Stocks Are 'Still Pretty Cheap'—and Economy Will Lift them

What is the likelihood of a market double-dip and how should investors be prepared? Kent Croft, chief investment officer and portfolio manager of Croft Value Fund, and David Kelly, chief market strategist at JPMorgan Funds, shared their insights.

“It was a disappointing housing report, but it can’t stay there,” Kelly told CNBC. “Over time, housing starts has to go up and that is what’s driving the economy forward.”

Despite worries, Kelly said the economy will churn out a series of 4 percent growth rates going forward.

“Stocks are still pretty cheap, earnings are going to do well and people need to take advantage of stocks,” he said.

In the meantime, Croft said markets are “always climbing a wall of worry.”

“We have concerns, but in these types of markets, there’s also a lot of best in class companies that you can get for very good long-term valuations,” he said.

Croft Likes:

Becton Dickinson

Flowserve

MetLife

Kelly Likes:

S&P Technology

S&P Consumer Discretionary

Kelly Dislikes:

10-Year T-Note

30-Year T-Note

Scorecard—What They Said:

• Croft's Previous Appearance on CNBC (Apr. 26, 2010)
• Kelly's Previous Appearance on CNBC (Jun. 2, 2010)

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More Market Intelligence:

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• Pimco Bond Guru Bill Gross Moves into Equities
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CNBC Slideshows:

• Top Holders of US Government Debt

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CNBC Data Pages:

• Dow 30 Stocks—In Real Time
• Oil, Gold, Natural Gas Prices Now
• Where's the US Dollar Today?

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CNBC's Companies in the News:

BP

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Berkshire Hathaway

• Buffett, Gates Issue Challenge to Billionaires on Fortunes

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Disclosures:

No immediate information was available for Croft or Kelly.

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Disclaimer