The global recovery is being led by countries outside of the United States, and investors should look to multinational corporations to protect themselves against the weakening dollar, said David Darst, managing director and chief investment strategist at Morgan Stanley Smith Barney. (See his stock picks below.)
But Richard Peterson, director at Standard & Poor's, said it will be difficult to play out the recovery, which relies on policies in Washington, how the Federal Reserve acts on raising interest rates, and an uncertain consumer.
"It'll be hard to tell what will happen in the next few weeks, let alone in two years," Peterson said. "There is a recovery brewing, but the question is what is the magnitude and the strength of that recovery."
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Pointing to growing stability overseas — specifically Australia's decision to raise interest rates — Darst said multinational companies that generate revenue from foreign currency are a safe bet.
The raised interest rates are "showing quickening economic activity outside the United States, and these big multinationals give you exposure to that," he said.
Before the Fed raises rates, Darst recommends industrials and hardware technology, adding that health care is an "under-owned, under-loved" sector. Once rates have been raised, however, he said investors should buy into the food and beverage and tobacco sectors.
"When you get the 12 months before the Fed raises rates, that's the sweet spot that we're in," Darst said.
Johnson & Johnson
SPDR DB International Government Inflation Protected Bond ETF — This ETF protects against unexpected inflation in 17 countries, including the United Kingdom, Australia and Canada.
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Disclosure information was not available for Darst, Peterson or their companies.