US Markets

This could cause market rally in fourth quarter: Strategist

History & the markets

The stage is being set for a "surprising" stock market rally in the fourth quarter, strategist Brian Belski said Monday.

While it was known coming into this year that the Federal Reserve would add volatility to an already volatile market, the dollar would have an impact and China was slowing, most of those downgrades to the market have already happened, he told CNBC's "Power Lunch."

"People are playing defense … [and are] acting more like what was instead of what is," the chief investment strategist for BMO Capital Markets said. "What is, we think, is a very attractively priced asset and that's U.S. stocks."

In fact, Belski is sticking to his year-end price target of 2,250 for the .

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That's because he thinks third-quarter earnings will surprise to the upside.

"We are banking on earnings to be better than expected," he said. "If you take out energy, we are going to see a positive number for the third quarter and nobody is believing that."

He predicts domestic growth will outpace what has been lost in terms of international growth.

Mega-caps that could be poised for big moves higher

David Rainey, portfolio manager with Hennessy Focus Funds, sees opportunities in specific names such as O'Reilly Automotive. He told "Power Lunch" that he thinks the company, which has grown from a modest store base to over 4,000 locations, can grow even larger over the next five to seven years.

He also likes the cellular tower company American Tower, which he said has a rapidly growing international portfolio and is benefiting from the U.S. carriers' rollout of 4G technology.

Portfolio managers Chad Morganlander and Mark Travis believe there is value to be found in large cap names suc as Cisco and Microsoft.

Cisco has $40 billion of net cash on its balance sheet and has an upside potential of $35 a share, Stifel Nicolaus' Morganlander noted. Meanwhile, Microsoft, which has $75 billion net cash on its balance sheet, could hit $55 per share, he added.

Intrepid Capital Funds' Travis said he likes the dividends for both companies, which is better than the 30-year Treasury.

Other names on Travis' large-cap list include Bank of New York Mellon, Express Scripts and Western Union.

Morganlander also likes Aetna, Abbott Labs, Hershey, Wal-Mart and Oracle.

— CNBC's Brenda Hentschel and Jennet Chin contributed to this report.

Disclosures: Morganlander and his family do not personally own Cisco, Microsoft, Aetna, Abbott Labs, Hershey, Wal-Mart or Oracle. Washington Crossing Advisors, an investment advisory program offered through Stifel, Nicolaus & Co., does own the positions. Travis, his family and his firm own Cisco, Microsoft, New York Mellon, Express Scripts and Western Union. Rainey owns ORLY, AMT, ECPG through both the mutual fund and individually in his personal account.