Sarat Sethi said Monday that investors should be ready to take advantage of the market pullback and buy shares of companies with solid fundamentals. The portfolio manager at Douglas C. Lane & Associates said on CNBC's " Squawk Box " that he is prepared to buy more stocks for his clients even though he isn't sure when the slide for stocks will bottom. "Timing it is almost impossible," he said, but investors should look toward high-quality companies during market weakness. Some of the high-quality names on Sethi's list include Constellation Brands and Coca-Cola in the consumer staples sector and Honeywell in the industrials space. The names that investors should focus on are those with solid growth and the ability to minimize the impact of inflation, he said. "I think you've got to focus on input costs and revenue growth. Who's going to be able to increase their earnings in spite of higher input costs, and also who's going to have higher demand going forward for the next 12 to 24 months," Sethi said. He also said there was "more margin of safety" in companies that currently have low earnings multiples like General Motors and CVS . The high price-to-earnings ratio of the stock market at large is something that has worried professional investors and strategists, but those cheaper stocks could be insulated from a widespread multiple reduction, Sethi said. Shares of Constellation Brands and GM have actually risen this month, while the other stocks have seen small declines similar to the broader market. As for the macro picture, Sethi said that uncertainty about how China would respond to the Evergrande crisis was hurting the markets but the supportive stance from other governments would likely keep the sell-off in check.
Cameron Costa | CNBC
Sarat Sethi said Monday that investors should be ready to take advantage of the market pullback and buy shares of companies with solid fundamentals.