The Dow has rallied more than 60 percent since the March lows, but about half of the stocks in the blue chip index have lagged. Should you buy the laggards now? David Katz, chief investment officer of Matrix Asset Advisors, shared his view.
“We like a few of the losers,” Katz told CNBC.
“[But] these stocks went down a lot less than the overall Dow when the markets sold off in the 15-month bear market, and as a result, they came back a lot less.”
Therefore, Katz said he wouldn’t use the "loser strategy" to pick stocks as the opportunities in the Dow are spread out between last year’s better and worst performers.
Instead, Katz said he looks at valuation, P/E, what the business is worth, where the stock is selling and what type of earnings recovery the company will have.
“We think there are opportunities within the group like Chevron, P&G and Wal-Mart, but we would also look at things that did exceptionally well off the bottom like Bank of America, JPMorgan and Alcoa,” he said.
Katz added that BofA can "easily double over the next 2 to 3 years."
- Watch Katz's Previous Appearance on CNBC (Nov. 30, 2009)
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CNBC Data Pages:
Katz owns shares of Chevron, Wal-Mart, Coke, P&G, Bank of America, Alcoa, Microsoft and Cisco.