Will 2010 be the year of the large cap stocks? And if so, where are the best places for investors? Brent Wilsey, president of Wilsey Asset Management, and Michael Krause, president of AltaVista Independent Research, shared their views.
“Right now, investors are thinking of coming back in, but they’re a bit afraid and the first place they’re going to go is the ETFs [exchange-traded funds], the Dow 30s and so forth,” Wilsey told CNBC.
“That’s what people feel comfortable with first.”
Wilsey said the current environment offers an opportunity for investors to look into companies with decent values, such as Cisco , Hewlett-Packard and Chevron , which are paying "good" dividends.
On the other hand, Wilsey cautioned, “American Express , Boeing , Verizon —those companies are too expensive.”
“Find good quality companies...Going forward, we will see our economy grow slowly and by picking the right companies, investors will do quite well.”
In the meantime, Krause said the large cap stocks have a higher and more persistent level of profitability, but are still trading at much cheaper multiples both in terms of P/E and price-to-book value than smaller cap stocks.
“You’re going to have more exposure to foreign economies when you are investing in the Dow 30 as opposed to the Russell 2000,” he said.
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No immediate information was available for Krause or Wilsey.