What Works in Cherry-Picking Stocks


In a volatile market, stock picking becomes more of an art than ever. Stephen Wood of Russell Investments and Jeffrey Saut of Raymond James offer some instruction for investors in the cherry-picking of stocks.

"In a challenging growth environment, in a challenging earnings environment, names that are more likely to be able to defend some rate of earnings growth are probably where people want to look right now," Wood told CNBC.

That, he said, points investors toward large-cap, globally-diversified growth stocks.

At the top of Wood's list is McDonald's .

"The profile of a name like McDonald's seems to have a little bit more defensible earnings strength," he explained.

Saut takes a slightly different tack.

"I think for the conservative investor, you take advantage of fundamentally good companies that have been hit on a price concession for one-off items," he said. "Schering-Plough comes to mind."

The drugmaker's stock has been hit hard on news of a study involving its blockbuster drug Vytorin.

Another Wood pick is Google .

"Right now, you're looking at 'best of breed' in this environment," he said. "I think where we are recently, down from the mid-700's, being able to accumulate...names like this make a lot of sense."

Saut chooses Delta Petroleum .

"That is the company that Kerkorian paid a 23 percent premium...and he bought roughly a third of the company," he said.

And Saut is big on CNBC.com parent General Electric .

"We haven't liked GE for about six years, up until about eight months ago," he said. "For the first time in history, the foreign side is going to out-earn the domestic side."

GE, he pointed out, has a better than 40 percent market share of the natural-gas-fired turbine generator market, as the world rebuilds its electrical-production infrastructure.