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Top Strategists' Plays for the Second Half

What will the second half bring? Neil Hennessy of the Hennessy Funds and Linda Duessel of Federated Investors offered their market outlooks and investment advice.

Hennessy predicted "the exact same scenario going into 2010 as we saw in 2002," when companies dealt with the downturn by getting "lean and mean."

He says firms cut costs so deeply and streamlined themselves so radically that they were well-positioned to rebound.

In the meantime, Hennessy said investors should look at lower-end consumer discretionary names.

Once, certain consumers "with their noses in the air...wouldn't enter a Wal-Mart." But the downturn has meant that such supposed snobs are "getting used to them" — and will drive sales at the discounters, he said.

Other lower-shelf retailers he suggested: Rent-a-Center and AutoZone .

Duessel agreed with Hennessy's lean-and-mean corporate paradigm:

"What we see is how dramatically companies cut costs in the first quarter. Things are so dramatically cheap now that they have a chance to bounce back," she said.

"Valuations are still quite cheap in our view."

Duessel recommended commodities and energy companies, and sees growth happening first beyond the U.S.

Track emerging markets:

  • iShares MSCI Emerging Markets Index

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Disclosures:

Disclosure information was not available for Hennessy, Duessel or their respective companies.

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