Stocks Likely to See 8-12% Upside Next Year: Chief Investor

Stocks gained Wednesday following several positive economic reports. How should investors be positioned going forward? Neil Hennessy, portfolio manager and chief investment officer of Hennessy Funds, and Andy Bischel, CIO of SKBA Capital Management, shared their insights.

“We like dividend-paying companies,” Bischel told CNBC. “We are very much pro-cyclical.”

Bischel’s stock picks include DuPont and Microsoft.

“You can get a whole change of product lineup and a refresh cycle going on there,” Bischel said of Microsoft. “We also like energy stocks and financials.” (Scroll down for his full list of picks)

In the meantime, Hennessy said investors should be long in this market.

“If you look at companies, they have tons of cash on their books and companies are no different from individuals,” he explained. “So the more money you have, it’s going to burn a hole in your pocket and you’re going to go on an acquisition binge.”

In addition, Hennessy noted that the stock market tends to rise 18 percent on average during the third year of a presidential cycle.

“[Stocks are] not necessarily going up 18 percent, but we’re going to go up [at least] 8 to 12 percent unless we get a surprise on the upside."

"But I don’t see any surprises on the downside," Hennessy added.

Bischel Likes:



US Bancorp

Hennessy Likes:


Ross Stores

Scorecard—What They Said:

  • Bischel's Previous Appearance on CNBC (Oct. 12, 2010)
  • Hennessy's Previous Appearance on CNBC (Oct. 18, 2010)

More Market Views—Across the Board:

CNBC Data Pages:

CNBC Slideshows:



Bischel owns shares of DD, MSFT and USB via ownership of funds that SKRA is the subadvisor.

Hennessy owns shares of IBM and ROST in his 401k via ownership of his funds.