarter, I don’t think that’s much of a concern.”

Andersen said he remains bullish and noted, “I still think there are wheels on this wagon.”

Alan Lancz, president of Alan B. Lancz & Associates, urged investors to be selective. He likes small- and mid-caps, especially biotechs -- which he believes large pharmaceutical companies are likely to buy at “good premiums.”

He said rising interest rates are a concern.

“I think investors should take a good look at interest rates more than energy prices,” Lancz said. “…If interest rates go up, it’s going to slow down the M&A activity. You’re not going to see the premiums. We saw that in June. We had eight days in a row with no deals, when interest rates spiked from the high 4% to 5.3% on the ten-year bond.”