Recession. Bear market. Credit crunch. Is it better to stay out of the stock market or use the recent selloff as a buying opportunity?
CNBC asked the pros where you should be putting your money. Here's what they had to say.
Flying With Aerospace & Defense
"The reason I like aero is that there are huge backlogs of commercial planes that need to be delivered. Boeing, Airbus have six year backlogs, and the business jet makers have two to three year backlogs. And defense, the budgets keep growing, and we’re still going pretty strong in Iraq, in terms of troop levels, and there’s a need to replace aging equipment.”
Richard Tortoriello, Standard & Poor's Defense Anlayst
Tortoriello recommends: Goodrich and Rockwell Collins
Coal Stocks Heat Up
"The U.S., with its excess coal reserves, is the swing supplier to Europe, so a lot of these Eastern coal companies are now able to economically ship coal to Europe, and it looks like it's not only happening in 2008, but certainly what we need to see for this coal rally to be sustained is for concerns over 2009 supplies, and we're beginning to see that right now."
Gordon Howald, Calyon Securities/Credit Agricole
Howald recommends: Arch Coal , Foundation Coal and Peabody Energy
Making Money in Materials
[On Schweitzer-Mauduit] "They’re a cigarette paper manufacturer, which doesn’t sound like a real exciting place to be, but there are several real catalysts for the company. First off, is low-ignition propensity paper, which is paper when you’re smoking a cigarette and it’s discarded, but the smoker is in bed or in a forest, it will go out if the cigarette is not being actively smoked. Twenty-one states have mandated this, Canada also, and they produce the lion’s share of the product, and it’s a much higher margin product than traditional cigarette paper."
Joe Kremer, Fifth Third Asset Management Portfolio Manager
Kremer recommends: Schweitzer-Mauduit and Polyone Corp.
Nibble on Washed-Out Stocks
“I like the U.S. market. I think we may have made the 'panic' bottom last week...I think we’ll have a rally out of this and I think we’ll have a good rally over the next 12 months once we get the real bottom sometime in March or early April.
"Stuff like Altria and Coke have been real good in terms of defensive plays. But, you have to get more aggressive.
"I think the financials are getting pretty washed-out. Start to nibble on these washed-out stocks… Boeing looks pretty bad. Time to buy it. Merck, great earnings coming up this week and the stock is suffering."
Russell Lundeberg, Barrett Capital Management
“If you’re looking at it as a long-term investor, I think eventually the value has to be recognized. And I think a few things that could spur that on.
"We have talks about the creation of a sovereign wealth fund [in Japan]. There’s actually some proposals that they’re talking about potentially eliminating dividend and capital gains taxes within the country. And there are also some new changes in financial services that have made it less attractive for Japanese investors to invest outside of Japan, which not only puts upward pressure on the equity markets but also helps the currency as well.”
Harry Clark, Clark Capital Management Group
Eye on Dry Bulk
“That leads us to our top pick for 2008, which is a AegeanMarine --ticker, ANW . A bunkering tanker refuels ships so they’re not really transporting cargos or commodities, they’re refueling ships. And when you look at the shipyard delivery schedule for the next few years of crude tankers, dry bulk vessels, container ships, there will be a lot more ships delivered. The global fleet should increase in size by 45% and so with that increase in global fleet size as well as the number of bunkering tankers likely leaving the fleet to regulatory reasons in 2008, we think a Aegean Marine is in good shape to take advantage of those fundamentals.”
Doug Mavrinac, Jefferies Maritime Group Research Head
Consider Short & Inverse ETFs
"Contrary to the general market, the ETFs that are on the top of the list happen to be short and inverse ETFs. The best performing ETF year-to-date happens to be the ProShares, Ultrashort Semiconductor ETF. Stocks like KLE, Tencor Texas Instruments that have really been beaten up, here’s an ETF that actually takes advantage of that."
Tom Lydon, ETFtrends.com Editor