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Market Is 'Below Fair Value'—Here's How to Play It

This market is bound to grow and so investors should take advantage of these following sectors, agreed Sarat Sethi, partner and portfolio manager at Douglas C. Lane & Associates, and Craig Callahan, founder and president of ICON Advisers. They shared their best investment plays.

“The market is about 30 percent below fair value, so stocks are on sale and we expect the rally we had over the last year to resume through the remainder of this year,” Callahan told CNBC.

Callahan favors the transportation sector.

In the meantime, Sethi said although the markets will be volatile in the next six months, investors will eventually be glad two to three years down the road if they bought "companies that are cheap" now.

“Stick with really good balance sheet companies that can grow, like linear technology that makes analog products—they’re supplying all the autos and the iPads," suggested Sethi. "These are companies [whose] multiples have come down by 50 percent—and people are pricing this market as if this company’s not going to grow anymore."

“So I like the semi space, especially the specializedsemi-space, the consumer space and staple space.”

Sethi Likes:

Cypress Semi.

Fairchild Semi.

Lattice Semi.

National Semi.

Pericom Semi.

Callahan Likes:

Transportation

Railroads

Air Freight

Airlines

Machinery Industries

Scorecard—What They Said:

  • Callahan's Previous Appearance on CNBC (Jul. 13, 2009)
  • Sethi's Previous Appearance on CNBC (Jun. 16, 2010)

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Market Views—Across the Board:

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CNBC Data Pages:

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CNBC Slideshows:

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Disclosures:

No immediate information was available for Callahan or Sethi.

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Disclaimer

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