Best Sector Plays for 2010: Citi's Levkovich

As the year draws closer to an end, investors are looking ahead to new investment strategies for 2010. Tobias Levkovich, chief U.S. equity strategist at Citigroup, shared his outlook.

In the Year 2010
In the Year 2010   

“We’ve had one heck of a rally and we should appreciate it,” Levkovich told CNBC.

“We will probably trade up in the first half of the year," he predicted. But "we think as we get into the second half of 2010, it’s going to become a little bit more challenging.”

Citi established a year-end 2010 S&P 500 target of 1,100.

“The one area that we’re very excited about is the industrial space,” said Levkovich.

“Production trends are going to move higher; credit conditions lead industrial activity by about 9 months—nobody believed that 18 months ago or 6 months ago, and it’s still true as it was for 20 years. Historically, that means you tend to do well in the capital-goods type names.”

But Levkovich said he is “worried” about the semiconductor area.

“You’re starting to see capacity growth, earnings revisions at high levels,” he said. “And we think they have unattractive valuations.”

  • See Levkovich's Previous Appearance on CNBC (Oct. 19, 2009)

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Tuesday's Top Dow Gainers:

Microsoft

Merck

Alcoa

Verizon Communications

Hewlett-Packard

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Disclosures:

No immediate information was available for Levkovich or his firm.

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