With the market posting its best returns this year since the late 1990s, some top portfolios managers are expecting a tougher climate for stocks in 2014.
Rob McIver, co-portfolio manager of the Jensen Quality Growth Fund (JENIX), which is up 34 percent in the past year, and Jensen Quality Value Fund (JNVIX), which is up 46 percent, is one of them.
"We think the market will be a little mixed after the strong bull market of the past few years," he says, citing Federal Reserve plans to withdraw some stimulus, or taper its bond buying program, as one reason for concern. "In that sort of environment, we think that investors are going to look for substance and true profitability to justify some of the bull run that we've seen."
Jensen says he does see opportunity in these four companies:
Nike (NKE) - With the Winter Olympics and the World Cup coming up in 2014, the global sportswear company will benefit from some serious sports enthusiasm. But, given its strength in marketing, "whether it is the Olympics or other major events, Nike will be there and be there in a big way," says McIver.
Emerson Electric (EMR) - McIver says the global industrial company has transformed itself into a leading manufacturer of power equipment. He sees it as a way to play the need for electrical infrastructure in China and other emerging markets.
TJX Cos. (TJX) - The company that owns the Marshalls, HomeGoods and T.J. Maxx chains stays popular with consumers -- even outside of the holiday season -- by offering discounts of 20 to 60 percent off suggested retail prices. "That's always going to be a good deal for consumers," says McIver.
Oracle (ORCL) - The enterprise software giant has benefitted from the same strategy for many years and will continue to in 2014, says McIver, who says Oracle helps corporate customers be more efficient. "We think they are in the sweet spot to not only help their customers, but also be very profitable for our fund shareholders." he says.