Microsoft and Cisco have been badmouthed by the market for years, but they are the type of large companies that can react better to economic adversity, Ron Sloan, chief investment officer of Invesco's Core Investment Management unit, told CNBC Thursday.
"I think large companies have a lot more capital flexibility than small companies do today relative to their ability to react, whatever the big picture, macro issues are going to be," said Sloan, whose fund rates four stars from Morningstar. "They’ve got more cash. They don’t live hand to mouth."
Yes, Microsoft and Cisco have underperformed, but they "generate gobs and gobs of cash, and do have a lot of capital allocation flexibility," he said.
Cisco "is trying to do a lot of things to right the ship," Sloan noted. According to recent reports, Cisco could cut as many as 10,000 jobs.
At least one analyst doesn't think the reported job cutting will be enough. Alkesh Shah of Evercore Partners told CNBC Tuesday that while the personnel cuts would help Cisco meet its target of saving $1 billion in operating expenses, the company needs new products to compete. Read more here.
As for Microsoft, "people have been badmouthing this particular Windows 7 cycle for two years and yet they’ve actually done a very good job," he said. They are a beneficiary of cloud computingand have seen slightly better unit personal computer sales, Sloan said.
"So I think they’re kind of the flower child of this kind of thinking," he added.
His other favorites include ABB Ltd. and Illinois Tool Works.
CNBC Data Pages:
Disclosure information was not available for Ron Sloan or his company.