Rate hikes not necessarily bad for stocks: Portfolio manager

If rates go higher ...

Interest rate hikes aren't necessarily bad for the stock market, portfolio manager Brian Lazorishak told CNBC's "Power Lunch" on Thursday.

His comments came just a day after newly released Federal Reserve minutes showed that some members of the central bank's Open Market Committee want to make a "relatively prompt" rate hike. However, most members agreed more data were needed before the schedule of rate hikes was moved up.

San Francisco Federal Reserve President John Williams told CNBC on Thursday that raising the benchmark interest rate in the summer of 2015 is a "reasonable guess."

Read MoreFed's Williams: Summer 2015 rate hike 'reasonable'

"Think about why the Fed's hiking rates, it's because the economy's improving," said Lazorishak, co-manager of the Morningstar-rated four-star Chase Mid-Cap Growth Fund.

"In that kind of environment, people start focusing a little more on the individual stocks and a little less on the macro. A stock picker can really add value."

Traders on the floor of the New York Stock Exchange.
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However, when interest rates go up, the bond bubble will pop, portfolio manager George Young told "Power Lunch."

"It's not much of a move before interest rates move upward and that means something like a 2.4 percent yield in a 10-year government bond moves to 2.75 percent. You lose 3 percent of your money just like that," said Young, co-manager of the Morningstar-rated five-star Villere Balance Fund.

"It's like picking up a dime in front of a steamroller. That's a scary thought."

Read MoreCashin: Stocks will 'continue to flow higher'

Right now, Young thinks the stock market will move higher. One of his picks is LKQ. Another is Sotheby's, which he called cheap.

"You might think of it as kind of a rich man's stock but on the other hand, there are always people who need to sell or buy because of death, debt, divorce or discretion," Young said of Sotheby's. "This is a company that can make money."

Lazorishak likes mid-cap stocks.

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"Mid-caps, historically, have offered a good place to get some exposure a little bit different from large-caps but without quite as much risk as you take on if you get down into the small-cap space," he said.

Specific names on Lazorishak's list include Polaris Industries, O'Reilly Auto and Euronet WW.

—By CNBC's Michelle Fox


Brian Lazorishak does not own Polaris Industries, O'Reilly Auto and Euronet WW directly, but holds them indirectly through holdings of his mutual funds. Chase Investment Counsel owns all as a firm, but less than 1 percent of outstanding shares.

George Young's fund, firm and family own shares in Sotheby's and LKQ. The holdings are over 1 percent of each.