Some churning in the retail and energy sectors over the holiday-shortened week plus continuing economic worries may mean investors will have to tread cautiously. But changes on the international front offer some interesting opportunities.
Weighing on Retail
Wal-Mart reported strong results this week, posting a 4 percent jump in profits and putting retail stocks in the spotlight. Markets tried to gauge whether it signaled a broad trend or merely a blip in general retail malaise.
David Abella of Rochdale Management and JPMorgan's Charles Grom debated whether to buy Wal-Mart or other discount retailers like Costco or Target .
"Although retail stocks are a leading indicator and should uptick before the economy starts to uptick, I think in general there's probably some more downturn in retail," Abella warned. "But Wal-Mart is a good name; it's a very defensive name, both in the market as a whole and for people who are invested in retailers."
Grom's preference lies elsewhere:
"We like Costco," he told CNBC. "We think there's better upside in same-store sales and earnings growth this year."
Grom also likes Target.
"Target's a little bit of an out-of-consensus name right now, and we like it just for that reason," he said. "There's been about eight or nine sell-side downgrades recently, and the stock's pulled in significantly from its 52-week high."
Retail worries lie at the center of broad economic worries about the country and whether business growth is waning at the same time prices are moving up, a condition termed stagflation.
While growth indicators have ticked down and inflation indicators have ticked up, on a historic basis they remain relatively low, especially when compared to the 1970s stagflation heyday. However the economic debate ends up, experts suggested there are still ways for investors to play a down turn.
Crude Hits New High
Adding to the economic hubbub were renewed energy concerns. Crude oil closed above $100 per barrel for the first time, helping propel a wild ride for the market. But some argued the rise
was fed by speculation and that oil prices would soon fade.
Indeed, legendary oil investor T. Boone Pickens said he was already betting on a drop in prices.
While prices retreated from the high, events in Iraq and weather concerns continued to pressure prices at week's end.
Robert Zagunis of Jensen Asset Management has been looking over the horizon, and at a time of general market turbulence, skepticism, and fear, he sees buying opportunities in companies in sectors as diverse as financials and food.
To keep on a steady course, Zagunis recommended Wells Fargo and Sysco.
"I think that economic cycles are inevitable," he told CNBC. "There are opportunities, and...that's where some of the long-term investors should focus."
Meanwhile, Ned Gray of the Delaware Global Value Fund picked Caterpillar.
Gray's four-star Delaware Global Value Fund is up an average of 20.9 percent per year over the last five years.
"In this kind of environment, with a weakening global economy, what we're looking for is not so much just devaluation, because that obviously hasn't been much support in the past year," he told CNBC.
Gray also likes Royal Phillips Electronics, a stock he says is very badly misunderstood.
"The underlying strength resides in a few core businesses," he said. "The medical equipment business, the lighting equipment business, are both very solid leading producers within their industries globally, and I think it's too often been associated with the semiconductor business, which they have been gradually been working their way out of."
Castro Steps Down
News that Fidel Castro plans to step down as Cuba's head of state after nearly half a century in power raised more questions than it answered this week, especially when it comes to investing.
How much of a chance is there that the long-standing U.S. trade embargo against Cuba will be lifted? Caribbean Basin Fund manager Tom Herzfeld, whose fund surged on the news, said it's time to take a serious look at stocks that would benefit from economic reform in Cuba.
"It's a significant development," Herzfeld told CNBC. "It's, I think, a step closer to resumption of U.S. trade with Cuba."
Fund components that gained sharply include maritime freight companies like Trailer Bridge , and cruise lines like Royal Caribbean and Carnival .