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Stocks to Get You Through This Volatile Market

Just one day after the Fed cut interest rates by a half-point, stocks are up -- after dropping -- and economic uncertainty is resurging.

CNBC asked market experts where investors should put their money in this environment.

Playing ‘Out-of-Favor Stocks’

“Emphasize the areas of the economy that you’re seeing great fundamentals. We like technology and we like industrial as part of that play. And then look at the out-of-favor area of the marketplace. And clearly financials might be one area where you may want to start to look for ideas and the discretionary sector is an area we’re starting to look for ideas. We think one of the themes this year is to play the out-of-favor stocks.”

Andrew Feltus, Pioneer Investments Fund Manager

Banking on Banks

Bank of America has surely suffered its share of the pain from the subprime mortgage crisis. Earnings in the fourth quarter were minimal, as it took large markdowns, but this is a strong company. It has weathered storms similar to these in the past, it is trading cheaply at only about ten times this year’s estimates, and it has a great dividend of around six percent.”

Adriana Posada, American Beacon Portfolio Manager

Posada recommends: Bank of America and JPMorgan

Making Money in the Sky

"I believe in uncertain economic times like we have now that good companies go on sale. Southwest is off some 30% from its high last year. It’s definitely a good company with a great balance sheet, so Southwest would be the prime beneficiary of legacy carriers taking capacity out."

- James Parker, Raymond James & Assoc. Airlines Analyst

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Opportunities in Healthcare

"So far this year it has been a little bit of a rocky ride. We saw some selloffs in healthcare services here recently, mainly because of the performance they had last year, taking profits off the table and putting into other areas. However, we believe this sector will strengthen as we move through the remainder of the year."

- Arthur Henderson, Jefferies & Co. Managing Director of Healthcare Services

Henderson recommends: Healthways and Express Scripts

(Contd.)

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Taking a Chance on Financials

"I’d certainly be in stocks in general and out of Treasurys. If this thing turns out to be a relatively mild recession by the second half of the year or we don’t have a recession at all, then the markets are just completely mispriced. So overweight stocks versus bonds in the U.S. Within the stock market, I think large cap stocks in the U.S. are much cheaper than small, and also maybe financials still in this environment. We’ve got these Fed rate cuts, you’re finally getting paid for taking risks when you make loans, so I think that’s a good area also."

- David Kelly, JPMorgan Funds

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