From the looks of it, the small cap sector is right on track to outperform large caps for an unprecedented 7th consecutive year. But will small companies be the better investment in 2007? Some big money investors don’t think so. On “Squawk on the Street” CNBC’s Mark Haines spoke with one such investor -- Bob Millen, Co-Portfolio Manager of the 4-Star Morningstar rated Jensen Portfolio.
Bob Millen made the case for quality. He thinks it’s time for large cap quality stocks to come back – as the economy slows and interest rates take their toll.
Going forward Millen likes Microsoft , mostly because of the new Vista launch. Immediately, Mark Haines replied, “No one is going to buy it.” Millen countered that the company is solid as a long term investment, even if Vista sales aren’t a strong as expected.
Millen also liked Colgate-Palmolive . He called it a play on fast growing markets such as China and Latin America where Colgate has a dominant share.
In addition, he said they’re in a 4 year restructuring program that has lowered cost and improved margins. That puts them in good position to take advantage of efficiencies and put money back in products.
Analyst disclosure: Bob Millen and member of his family own stock in MSFT, JNJ, and CL
Side by side comparison of Dow Jones Industrial Average and Russell 2000.