Invest in 'secular growth' stocks during market volatility, experts say

Traders work on the floor of the New York Stock Exchange (NYSE) on October 10, 2018 in New York City.
Spencer Platt | Getty Images
Traders work on the floor of the New York Stock Exchange (NYSE) on October 10, 2018 in New York City.
  • Experts recommend investors turn to sectors that can provide consistent growth in the face of market volatility.
  • "When you start to invest in areas that are vulnerable to cost inputs, to regulation, to trade policy, then you're on thin ice," says Fred Lane, founder of Lane Generational of Raymond James.
  • The health-care industry stands out for providing "real, dividend-generating growth," says Brad McMillan, CIO of Commonwealth Financial Network.

The recent market volatility may be making investors nervous, but several experts told CNBC Wednesday there is a way to ride it out.

They recommend turning to sectors that can provide consistent growth in the face of market volatility.

"Find a balance sheet that's getting delevered and cash flows are increasing," Kevin O'Leary, O'Shares ETFs chairman and "Shark Tank" investor, said on "Power Lunch." "Park your money there."

U.S. stocks plunged on Wednesday. The Dow Jones Industrial Average dropped 608.01 points, erasing all of its gains for 2018. The S&P 500 fell 3 percent and also turned negative for the year. The Nasdaq Composite fell 4.4 percent as Facebook, Amazon, Netflix and Alphabet all closed lower.

"Growth over time is the place to be," Brad McMillan, CIO of Commonwealth Financial Network, told "Power Lunch."

He favors the health-care sector because it has provided "real, dividend-generating growth."

Stay away from industries that are easily swayed by economic headwinds, according to Fred Lane, founder of Lane Generational of Raymond James.

"When you start to invest in areas that are vulnerable to cost inputs, to regulation, to trade policy, then you're on thin ice," he said in an interview with "Closing Bell."

For example, industrials and auto manufacturing companies are "very much victimized by the change in our foreign trade and our U.S. dollar strength," said René Nourse, founder of Urban Wealth Management.

Lane recommends the tech, health-care and consumer discretionary sectors. "That's where the secular growth is," he said.

However, Sam Stovall, chief investment strategist of U.S. equity strategy at CFRA, cautions investors looking to buy the lows in beaten-down names.

"Step out of the way and let the market find its own footing," said Stovall.

He thinks the S&P 500 could drop down to 2,580 or 2,600.

"Then typically those that were worst become first. Those that were beaten the most tend to then rally off of that bottom the quickest."

— CNBC's Fred Imbert contributed to this report.

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