This one sector is the value trap to avoid, says portfolio manager

Growth stocks are a better bet than value stocks over the next six months, Washington Crossing Advisors portfolio manager Chad Morganlander said in a new interview with CNBC's "Trading Nation."

Last week value stocks surged, Morganlander pointed out, largely as a result of a rising interest rate environment. However, growth stocks are ultimately going to outperform based upon revenue growth and earnings growth, he said.

Some examples of growth companies Morganlander pointed to on Wednesday included Microsoft, Cisco and Oracle, adding, "growth companies do really well when the global economy is doing well. We believe that it's still going to grow not only here in the United States, but on the developed side, as well as the emerging markets side."

"Usually the value index is comprised of oil and gas companies, as well as financial companies," he said.

Financials are one area, specifically, to avoid when it comes to value names, as the interest rate environment in the short term will not benefit financials "as much as everyone's expecting."

Though the S&P 500 financials sector is positive on the year, it is the third-worst-performing sector in the market only beaten to the downside by energy and telecommunications.

Furthermore, the value index is typically composed of oil and gas companies, tethered to beaten-down crude oil prices, and Morganlander would stay away from that area. Crude oil on Wednesday logged its worst day in four weeks.

Vote
Vote to see results
Total Votes:

Not a Scientific Survey. Results may not total 100% due to rounding.

Videos

Trades to Watch

Trader Bios

About

Trading Nation is a multimedia financial news program that shows investors and traders how to use the news of the day to their advantage. This is where experts from across the financial world – including macro strategists, technical analysts, stock-pickers, and traders who specialize in options, currencies, and fixed income – come together to find the best ways to capitalize on recent developments in the market. Trading Nation: Where headlines become opportunities.

Michael Santoli

Michael Santoli joined CNBC in October 2015 as a Senior Markets Commentator, based at the network's Global Headquarters in Englewood Cliffs, N.J.  Santoli brings his extensive markets expertise to CNBC's Business Day programming, with a regular appearance on CNBC's “Closing Bell (M-F, 3PM-5PM ET).   In addition, he contributes to CNBCand CNBC PRO, writing regular articles and creating original digital videos.

Previously, Santoli was a Senior Columnist at Yahoo Finance, where he wrote analysis and commentary on the stock market, corporate news and the economy. He also appeared on Yahoo Finance video programs, where he offered insights on the most important business stories of the day, and was a regular contributor to CNBC and other networks.

Follow Michael Santoli on Twitter @michaelsantoli

Read more

Connect