Apple, Occidental to Take Lead, Ransom Says

NEW YORK (TheStreet) -- Joe Ransom, co-manager of the RidgeWorth Select Large Cap Growth Fund(SXSAX Quote), says energy companies including Occidental Petroleum(OXY Quote) and technology firms such as Apple(AAPL Quote) will lead the stock market higher in the next year.

The mutual fund has risen 25% this year, 5 percentage points more than the S&P 500 Index. Over the past five years, the RidgeWorth Select Large Cap Growth Fund has lost an annual average of about 1%, less than 84% of its Morningstar peers.

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Are you bullish or bearish?

Ransom: Our investment outlook over the next nine to 12 months leans toward a bullish posture. The rise in stock prices of about 60% from the March lows certainly suggests that the opportunities are less compelling than six months ago. Nevertheless, we continue to see opportunities as we move from recession to recovery and the prospects for earnings growth improves. Admittedly, given current valuations of about 16 times to 17 times on the S&P 500, forward returns are likely to be more modest and a bit harder to come by.

What is your top stock pick?

Ransom: Our current top stock picks in the fund are Apple and Occidental Petroleum. We are positive on Apple due to product momentum, the potential for margin improvement and upside momentum to earnings combined with what we believe is a rock-solid balance sheet, strong free cash flow growth and a very reasonable valuation.

Occidental Petroleum is a "best in class" exploration-and-production company. We are constructive on unit growth production companies in the energy patch as we see upward pressures on crude prices as the world economies improve, especially emerging-market countries. We expect crude prices to be firm over the next six to 12 months, and Occidental is expected to benefit from firming prices and higher production. In addition, geopolitical issues, as well as currency trends, play roles in energy stock-price performance.