Don't sell now!
The worst time to sell into the equity markets is when risk appetite is low, says Khiem Do, head of Asian multi-asset strategy at Baring Asset Management.
He offered CNBC his investment advice.
Starbucks stock retreated in heavy volume after a report suggested the coffee chain's growth may be losing some steam.» Read More
Michael Corbett, portfolio manager at Perritt Micro Cap Opportunities Fund, said investors can seize opportunity in high oil prices -- with micro cap energy companies.
Corbett explained that micro-cap companies are companies that "separate the top 80 percent from the bottom 20 percent, in terms of market capital."
Mitcham Industries – "They’re getting a big benefit from the high energy prices; another part of the benefit is that the weaker dollar is helping them. Over 70 percent of their business is coming from overseas. This company is growing."
AM Castle – "This company is helping out big companies like Boeing. They’re also benefiting from the weaker dollar."
Once it was art. Once it was cool. Now, it's just an ugly mess. Tattoo removal is a growing trend -- and Formula Capital's James Altucher says it's a trend investors should watch.
"On a daily basis, you see people worried about Apple's earnings, Google's earnings, oil, subprime, but...you have to invest in trends that are never going away," he told CNBC. "Tens of millions (of baby boomers) have tattoos...maybe 100 percent of them regret it; it's going to be a booming industry."
So how does this translate into shrewd additions to a portfolio?
"Every tattoo is made by thousands of pinpricks with pigment inserted into your skin," he explained. "Lasers go in...and remove all the pigment...there's a few companies that specialize in the lasers that do this tattoo removal."
Topping his list is Cynosure,
"I consider this the Google of tattoo removal," he said. "The company has $60 million in cash, no debt, they trade for just eight times cash flow, and they're growing at 40 percent a year."
There's also Palomar.
"They have a $215 million market cap, $115 million cash in the bank, no debt," he said. "You have Cutera, with $90 million cash in the bank, no debt, and only $130 million market cap."
Altucher says they are bargains -- and they promise to be around for a long time.
"The entire market has driven these stocks down, and yet it's a tidal-wave trend," he said.
Maybe Wall Street really is drunk. Somehow the Biblical parable ''the last shall be first and the first shall be last" is shaping up to be the dominant theme this earnings season -- at least in terms of performance.
In the past two weeks, the Financial and Discretionary sectors have dominated the market, gaining 18 percent and 8 percent respectively, versus only 3 percent gain for the S&P 500. Interestingly, these same two sectors are forecast to post the worst earnings results this quarter with consensus looking for a 75 percent and 20 percent drop in profits.
But wait -- it gets better: There's another half to this story and wouldn't ya know it? The first are indeed last!
Energy profits are forecast to rise a market-topping 28 percent this quarter, and yet in the past two weeks of the earnings season, they've found themselves in performance purgatory with a 6.6 percent decline.
Perhaps the proud have finally been humbled?
- Dow Oil & Gas Index
- Exxon Mobil
- JP Morgan Chase
- Lehman Bros.
Michael Jones runs the five-star Touchstone Value Opportunities Fund, up an average of 12.56 percent per year over the last five years.
What's his "Triple-A" strategy?
Topping his list is Alcoa.
"Alcoa's done a great job of positioning (itself) for the current environment of energy costs going up," he told CNBC.
He sees Alcoa's main product -- aluminum -- being substituted for other metals as manufacturers seek to control costs. And he notes that Alcoa plants have been situated near renewable energy sources.
Jones also likes ABB.
"They're probably the most well-positioned provider of (electrical) transmission equipment," he said. "Number one in North America, number one in Asia, number two in Europe."
Rounding out his "A" list is bond insurer Assured Guaranty, which recently raised eyebrows as Moody's Investors Service said it is considering a downgrade of as many as two notches, and JPMorgan downgraded it to neutral from overweight.
"We think (it) is in pretty good shape," he said. "They've increased their market share in the municipal bond-underwriting business by a dramatic amount this year; their underwriting is up 15-fold, year-to-date, over last year; we think they have adequate capital."
Brent Wilsey has a prescription for investors: Specialty health-care names.
The president of Wilsey Asset Management thinks that the downdrafts that have slammed stock prices in the sector are now behind it, and it's time to buy into the companies' recovery.
Topping is list is Chemed.
"This company has moved quite a bit," he said. "The 52-week high is $69 a share; it's...now around $42...the forward P/E is still under 12...their earnings are up 11 percent year-over-year."
Wilsey also points out that nearly a third of the company's earnings come from an unexpected subsidiary: Roto-Rooter.
He also likes Coventry Health Care.
"The stock has kind of struggled over the past year," he said. "But the company's doing a great job! Their sales are up 32 percent year-over-year; return on equity is 20 percent...great company, great fundamentals, good time to buy it."
Also on his list, UnitedHealth Group, which posted a sharp drop in second-quarter profit this week.
"Their earnings don't look as good because of special one-time items, but if you take those out...you'll see that their earnings were 67 cents per share," he pointed out. "Going forward, the next 12 to 18 months, you'll see good things from this company."
Rounding out his selections are Humana and WellCare Health Plans.
Richard Sparks thinks investors should continue to stay away from financial stocks, but he thinks there's another sector that deserves careful consideration.
"I think value sometimes is a trap," the senior equities analyst at Schaeffer's Investment Research told CNBC. "With the financials, I think it has been, all the way down...the financials still have unknowns out there; they're starting to become known...but I don't think it's yet time to jump in, wholesale, on the financials."
So where is it time to jump in?
"Even though the consumer is being pinched by higher oil prices, higher gasoline prices, retail sales are still a big part of the economy," he said. "Retail sales have shifted down now, toward the lower-end retailers, and, in fact, one area that we like very much is the big-box retailers, such as the Wal-Marts of the world -- they have the Sam's Club -- Costco...and they've done very well, those stocks have."
Michael Santelli, senior director of Allegiant Funds, says mid-cap stocks offer the investor some excellent opportunities in this turbulent market climate.
His Allegiant Mid-Cap Value Fund is up an average of 12.08 percent per year over the last five years.
His first pick is Arch Coal.
"It's pulled back nicely, giving people an opportunity to get in," he told CNBC. "They're going to re-price their legacy contracts at much higher coal prices, driving their earnings and cash flow over time."
Arch Coal is heavily invested in the Wyoming Powder River Basin region. The price of coal from that region has much more room to grow than the price of coal from Eastern mines.
Santelli also likes packaging manufacturer Pactiv.
"They've been hurt with raw material prices," he explained. "They buy a lot of plastic, which is a derivative of oil and natural gas, so raw material costs have pinched them."
He says the company has a plan to get that margin back through price increases.
The words "overseas exposure" are not always spoken kindly. The truth of that statement has been growing, as the red-hot economies of China and India cool down. Jim Oberweis, editor of The Oberweis Report, has some recommendations for shrewd investors who want to keep their overseas exposure positive.
"We're still seeing growth rates in the 9 to 10 percentage range in China, and even given the recent decline, we're talking about a decline that comes on the heels of a nearly 300 percent gain just prior," Oberweis told CNBC.
So among Chinese stocks, what does he like?
"Vision China operates 45,000 displays on buses in 15 cities in China," he said. "They pay a fixed rate for programming, and they sell at a variable rate, so inflation actually helps Vision China, and so will increases in advertising rates over time."
He has a couple of education-related picks. One is ATA, China's leading computer-based testing company.
"Right now, there's about 123 million exams that are issued every year," he explained. "It's a key way of differentiating for professional certification and college-entrance exams...so as you see an increase in computer-based from paper-based, and an increase in overall exams, they're really the player that is most likely to benefit."
He also likes New Oriental Education.
"Well-educated families are earning much more than uneducated," he said. "New Oriental Education provides college test preparation as well as languages...their enrollments are running at about 30 to 40 percent right now."
Four-star fund manager Robert Millen thinks it's a good time for investors to be looking at quality growth companies.
He admits that there may be some more darkness before the dawn.
"Predicting when the market is going to change is always very difficult, and usually, people are wrong," he told CNBC. "My guess is that we're going to have some more volatility before it reaches its bottom."
Topping his "quality growth" list is orthopedic equipment maker Stryker.
"It's a great company, very consistent, a growth company over the years," he said. "They're in a market that has strong tailwinds, with people wanting to live longer, happier lives."
He also likes Emerson Electric.
"Emerson's a global play," he said. "This is a company that puts in these large air conditioning- heating-ventilation systems in industry around the world, with a strong focus on the developing markets."
Also on Millen's list is Procter & Gamble.
"Twenty-three brands, over a billion dollars for this company," he said. "Tremendous company with good pricing power in a tough market."