Putnam, Citigroup, UBS, BlackRock Buy on Dips

Putnam Investments, Citigroup, and UBS AG are telling investors to add to their U.S. holdings as the stock market falls, according to a survey of 15 strategists by Bloomberg.

"We're more favorably disposed to the U.S. market than we were at the end of last year," Kevin Cronin, who oversees $192 billion as head of investments at Boston-based Putnam, tells Bloomberg. Cronin calls the selloff a "bit overblown."

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Specifically, Cronin is recommending U.S. technology stocks, consumer-related companies, and homebuilders.

All 15 strategists surveyed by Bloomberg expect the stock market to end higher this year, with an average year-end forecast for the S&P 500 at 1549.

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But is this a contrary indicator? According to Bloomberg, "The last time all the firms tracked agreed that U.S. stocks would post a full-year rally was for 2001. The S&P 500 dropped 13 percent that year."

The S&P 500 fell more than 4 percent last week with the selloff wiping out more than $800 billion in market capitalization. According to Bloomberg, U.S. companies have cut their first-quarter earnings projections by half since the start of 2007 and more U.S. companies missed profit guidance last quarter than at any other time this decade.

"We're buyers," Tobias Levkovich, Citigroup's chief U.S. equity strategist, said in an interview from New York. "Nothing's changed. We'd be taking advantage of this."

Levkovich is recommending retailers, telecommunications companies and semiconductor makers. Levkovich is forecasting a 15 percent jump in S&P 500 stocks from last week's close.

Robert Doll, manager of $1.1 trillion as chief investment officer of global equities at BlackRock, is looking for a 12 percent rally in the S&P 500 for a year-end close of 1549.

"This isn't going to lead to a major bear market," Doll tells Bloomberg. "Out of this will come some better buying opportunities."

Doll is telling investors to "slowly add" to holdings of the large-cap energy and technology companies (specifically citing Microsoft, IBM and Cisco), and to shift out of emerging markets and other so-called risky investments.

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David Bianco, chief U.S. equity strategist at UBS Investment Research, says the sell off may trigger takeovers by private equity investors, which would then buoy the stock market. That's a sentiment shared by BlackRock's Doll.

They point to the estimated $1.6 trillion in cash buyout firms have to spend, according to Morgan Stanley.

"There's a lot of value here for anyone that's willing to exploit this," Bianco said. "It's not just theoretical, we see plenty of that activity going on with private equity."

Bianco is forecasting an 8.1 percent rally by year-end.

Bianco recommends buying shares of Coach and Cisco.

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