'RealMoney' Radio Recap: A Contrarian New Year

"The much ballyhooed Santa Claus rally is not showing up this year, at least not yet," Aaron Task, co-executive editor at TheStreet.com, told listeners on Tuesday's "RealMoney" radio show.

Task, who will be filling in for Jim Cramer all week, said that the holiday rally may have come in November, and that investors will be reluctant to put their profits back into the market so close to the end of the year.

But that doesn't mean there aren't profits to be booked in 2006, he said, quoting a senior investment strategist at Merrill Lynch who said that equity markets are set to soar in the coming year with large-caps leading the way.

The smart money on Wall Street likes financials, health care and IT; but not all investors are alike and Task invests to the beat of a different drummer.

As a contrarian investor, he places his bets on undiscovered territory or battered sectors in the belief that the cycle will come around.

Task also recommended exposure to big-cap U.S. stocks, saying that the airline sector is the real contrarian play. Companies such as Southwest(LUV Quote) were up Tuesday as energy prices came down, but Task said that labor and pension issues might complicate the picture too much for even the most contrarian investor.

Autos would be another example of an extreme contrarian play, and the stock buy would be GM(GM Quote).

But the sector Task was excited about was big-cap pharma, including Johnson & Johnson(JNJ Quote), Merck(MRK Quote) and Pfizer(PFE Quote).

These stocks were killed in 2005, giving investors a shot at companies that are battered but not broken.

In an article for TheStreet.com, Jim Cramer said that Johnson & Johnson is his favorite of the bunch. It has the same multiple as Novartis(NVS Quote); and he sees the situation for the company improving greatly if Boston Scientific(BSX Quote) wins in its bid to acquire Guidant(GDT Quote).