The market is catching its breath but these 2 groups could deliver solid profits

The bull market is entering a new phase, but PNC Financial's Jeffrey Mills believes that's no reason to get negative on stocks.

In an interview the firm's co-chief investment strategist acknowledged it will be hard to replicate last year's record gains. He referred to 2018 as a "reset year" as stocks retrace.

"The market is catching its breath," Mills said Thursday. "There's going to be a continued push and pull between strong fundamentals. So, we have solid growth [and] really good earnings, but then multiples that have come down."

Despite his prediction of a near-term market pause, Mills doesn't think investors should get overly defensive. He listed energy as a top play in this environment.

Mills also favors financials, a group that's down about 2 percent so far this year.

As for the rest of the market, he isn't waving a white flag. Mills is confident the S&P 500 Index will stay above flatline this year. Right now, it's up nearly 4 percent in 2018.

"Reset year to me means probably the worst-case scenario isn't that bad, but the best-case scenario isn't that good. So, I'm thinking something in the 4 to 7 percent total return range," Mills said.

Source: CNBC

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