Stock Strategies for the '7th Inning'

How should you play the second half? David Sowerby of Loomis Sayles and Brett D'Arcy of CBIZ Wealth Management offered CNBC their market outlooks and favorite investments.

Sowerby believes the rally in lower-quality S&P stocks is on the verge of ending.

"We're in the bottom of the seventh inning," he said.

"It's very similar to what I saw in 2003: a rally off of the cyclical lows...dollar stocks went to $3. But there was a reason they were $3 stocks."

He cautioned that such strategy is not "a long-term winning formula." Instead, it's time for investors to start seeking higher-quality companies.

D'arcy sees several trends at work; not the least is his view that "the U.S. economy is going to come out of this recession much better and faster than the rest of the world."

Second opinion:

Despite being up 24 percent for the first half, tech "will continue to do well, based on where [tech firms] are in the business cycle," he believes.


Sowerby likes:

Fossil — He notes that the watch-maker, increasingly moving into hip apparel, has "very good' margins and cash flow. The CEO took no cash compensation, so his 'stock-based' success "ties him to shareholders."

Sowerby says this "winning cyclical stock" is both "very attarctive" and "very misunderstood."

D'arcy likes:

North American technology sector exchange-traded funds.

"There's still a lot of company-specific risk, so I would do a sector investment" via ETFs.

Two ETF possibilities:

- iShares S&P North Amer Tech-Software

- iShares S&P North Amer Tech-Multimedia Networking

Compare with General Tech ETFs:

Technology Select Sector SPDR

Semiconductor HOLDRs

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Disclosure information was not available for Sowerby, D'Arcy or their respective companies.