Dow's 7 underperformers—time to buy?

Bet on underperformers?

Of the 30 stocks on the Dow, 23 have hit 52-week highs this year.

That means only seven have not: Nike, General Electric, Wal-Mart, IBM, Procter & Gamble, Verizon and Cisco.

Noah Blackstein, vice president and portfolio manager of Dynamic Funds, is not betting they'll catch up.

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For a lot of the companies, "there really are fundamental reasons which are driving their underperformance," he told CNBC's "Power Lunch" on Monday.

Nike sneakers sit on display at a Foot Locker store inside the South Park Mall in Strongsville, Ohio, March 4, 2014.
Luke Sharrett | Bloomberg | Getty Images

Instead, he has his eye on small- and mid-cap stocks.

"As the U.S. economy continues to pick up steam and interest rates move higher, the smaller caps and the mid-caps are going to start to gain on the larger-cap companies," Blackstein said.

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He likes and Biogen Idec.

However, Allianz Global Investors' Kristina Hooper believes the avoidance of large-cap stocks is unfortunate because they can offer good dividends.

"If investors have a long enough time horizon, they should have adequate exposure to large caps," she said.

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"It looks like small caps will continue to outperform this year and that's largely because of the monetary policy backdrop but at a certain point that will go away. The Fed will become less accommodative and the investing landscape may return to a more normal environment," she added.

Hooper likes financials, oil producers and selective tech names, calling them "attractively valued."

—By CNBC's Michelle Fox. CNBC's Jennet Chin contributed to this report.

Disclosure: Noah Blackstein owns and Biogen Idec in his portfolio.