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On Target: Citigroup's Levkovich Bullish On '07

Today is day three of our weeklong “On Target” series. We’re featuring the market gurus who were pretty much right on for 2006 and asking them to give their predictions for next year. Citigroup Chief U.S. Equity Strategist Tobias Levkovich was on “Squawk on the Street” to share his thoughts.

“We’re looking for a strong year in ’07,” Levkovich says, citing “compelling” valuations in the market.

Also, earnings expectations are low. According to Levkovich, investors are predicting a drop of 20% in growth rates relative to what they’ve seen on average over the past 10 years. Despite a recession, the attacks of Sept. 11, 2001, and the crisis in the Asian markets during that time, “people still think the future is a lot worse,” the analyst says. Citigroup disagrees. Levkovich cites research that when such discounts occur, markets tend to do well in the subsequent year.

Levkovich is bullish on retail, media and semiconductor stocks for 2007. But he’s steering clear of utilities and REITs.

Market Outlook 2007